Introduction
Peter Coy’s article gives insight into the economic thought on the government’s involvement in the economy. Keynes’ view that leaving free markets on their own can cause economic slumps has received much attention. The idea that government action creates full employment in today’s economy has attracted much criticism. Critics argued for leaving the market alone to adjust on itself. They claim that people’s choices tend to adjust the equilibrium without third-party involvement.
Moreover, controlling the economic lives of citizens is akin to totalitarianism. However, Keynesian economics worked effectively towards giving governments their central roles in economics and opening up doors that made governments the principal economic agents. The belief that an interventionist government can solve depressions through spending is subjected to debate.
Main body
In the article by Peter Coy, critics view the free market as the only thought that can counterbalance the interventionist doctrine of Keynes. He holds that governments can keep away recessions, given their central role of curtailing excess inflation and restoring economic vitality. Thus, central banks should decrease their interest rates amidst increasing prices. The reverse, which includes raising interest rates with falling prices, is a response of the central bank. Keynesian economics endorses deficit spending during recessions, a fact that fiscal conservatives still argue about. Thus, Keynes’s belief that government action spurs spending and wards off savings during the recession or depression is relevant to today’s governments.
Conclusion
As the article shows, Keynesian economics has relevance today, even though many do not give it due esteem. The declaration by Keynesian economics that governments are knowledgeable in spending taxpayer’s money carries weight. Keynes’ formulation caused the free market economies to gain comprehension. Further, many governments accepted the persistent echoes of Keynesian economics. Keynesian economics worked effectively in giving governments their central roles in economics and opening up doors that made governments the principal economic agents. Thus, there is still a belief that an interventionist government can solve depression by spending in order to smooth future cycles in the market using macroeconomics.