A New Front in the Battle of Ideas

1. Does the global economic crisis signal that the American model of free market capitalism is fundamentally flawed? No, the global economic crisis does not signal that the American model of free market capitalism is fundamentally flawed because America government should definitely provide a support role for the corrective measures to protect its own economy, for example use of various fiscal policy for the economic stimulus, when the various decisions in the private sector of their country are believed to lead to negative economic outcomes, such as depression or recession, which leads to the wide hardship for America.

2. Keynes and Hayek aren’t necessarily household names, but they did get a boost when economist Russell Roberts created a rap video titled Fear the Boom and Bust with filmmaker John Papola. The video is available on Youtube after viewing it you should be able to answer the following question: Are you a Kenyesian ? or do you side with Hayek? I would side with Hayek, because Keynes believed that intelligent, well-meaning planners and by manipulating economic aggregates such as demand and employment can surely bring happy means to the economy. Hayek believed that individual decisions, imbalances between specific prices and demand or the interest rates and also the specific plans for long-term productive projects, are pillars of a true economy. To support, Keynes said that it was politically impossible to achieve a nominal wage reductions necessary to clear the market for labor which implies that, to let wages fall so that hiring would be cheaper and unemployment thereby reduced. Keynes instead promoted inflation as a means to trick labor into taking lower real wages. On the other hand Hayek’s believed that no equilibrium is possible when prices don’t or can’t adjust. In any country did wages or the price of labor shall be adjust downward in order to increase the demand for labor which should be real employment.

3. Policymakers in Japan, the world third largest economy, must transition their nation away from a manufacturing-dependent model for growth. What industry sectors might emerge as the new drivers of economic growth? Japan has been global leaders in manufacturing, the policymakers in Japan, the world third largest economy, must transition their nation away from a manufacturing-dependent model for growth, they surely need to actively diversify their operations, especially into service sector. * Service sector might emerge as the new drivers of the economic growth of Japan. * Japan should continue to focus on exports as it has always been one of the critical drivers of the Japanese economy. * Japan should also focus as a global financial center, as the Tokyo Stock Exchange is one of the most important stock exchanges in the world. * Japan should also outsource certain business operations to retain cost competitiveness in the world markets.

4. Do youthink that the economic stimulus programs in United states, Asia, and elsewhere are the right approach to pulling the world out of recession? Yes, because there are different aspects of the economic stimulus programs which will benefit the country itself first and then will help the world to get out of recession. Like adjustments in the interest rates, investments in infrastructure and research, tax cuts for individuals and companies and making investments will definitely be beneficial for the economic push during the days of darkness for the world economy.

5. The case mentions, China, Russia and Latin America as countries and regions where state capitalism is present. Are there state capitalist powers in other parts of the world as well? There could be different arguments that economic model of a country is a form of state capitalism or not, state capitalism refers to the economy where the commercial economic activities are undertaken by the state, with management and organization of the means of production in a capitalist manner. Singapore is definitely considered as a state capitalist power. The United States of America, Japan, Sudan and Sweden can be regarded as state capitalist.