President Obama’s Wall Street Reforms: A Keynesian Approach
In 2008, the global financial crisis plunged the world into recession. In response, President Obama implemented a series of Wall Street reforms. These reforms were predominantly based on Keynesian economics, which is the belief that the government should intervene in the economy to promote growth and stability.
There are two different types of welfare states: the Keynesian welfare state and the neoliberal welfare state. The Keynesian welfare state is based on the principles of Keynesian economics, while the neoliberal welfare state is based on the principles of neoliberalism. Neoliberalism is a free-market economic philosophy that favors deregulation and privatization.
2. The Keynesian welfare state
The Keynesian welfare state is based on the principles of Keynesian economics, which is the belief that the government should intervene in the economy to promote growth and stability. The government intervenes in the economy by spending money on public works projects, such as infrastructure, and by providing social welfare benefits, such as healthcare and unemployment benefits.
The Keynesian welfare state was created in response to the Great Depression of the 1930s. At that time, classical economists believed that recessions were a natural and necessary part of the business cycle. They believed that governments should not interfere in the economy, because this would only make things worse.
Keynesian economics challenged this view. Keynes argued that recessions were not inevitable, and that governments could and should take active measures to prevent them from happening. He also argued that governments should intervene in the economy during recessions in order to help businesses and workers get through tough times.
The Keynesian welfare state was first implemented in the United States during Franklin Roosevelt’s New Deal. The New Deal was a series of policies and programs designed to address the problems of the Great Depression. These policies included public works programs, social welfare benefits, and regulations on banks and financial markets.
The Keynesian welfare state continued to grow throughout the 20th century. In 1944, British economist John Maynard Keynes wrote “The General Theory of Employment, Interest, and Money,” which provided a theoretical justification for government intervention in the economy. In 1948, U.S. President Harry Truman implemented the Fair Deal, which expanded upon Roosevelt’s New Deal policies.
3. The neoliberal welfare state
The neoliberal welfare state is based on the principles of neoliberalism, which is a free-market economic philosophy that favors deregulation and privatization. Neoliberalism Rose to prominence in the 1970s and 1980s in response to stagflation, which is a combination of high inflation and high unemployment.
Neoliberal economists argue that governments should get out of the way and allow businesses to flourish. They believe that deregulation will lead to more competition, which will in turn lead to lower prices and higher quality products for consumers. They also believe that privatization will lead to more efficient provision of services.
The neoliberal welfare state was first implemented in Great Britain under Prime Minister Margaret Thatcher. Thatcher’s policies included privatizing state-owned industries, deregulating financial markets, and reducing social welfare spending. These policies came to be known as Thatcherism.
Thatcher’s policies were controversial at the time, but they proved to be successful in terms of economic growth. In 1979, when Thatcher was elected Prime Minister, the British economy was in a recession. By the time she left office in 1990, the economy had recovered and was experiencing sustained growth.
4. President Obama’s Wall Street reforms
President Obama’s Wall Street reforms were predominantly based on Keynesian economics. The role of the state is to provide economic stability and protect consumers, while the role of financial institutions is to serve the needs of businesses and investors.
The role of the state is to provide economic stability and protect consumers. The government does this by regulating financial markets, issuing rules and regulations, and providing social welfare benefits.
The role of financial institutions is to serve the needs of businesses and investors. Financial institutions provide loans to businesses, invest in stocks and bonds, and provide other financial services.
The role of credit rating agencies is to provide information about the creditworthiness of individuals and businesses. Credit rating agencies assess the ability of borrowers to repay their debts.
The Volcker Rule is a regulation that prohibits banks from engaging in certain types of speculative trading. The rule is named after former Federal Reserve Chairman Paul Volcker, who first proposed it in 2010.
The resolution fund is a pool of money that is used to bail out failing banks. The fund is financed by assessments on all banks, and it is used to pay for the costs of liquidating or reorganizing a failing bank.
President Obama’s Wall Street reforms were based on Keynesian economics. The role of the state is to provide economic stability and protect consumers, while the role of financial institutions is to serve the needs of businesses and investors. The Volcker Rule and the resolution fund are two key aspects of these reforms.