U.S. Doctrines Free Essay
The U.S. has an enormous public debt and a budget deficit that result in a continued decline in the American economic market freedom. The U.S. public debt accounts for an equivalent of more than the total U.S. GDP, and the protection of property rights is uneven. Despite the economic recovery since the last recession, the country faces wage stagnation, inflation, rising income inequality, and an increase in tax rates. The U.S has faced a decrease in exports and an increase in imports. Moreover, the U.S. faces inequality in the provision of relief because the relief benefits are divided depending on social classes. Despite the most diversified and largest economy, the state shows slow economic growth. Unlike Friedman’s doctrine, President Roosevelt’s theory provides the best policies that can help in solving the current economic situation in the United States.
The Reason Why Friedman’s Theory Is Not the Best Solution to the U.S. Economic Problems
Friedman’s theory has weaknesses when it comes to solving the current economic issues of the U.S. The theory only considers the corporate level and neglects the individual level that forms the basis of detecting challenges facing the U.S. economy, such as unemployment and uneven distribution of resources ensuring labor productivity. According to Friedman, the U.S. government should increase taxation to obtain money for funding other sectors of the economy. Increasing taxes results in inflation, and this leads to high living standards in the economy. On the other hand, according to fiscal policies, the government should cut taxes to reduce the deterioration of the economy. Inflation lowers the purchasing power of the U.S. population due to the existence of wage stagnation, which does not help in maintaining high living standards. Friedman’s theory holds that during inflation the government should direct the purchasing power of products elsewhere or force the corporates to produce less. Such actions do not show the implementation of fiscal policies in solving economic issues.
Helpful Theory in Solving the U.S. Economic Situation
Roosevelt’s approach starts with identifying the economic conditions affecting the U.S. According to Roosevelt, the ability of Americans to pay had fallen. Inflation has reduced the purchasing power of people in the United States due to wage stagnation. Roosevelt’s theory provides solutions to increase the employment rate, ensure equality in the wage distribution, and reduce wage stagnation. Roosevelt states that redistribution of industries reduces overpopulation in industrial centers and ensures better land use. The U.S. farmers have very limited markets for their produce. According to Roosevelt’s theory, redistribution of industries will help in providing value to farmers and increase the purchasing power of their products, which in turn will enhance the outputs of the cities. As a result, the nation will experience a faster GDP growth rate due to better land use.
Furthermore, Roosevelt states that government leadership is responsible for leading the country during dark hours of the economy. Roosevelt’s theory shows that the U.S. federal deficit can be reduced when the government does not see borrowing more money as the solution to credit failure. The U.S. uses monetary policies in increasing the money supply by buying financial assets to aid in holding long-term interest rates (Dosi et al. 166). Federal monetary reserves serve for buying bonds from the public to control the money supply in the economy. The U.S. government uses fiscal policy in ensuring tax cuts and stimulus spending to prevent the state’s economic deterioration (Dosi et al. 187). Growing government expenditures result in a fiscal deficit that boosts government debt.
Roosevelt’s theory demonstrates that the way to reduce unemployment and ensure an increase in labor productivity involves putting more people to work. The theory holds that the government can raise the employment rate by increasing its expenditure through hiring more people and exploiting natural resources to improve labor productivity. Therefore, the raised employment rates can provide increased taxable income, which will lead to a reduction of the federal deficit.
Roosevelt’s theory states that unifying relief ensures equal use of government expenditure, which also contributes to the decrease of the budget deficit. The law guides U.S. government spending. The mandatory state expenditures in the United States account for the largest government spending, which results in the growth of the federal deficit. Growing government expenditures cause an increase in the debt if the government does not raise taxes. On the other hand, raising taxes leads to the deterioration of the economy. Therefore, according to President Roosevelt, the government should cut unnecessary or uneconomical expenses. For example, President Trump stated that Obamacare was covered by other relief activities such as Medicare. Obamacare ensures inequality since not all citizens are covered. Therefore, according to Roosevelt’s theory, Obamacare has to be removed by unifying it into other relief activities. In that case, most Americans will be covered by the relief thereby reducing the uneven distribution of national resources.
Roosevelt’s theory offers solutions to the current situation in the U.S. by providing policies that the government can use in reducing the nation’s debts. The theory holds that unifying relief activities can reduce inequality and uneconomical use of government expenditure while guaranteeing even distribution of resources. Besides, to Roosevelt’s theory, the U. S. government is responsible for increasing employment and ensuring better land use. Monetary and fiscal policies also play a significant role in reducing the federal budget deficit. On the contrary, Friedman’s theory goes against the fiscal approach in solving economic issues and coping with inflation problems that reduce the purchasing power of citizens.
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