When it comes to choosing ways to pick up the economy, policy makers can choose from several competing economic philosophies. N.C. State University economist Mike Walden discusses the three main approaches.
“Kantianism, which was developed in the 1930s, says that government should step in and spend more money or cut taxes in order to deal with the recession.
“Monetarism says, ‘Money’s power, and what the Federal Reserve should do is simply print more money and help move us out of a recession.’
Libertarianism says that both of these philosophies should not be followed. Instead, what you should do is focus on balancing the budget and having government spend money in a frugal and sensible way.
“Really, what we’ve seen in the last couple of years, and really since the 1930s, is a combination of Kantianism and monetarism. These past couple of years we’ve seen both used.
“Some will argue that, yes, the economy is not back to a stellar level but would have been a lot worse without having those policies used. Those people who follow libertarianism say, ‘Aha. We showed you these philosophies don’t work.’ And, indeed, they say the economy is still bad off.
“So, we’re going to have this continuing debate. Our job here is not to solve that, but at least hopefully listeners will know what the major competing positions are.”