Given the different doctrine, conservatives and liberals reach different conclusions on economic issues such as what should be the role of government economic policies and regulations, what levels of wealth and income equality should be tolerated and may be how modern economy should be (cichoka et al., 2017). For the longest time, the economic debate between the liberals has been going on. It’s for the same reason that we are going to highlight some of the significant points of contention.

Economic Stability Sources

Economic stability is referred to as the absence of excessive fluctuations in the macroeconomy. Conservatives favor free markets even though they believe that government intervention is the primary cause of economic instability. They think that the government should not play the significant role in regulating businesses and managing the economy. (Baker & B. 2017) They practically oppose the efforts to tax high rates and to redistribute income to assist the poor. Liberals, on the other hand, believe that it’s the combination of unbridled free markets and their private sector participant which cause all the problems in the economy. (Cichocka, 2017) They believe that the private sectors are the reason for booms and busts in the marketplace through excessive speculation and leverage thus seeks government intervention and policy stabilization.

Reasons behind Inflation\

Conservatives are less worried about inflation because they believe inflation is everywhere and its caused by uncontrollable money expansion. They argue that there is too much money chasing too little goods. (Baker & b, 2017) On the other hand, liberals strongly reject inflation citing that it is only applicable in the third world countries. The government often uses printing of money as a substitute for tax revenues. As a result, too much demand for goods and services are generated creating inflationary pressure (Crawford et al., 2017). However, in modern industrial countries where overproduction is moderate, inflation is mainly caused by the increase in the cost of production such as wages and production costs.

Fiscal Versus Monetary Policy in economic stabilization

Monetary Policy determines nominal interest rates whereas fiscal policy provides public goods generating private utility. Monetary convertism eliminates the steady biases associated with the lack of monetary and fiscal commitment which in turn leads to stabilization policy that is close to optimal. Conservatives favor monetary policy as a stabilization tool since they consider fiscal policy identical government borrowings, budget deficits and also spending on wasteful social programs (Crawford et al., 2017). Liberals, on the contrary, believes that by increasing taxes, the government pulls money from the economy and slow business activity. Liberals argue that lower interest rates generated by easy monetary policy might fail to stimulate the economy; this is because many borrowers will be reluctant to add to their debts during the hard economic times(Bakker & B,2017). Liberals support more spending on infrastructure, education, unemployment benefits, and such demand boosting projects.

Conclusion

As might expected, liberals are more likely to hold anti-free markets views as opposed to conservatives. Liberal, on the other hand, are more likely to support wage, price controls and nationalization of industries and are more hostile to business and profits. Surprisingly, while conservatives hold free-market views relative to liberals, conservatives don’t hold such views in any absolute sense. They mostly support the same economic measures as liberals but by less decisive margins.

References

Bakker, B. N. (2017). Personality traits, income, and economic ideology. Political Psychology, 38(6), 1025-1041.

Cichocka, A., Bilewicz, M., Jost, J. T., Marrouch, N., & Witkowska, M. (2016). On the grammar of politics—or why conservatives prefer nouns. Political Psychology, 37(6), 799-815.

Crawford, J. T., Brandt, M. J., Inbar, Y., Chambers, J. R., & Motyl, M. (2017). Social and economic ideologies differentially predict prejudice across the political spectrum, but social issues are most divisive. Journal of Personality and Social Psychology, 112(3), 383.

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