Wednesday, October 14, 2009
Fresh Water vs. Salt Water Economics
The economics profession has always been on the center of controversy in regard to how the profession attempts to solve the economic problems the people face everyday. The debate is mainly among two groups of economists: fresh water economists and salt water economists. The freshwater economists, who are associated in the universities near and around the great lakes, say University of Chicago, maintain that the government should not intervene the market and let it function on its own way. They attempt to show that this actually brings maximum welfare in the society. Salt water economists or the economists around the east or west coasts, say University California at Berkley, on the other hand, believe that government action is necessary when and as necessary. The controversy among these economists basically rests on the assumptions they make when developing economic models that are designed to solve the economic problem, and what the government’s role should be in addressing economic problems. The economic models by fresh water group are built on the fundamental assumption of people’s rational behavior, as opposed to the belief of salt water group that people may not all the time show rational behavior. As to the government’s role in economic activities, fresh water school wants government to stay away from the market and leave it operate without any disturbance from the government, whereas salt water school wants to see the government’s role in the market to the extent that it helps to solve market failure and raise economic welfare of the entire society.
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I am on the side of the salt water economists because I believe that government intervention is necessary sometimes. When market failure occursa and there is unjustice done to the people then the government steps in. An example would be when a company has a monopoly on a market there is no competition. In this case the government would step in and stop this and allow more companies to come in and the market would be competitive again.
ReplyDeleteJason
One of the most important things you can have in life are options. For this reason i agree with the salt water economists. Govt intervention was needed in the automotive industry, it was also necessary to extend unemployment benefits helping millions of americans and putting money back into the economy. One could sympathize with the fresh water economist, the logic that the market will right itself if we just leave it alone sounds believable right up into the point that the car crashes. Govt needs to grab the wheel in these situations to lessen the effects,not assume that this is all for the best close their eyes and pray. I at least want that option....
ReplyDeleteI'd say that I'm on the side of the salt water economists, despite the fact that government intervention can seem unnecessary at times. With most major issues regarding the economy, however, I think gov't intervention is key to keeping the market fair.
ReplyDeleteI guess I am a hybrid on this one..... I want to see the market run its due course as that is the most efficient method. However I also agree that so many people are not rational and they create artificial market extremes that need help. Whether it is everyone buying ammo because they are told the government is going to take their rights away or the media telling everyone how bad the economy is and no one spending any money or worse banks not lending the money they have. The government then needs to try and intervene and jump start the economy.
ReplyDeleteI am on the side with the salt water economists, because sometimes, government intervention is needed. The fresh water economists sounds Republican, whereas the salt water fish sounds like they are Democrats. I believe that we have had a lot of market failure, because there was a lack of government intervention.
ReplyDeleteI have been known to switch sides, changing my mind when it fits my agenda but mostly I just love the underdog. Its because of these reasons coupled with the fact that im bored that i want to throw a line to the fresh water economist. We all know too many hands in the kitchen can ruin the most sacred family recipe.Do you know how big the hands of the government have become? Fresh water economist are simply asking for time, time to turn the ship before govt assumes it cant right itself. Salt water economist are afraid to let go, scared that this economy can balance itself, just like us they want to feel important. Im sorry...but theres no fire to put out,no kittens to save here. Faith is believing when you shouldnt...It worked for me.
ReplyDeleteDan Mullen,
ReplyDeleteI am all for the freshwater view. I believe that the government should keep their hand out of categories such as; schools, mail, etc... Take a look at private schools vs. public the average amount a private schools receives per student is 9K. The average the public schools receive is about 26K. The money is managed way more efficiently with private and the student’s typically have better education at the end of the day. US postal service vs. FedEx, UPS, enough said again the private company is managed more efficiently and have better service. I could say more about how FedEx and UPS are better than US postal services however, I am sure you agree with me. Thanks for having me!
I would have to be on the side of salt water economists. The government does need to get involved with the market at certain times. They don't need to be at the center of everything but with certain things because they will be able to help. The government can help, or hurt but it will hurt the market more if they stayed out of the way and never intervened with anything then if they jump in and help where they feel they need it.
ReplyDeleteJoseph Plavetic
Everyone is entitled to their own opinion which is why economics is based upon assumptions. Those assumptions coupled withe evidence make convincing sides for both fresh water and salt water economists. I see both points of view and would like to believe people are rational and can iron things out themselves but sadly thats definitely not the case in our society, look at us now. So with that being said salt water it is! Sometimes its just necessary for the government to intervene for the greater good.
ReplyDeleteI side a bit more with the salt water economists. I think that goverment intervention can hurt the economy sometimes, but for the most pare the government with help the economy.
ReplyDelete