K’s

Welcome to the SwiftEconomics.com Glossary! Each word will come to life using witty jokes, satire, and colorful examples. The glossary is meant to amuse and educate; not to be traditional or academic. The SwiftEconomics.com team wants to hammer home a few vital ideas throughout the vocabulary lesson. For example, keep an eye on asymmetric information’s effect on health insurance. Please share the SwiftEconomics.com Glossary with colleagues, friends, and family!

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Terms beginning with K

Keynesian Economics | Kleptocracy


Keynesian Economics

20th-century British economist, John Maynard Keynes, brought us this macroeconomic theory. The antithesis to Reaganomics, it’s all a matter of where you start: the demand side or the supply side. Keynesian thinkers believe that government policy should help stimulate demand. In other words, policy should work to increase consumption or spending. With robust purchasing power for the masses, which by default are the non-über rich, you can stimulate production. Entrepreneurs won’t produce unless there is strong demand. Makes sense.

Reaganomic thinkers are supply-siders. They believe the best way to stimulate production is by making it appealing for entrepreneurs to produce vis-à-vis low tax rates. The less you tax profits, the more entrepreneurs who will shoulder sizable risk and start new businesses. The new businesses increase jobs, production, and potentially, tax revenue to the government. It’s up to the entrepreneur, through market research, foresight and vision, to figure out if demand exists for an idea. The process of creative destruction leaves a diverse, efficient and healthy economy.

Both philosophies are theories with some historical trial. Consider that President Reagan also ran up large public debts through his two terms of low tax rates (although nothing compared to President Bush or President Obama). Both Bush and Obama have tried “stimulus checks,” where money is taken from more affluent people and given to less affluent people in order to stimulate demand. Everyone puts their own spin on the two theories, but here they are. You can make the call as an educated citizen. I believe in competitive tax rates, balanced budgets and a strong currency. All three of which the United States is lacking.


Kleptocracy

Blago anyone? A government whose officials wield the power of the state for their own personal gain. This power, in democracies, is loaned to them temporarily by the citizens who elected the representatives. Based on the recorded phone calls released, Illinois Governor Rod Blagojevich likely attempted to trade the vacated Senate seat by Barack Obama for personal gain. That sounds about right.

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