BBA Student Lead Discussion on the Current Economic Environment
On Wednesday, January 21, 2009, U of T Scarborough BBA students, Cici Liu, Juan Ma, Alexander McLeod, Alexandru Rascanu and Leslie Yang participated in an informal discussion with Mike Hornbrook, Economics Correspondent for CBC Radio News. The discussion moderated by fourth year BBA student and MESA President, Derrick Fung specifically focused on the shift in governmental policy from a Friedman to a Keynesian economic model in addition to topics surrounding government deficit, market rationality and the current recession.
As talk centered on the tough economy, everyone seemed to agree that the current financial situation is mostly due to irrational markets, caused largely by customer fears. Alexandru Rascanu said, “People are simply acting emotionally rather than rationally.” Alex McLeod adds, “It’s only human nature to avoid as much risk as possible.”
Cici Liu credited the quickly declining financial market as the main reason for the governmental shift from a Friedman to Keynesian economic model. While the Keynesian economic model champions public management in order to keep the economy in order through the regulation of government spending, short-term interest rates and taxation, Friedman’s economic model believes in the "invisible hand," that is, allowing the economy to correct itself without government involvement.
She further elaborates that the government needs to be spending money on “infrastructure, schools and alternative energy – sectors that will benefit others in the future while also turning out a profit.” Derrick Fung added that what the government should really be implementing are legitimate bailout plans. However, while most agreed that the Keynesian model is what the economy needs at this time, others stressed the importance of ensuring it is not taken to the extreme. Rather, that the government should implement policies in line with “flexible Keynesian.”
Juan Ma expressed confidence in the government stating, “it’s not a problem that the government is heavily involved – just as long as they function well.”
More of the discussion can be heard on on Sunday, January 25, 2009 at 6:00 p.m. on CBC Radio One’s “The World This Weekend” Program.
The podcast may be heard here.