Question

THE ECONOMICS AND POLITICS OF THE LONG SLUMP In October 2010 unemployment was 9.4%. Blinder argues that without government intervention it "might have been worse." In Weeks 9 and 10 we discussed the responses of TARP (Bush and Obama administration policies) and ARRA (The Obama administration stimulus). The American public, in 2010 at least, did not have a favorable view of either policies and blamed the Democrats for the enduring slump in unemployment. And there were other issues related to the perception that TARP and ARRA were ineffective and unfair. These include not merely the loss of jobs but the destruction of wealth for millions of Americans, the lack of any substantial criminal prosecution for executive fraud, and the perception that TARP had bailed out banks at the expense of taxpayers. Related to these two issues, of course, were risk-encouraging Wall Street compensation practices, which became better known after the crash of 2008 and were untouched by any meaningful regulation.

What are some of the key ideas and issues in these debates?

Answer 1

According to these debates. Some key ideas and issues are

Government interventions in market have both advantages and disadvantages. But if we weigh the risks associated with market, government interventions though reduce the efficiency but would safeguards business.
Government interventions are needed when the market is of monopoly in nature, where people cannot afford high prices in the case of medicines, railways etc. With the intervention though it might affect demand and market but would ensure the availability to all.

Price ceiling and price floors though affect the demand and supply, it is used to safeguards the interest of both consumer and producer at time of crisis.

Also during recessions and bankruptcy, government bailout programs would help to overcome the macroeconomic conditions like unemployment, inflation to ensure well being of its people.