The Evolution of Modern
Liberalism
IT’S A ROLLERCOASTER RIDE
SUPPORT CLASSIC LIBERALISM…
OPPOSE CAPITALISM.
SUPPORT SOCIALISM…
OPPOSE COMMUNISM.
SUPPORT MODIFIED LIBERALISM
… NOW WE DON’T LIKE THAT ONE?!
 Evolution of the idea of freedoms
Classical liberalism – negative freedoms
 “Freedom from…” (oppression, control, e.g. freedom of
conscience)
 Industrial Rev – growth of capitalism, equality of opportunity
can create inequality
 Modern liberalism – positive freedoms
 “Freedom to…” (you cannot be free if your basic needs aren’t
met –e.g. freedom to access education, health care)
 Great Depression, World Wars, urbanization, globalization =
progressives: gov intervention to ensure equality of outcome

Post World War Two
 Liberal philosophy drifted further left
 acceptance
of programs part of the welfare
state supported by liberals.
e.g. universal health care & CPP
Journal Entry
 Discuss the bias in the video clip by providing
examples.
 Do you agree or disagree with the producer? Explain
your reasoning
Can you see any bias?
Journal Entry
 Discuss the bias in the video clip by providing
examples.
 Do you agree or disagree with the producer? Explain
your reasoning
Stop and reflect-journal entry
 After we have gone through the discussion, record
the following
 How does supply side economics differ from demand
side economics?
 Which theory do you support more? Why?
Neo-conservative reaction
 Like modern liberals, there are many ways to define
a neo-con.

Most common characteristic:

Reaction to liberal principles that had “gone too far”
• Civil rights movement leads to affirmative action
• Weakness of using diplomacy in dealing with enemies (détente
efforts in Cold War)
• Increasing debts and abuse of tax dollars by liberal programs like
health care
• Failure of public education
• Lack of morality in society by focusing on individual rights, or
allowing faith based tribunals like Sharia law
USA in the 1970s
 Growing government debt
 High levels of taxation
 Increased costs to business due to higher wages, benefits
and working conditions (unions), and government
regulations (like minimum wage and environmental laws)
 Increased cost of living (especially after 1973 OPEC
embargo)
= inflation (due to government spending and high cost of
managing debt) and unemployment (due to economy that
provided few incentives for investment)
A trillion dollars (see the little guy beside it?!)
– these are $100, not $1 bills.
Supply Side Economics
 Neo-conservative response to spiraling debts
caused by deficit financing.

Canada’s debt by 2000 over $500 B
 Focus - increase supply by reducing taxes/gov.
intervention in the economy: privatization and
deregulation

As more goods are produced, employment will increase and so
will the demand for goods and services.
 believes demand will come from increased supply as
the incentive to invest in the economy will stimulate
production (indirect involvement) – coffee drip
Chicago School – Friedrich von Hayek
 Believed that government intervention in the economy was
first step towards totalitarianism
 Pure free-market principles were the best way to encourage
economic growth
 Opposed demand-side economics
 Demand
side felt the government would
give money to the people to spur the
economy
 Supply side felt that the government
should let people keep their money to
invest in the economy
Milton Freidman
 economic systems have “leakages” that cause the extremes in the
business cycle by limiting demand

“leakages” - individual income saved in banks, income lost to taxes, monies spent
on imported goods
 These can be balanced with “injections”
 “injections” - businesses borrowing for investment, government spending,
exports
 Keynes (demand-side) wanted gov. to increase injections (fiscal
policy) – Friedman felt government should prevent the leakages
(monetary policy)

felt changes in the business cycle were due to inept politicians mismanaging
the stock of money
 government should be limited to protecting property rights,
printing money, and maintaining law and order
Friedman
Friedman, part two
“Trickle-down Economics” “Reaganomics”
“Thatcherism”
(Klein in Alberta)
 Stagflation (USA) – while fiscal and monetary
policy worked in the 1960s, it was not working in
the 1970s.
 1980 - Ronald Reagan elected on platform of
decreasing government involvement in economy to
reduce national debt


cut government regulations, social program spending and
income taxes (corporate and personal) to encourage
production (although he did not cut military spending).
Initially this system worked, but in the end it left the
economy with a greater debt (military spending)
Reagan on Reaganomics
 http://www.youtube.com/watch?v=ZzVGefEo
2yU&feature=related
Stop and reflect-journal entry
 How does supply side economics differ from demand
side economics?
 Which theory do you support more? Why?
An argument against it - Buffet