And there is no better symbol of this undying belief than this Nobel Laureate in Economics who has the New York Times as his voice..
Posted on 09/15/2010 6:28:48 AM PDT by SeekAndFind
Is the recession's great irony that government spending killed Keynesianism? With economists, bankers and investors perplexed over the economy's continued funk, we cannot be blamed for looking in odd places for answers. Could it possibly be that continuously increasing spending over eight decades has left little ability for government spending to affect the economy?
How could increased overall government spending have priced stimulative spending out of the market? To understand what has happened, we must look back to the 1930s. The New Deal was a concerted effort for government to take up the economy's slack.
In 1930, federal government spending (a 6 percent nominal increase from 1929) amounted to 3.4 percent of gross domestic product (GDP). Under President Franklin D. Roosevelt's New Deal, federal spending would top out at 10.7 percent of GDP in 1934 - only breaking the 10 percent threshold twice more in the 1930s. The increase of government relative to the economy was roughly threefold.
In contrast, the federal government consumed 24.7 percent of America's GDP last year. As large as the economic stimulus nominally was, it was just a fraction of the nation's $14 trillion economy.
While arguments still rage as to the New Deal's efficacy, at least government intervention was fiscally plausible then. Because of the government's previously minor economic impact, it could grow so much larger because it historically had been so much smaller.
In that regard, it was in line with John Maynard Keynes' own theorizing. He had envisioned government performing a countercyclical economic function. Government intervention would increase during an economic downturn but, just as important, it would decrease once the economy recovered. It would dampen the cycle he believed to be inherent in the economy: eliminating innate volatility by filling in the troughs and pulling down the peaks.
(Excerpt) Read more at washingtontimes.com ...
In the minds of liberals, this won’t kill Keynesian economic theory. They will think, as they usually do, that not enough was done, or it was done incorrectly. The theory will still be seen as valid, since they will never admit that they were wrong.
It should bury it forever.
Paul Krugman — defender of faith-based economics.
Don't forget political Keynesian-ism, that you can never stimulate the economy too much to pander to voters.
But as Republicans found in 2006 elections that low unemployment and a stock market high did them little good when prices were skyrocketing, and in 2008 dropping prices didn't help them when unemployment was rising and the stock market was falling. It only worked long enough to get GWB re-elected, 2003-2005 the period of rising employment, low interest rates, low inflation, climbing stock market, the good days.
The BIG LIE about Keynesian economics is that it floats all boats when in reality it only helps those in power to retain power, namely the liberal elites. It is communism pure and simple and was always meant to be.
True Keynesian-ism is different than political Keynesian-sm. True Keynesian-ism says you raise taxes and cut back spending and raise interest rates when the economy warms up. But we can see that with our boom-bust cycle economy that there is no exact formula for this, and politically there is no cool down option until it is too late.
I guess it’s like actual communism vs ideal communism, ideal communism says you dont have to kill half the population like Stalin or Po Pot did. But practical communism shows people wont all act like robots.
It never dies. I thought it had been killed when Reagan got elected. But it just goes dormant for 2 or 3 generations, until we get enough voters registered who don’t remember the last time it failed.
NO. Memories are short and Keynesianism is far too attractive a prop for politicians who want to control. It is a perennial. The collapse of the Soviet Union did not end socialism as a political force and utter collapse of Keynesian schemes will not end Keynesianism as an economic organizational model for politicians.
He’s a Keynesian!
(Slap!)
He’s a Kenyan!
(Slap!)
A Keynesian!
(Slap!)
A Kenyan!
(Slap!)
A Keynesian! A Kenyan!
(Slap! Slap!)
(Sobbing.) He’s a Keynesian AND a Kenyan!
Forget it Yam....it’s Washington.
Remind me what movie that was again ... it’s on the tip of my tongue but I can’t quite remember it...
Thanks, I thought it sounded familiar...
The only thing that was missing was the phrase : “I want the truth”.
Keynesianism was thoroughly discredited in the seventies; we all thought it was dead. We’ve learned, though, that, as long as there are politicians looking for an excuse to steal from us, it will never really die.
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