I'M NOT A ROCKET SCIENTIST I SIMPLY SPEND A FEW HOURS EACH DAY READING BROADLY ALL PUBLIC POLICY JOURNALS ACROSS ALL POLITICAL STANCES.
I posted what may be a complicated article for public policy beginners but labor and justice knows these concepts.......
KEYNESIAN VS NEO-LIBERAL/LAISSEZ FAIRE ECONOMICS.
Our American Founding Fathers fought a Revolutionary War to get away from EMPIRE-BUILDING LAISSEZ-FAIRE LIBERAL ECONOMICS-----and installed what was for centuries in the US a KEYNSIAN SOCIAL DEMOCRATIC economics. Labor and justice thrived under Keynsian economics and are enslaved under EMPIRE-BUILDING LAISSEZ-FAIRE.
CLINTON/BUSH/OBAMA ARE DESPERATE TO NOT RETURN TO KEYNSIAN SOCIAL DEMOCRACY GOING SO FAR AS TO RIG ELECTIONS IN THE US.
MAKING PUBLIC POLICY OUT OF EVERYTHING IS WHAT WE DO----WE THE PEOPLE have seen first hand how far-right, authoritarian, Libertarian extreme wealth and extreme poverty can CHANGE OVERNIGHT!
GET RID OF THESE GLOBAL WALL STREET PLAYERS!
'What matters from the Keynesian perspective, however, is not so much Scrooge’s new-found generosity to the gentleman who had solicited him earlier on behalf of the poor but his extravagance in spending his own money. Not only does he have the little fellow standing outside his window fetch the poulterer’s man with the prize turkey but he also promises him half a crown if he returns with the man in five minutes. Scrooge is suddenly willing to pay two and a half shillings to a boy for five minutes’ work, which is what Bob Cratchit, working six days a week, was paid for a whole day’s labor. On top of that, Scrooge is eager to send the poulterer’s man with the turkey by cab to Camden Town, more than five miles from the City of London, in order to deliver the turkey to the Cratchit family. So, while we don’t learn how much Bob Cratchit’s new, increased salary will be, we do recognize that Scrooge is quickly learning how to take pleasure in spending his money and is doing so in high style.
"The Primitive Keynesianism of Dickens's A Christmas Carol" was originally published in vol.30, Studies in the Literary Imagination,no.1(1997):pp.51-66
The primitive Keynesianism of Dickens's 'A Christmas Carol'Lee Erickson 18 December 2009
The traditional interpretation of Scrooge is of an avaricious miser graced by visitations which convert him into an enthusiast for Christmas. But from a Keynesian point of view, Scrooge is a hoarder with an obsession for maintaining almost complete liquidity in deflationary times like the early 1840’s. Even then, Dickens recognised the problem and understood the cure…I.
Dickens’s description of Scrooge bespeaks distasteful personal experience with money-lenders. We know from the first pages that Scrooge is the most cold-hearted of penny-pinchers: “Oh! But he was a tight-fisted hand at the grindstone. Scrooge! A squeezing, wrenching, grasping, scraping, clutching, covetous, old sinner! Hard and sharp as flint, from which no steel had ever struck out generous fire; secret, and self-contained, and solitary as an oyster.” Further, although Scrooge has inherited a fortune as Jacob Marley’s business partner and sole surviving heir, he is still living in Marley’s old chambers in a building where all the other rooms are being rented as commercial offices and where a wine merchant has stored his casks in the cellars. Scrooge has changed nothing about the rooms, added nothing to them, and spends almost nothing on his own creature comforts. He has only a low fire for himself on a bitter winter night and takes only gruel for his cold. Further, as we later discover, his scavenged belongings would bring only a few shillings and pence from the rag-and-bone shop man. Indeed, although Scrooge is a rich man, he has spent almost nothing of his wealth but instead apparently has hoarded his money as liquid capital for his firm, which has a place on the Royal Exchange and evidently handles foreign exchange and discount bills. That is, he deals in private and commercial credit.
His financial practice is represented by the “cash-boxes, keys, padlocks, ledgers, deeds, and heavy purses wrought in steel” that weigh down old Marley’s Ghost, and which the Ghost says are also weighing down Scrooge. To remain financially sound, Scrooge has remained extremely liquid so as to have cash and to meet any bill presented to him for immediate payment. However, as John Maynard Keynes remarks in his General Theory of Employment Interest and Money, ”of the maxims of orthodox finance none, surely, is more anti-social than the fetish of liquidity”. The worst thing an individual can do in financial crises and the thing that, according to Keynes, has the most “disastrous, cumulative, and far-reaching repercussions” is not to spend one’s income on either investment or consumption, but to hoard it, as Scrooge has done, under lock and key.
As Scrooge’s fiancée Belle rightly points out, the psychological motivation for Scrooge’s economic behaviour is fear. In releasing him from their engagement, she tells him that, “You fear the world too much” and that, “All your other hopes have merged into the hope of being beyond the chance of its sordid reproach”. In particular, Scrooge worries about losing his reputation for being a financially sound businessman. In this regard, like others of his time, Scrooge feared not just the Sprit of Christmas Yet to Come but the financial future, which seemed likely in the deflationary moment of December 1843 to be very bleak. On Tuesday, December 19, 1843, the day that A Christmas Carol appeared… the prices of goods in England had been falling for the past four years and had fallen during that time a total of 22.72 percent. During this period, the rate of deflation had thus been 5.68 percent a year; and, in particular, retrospective price indexes show that prices had fallen and the purchasing power of a pound had risen by five-and-a-half percent from the end of 1842 to the end of 1843. As a consequence, those with income in excess of their needs were spending no more at present than they had to spend, since they expected that tomorrow their pounds would likely buy more. Further, demand for borrowed money was historically low since most businessmen feared that they would not only have to pay back their debts in more valuable pounds but also that the demand for goods would continue to decline and reduce the return on any new investment…
By thinking that things will get worse, Scrooge has profited in the declining market that has prevailed since Marley’s death seven years before on Christmas Eve, in 1836. Indeed, his constant discovery that every pleasant thing is “humbug” represents his immediate discounting of any present pleasure against future pain. This general fear of the future felt by the English financial markets in 1843, and especially by Scrooge, is symbolically transmuted by the Ghost of Jacob Marley and the Spirits of Christmas, who, like the Fates, offer progressively more frightening consequences of not spending one’s money and who allow Scrooge to imagine a fate worse than his own bankruptcy and death.
In this atmosphere of business pessimism, there were more goods being produced than there was effective demand to consume those goods. As the Spirit of Christmas present shows Scrooge, the stores and shops are overflowing with good things to eat on Christmas Day:
“The poulterer’s shops were still half open, and the fruiterers’ were radiant in their glory. There were great, round, pot-bellied baskets of chestnuts, shaped like the waistcoats of jolly old gentlemen, lolling at the doors, and tumbling out into the street in their apoplectic opulence. There were ruddy, brown-faced, broad-girthed Spanish Onions, shining in the fatness of their growth like Spanish Friars, and winking from their shelves in wanton slyness at the girls as they went by, and glanced demurely at the hung-up mistletoe. There were pears and apples, clustered high in blooming pyramids; there were bunches of grapes, made in the shopkeepers’ benevolence to dangle from conspicuous hooks, that people’s mouths might water gratis as they passed; there were piles of filberts, mossy and brown, recalling in their fragrance, ancient walks among the woods, and pleasant shufflings ankle deep through withered leaves; there were Norfolk Biffins, squab and swarthy, setting off the yellow of the oranges and lemons, and, in the great compactness of their juicy persons, urgently entreating and beseeching to be carried home in paper bags and eaten after dinner.”
The very amplification of Dickens’s catalogue attests to the abundance available, even begging, to be consumed. Indeed, the English were ironically in the midst of a Malthusian glut or what Carlyle, writing in Past and Present also in 1843, accurately identified as “over-production”. And, of course, when Scrooge awakens from his visions on Christmas Day, the large prize turkey is still hanging in the local poulterer’s shop and has not yet been purchased by anyone. However, as we are shown by the Spirit of Christmas Present, the Cratchits, who only have Mr.Cratchit’s fifteen shillings a week and the prospect of a position paying five shillings and sixpence a week for the young Master Peter Cratchit, must make do at their Christmas dinner with a greasy goose “eked out by apple-sauce and mashed potatoes”, a small pudding “like a speckled cannon-ball,” followed by apples and oranges and “a shovel–full of chestnuts on the fire”...
If the Bob Cratchits of England cannot possibly afford to buy the prize turkeys in the local shops, those with incomes like Scrooge can. For this reason, A Christmas Carol in both its message and its physical appearance as a book was aimed at wealthy readers and sought to create an atmosphere of cheerful consumption. As Keynes remarks, in his proposal for curing the crises of confidence which afflict the economic life of the modern world, “a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectation, whether moral or hedonistic or economic”. Scrooge obviously is in accord with Keynes’ thinking, for as he wakes up from the visitation of the Christmas Spirits (and I can’t help but think here of Alastair Sim playing the role in the 1951 film, A Christmas Carol) he declares, “I am as light as a feather, I am as happy as an angel, I am merry as a schoolboy. I am giddy as a drunken man. A merry Christmas to everybody! A happy New Year to all the world! Hallo here! Whoop! Hallo!”. Scrooge’s transformation is also signalled by the bubbling over of his sudden access of good humour after he has impulsively and extravagantly spent his money and has ordered the cab to Camden Town: “The chuckle with which he said this, and the chuckle with which he paid for the Turkey, and the chuckle with which he recompensed the boy, were only to be exceeded by the chuckle with which he sat down breathless in his chair again, and chuckled till he cried”. It is certainly the impulsive, spontaneous character of Scrooge’s new beneficence that Dickens emphasises.
Dickens explicitly counters the gloomy Malthusianism that had previously informed Scrooge’s first response to the gentlemen raising charitable donations: “If they would rather die… they had better do it, and decrease the surplus population”. Dickens’s vision of the Cratchits’ Christmas dinner imagines a humanity quite different from the one portrayed in the following extraordinary and controversial passage from the 1803 edition of Malthus’s Essay on the Principle of Population:
“A man who is born into a world already possessed, if he cannot get subsistence from his parents, on whom he has a just demand, and if the society do not want his labour, has no claim of right to the smallest portion of food, and, in fact, has no business to be where he is. At nature’s mighty feast there is no vacant cover for him. She tells him to be gone, and will quickly execute her own orders, if he do not work upon the compassion of some of her guests. If these guests get up and make room for him, other intruders immediately appear demanding the same favour. The report of a provision for all that come, fills the hall with numerous claimants. The order and harmony of the feast is disturbed; the plenty that before reigned is changed into scarcity; and the happiness of the guests is destroyed by the spectacle of misery and dependence in every part of the hall, and by the clamorous importunity of those, who are justly enraged at not finding the provision which they had been taught to expect. The guests learn too late their error, in counteracting those strict orders against all intruders, issued by the great mistress of the feast, who, wishing that her guests should have plenty, and knowing that she could not provide for unlimited numbers, humanely refused to admit fresh comers when her table was already full.”
Such a remorselessly self-righteous vision has no place for those like Tiny Tim who is a “fresh comer” at a full table and who is likely, as the Spirit of Christmas Present tells Scrooge , to be hurried away to the grave. In just this spirit, William Bridges Adams, a noted railway inventor, reviewing Henry Hengist Horne’s New Spirit of the Age (1844) for the Westminster Review, sneered in passing at Dickens’s Christmas Carol:
“ A great part of the enjoyments of life are summed up in eating and drinking at the cost of munificent patrons of the poor; so that we might almost suppose the feudal times were returned. The processes whereby poor men are to be enabled to earn good wages, wherewith to buy turkeys for themselves, does not enter into the account; indeed, it would quite spoil the dénouement and all the generosity. Who went without turkey and punch in order that Bob Cratchit might get them – for, unless there were turkey and punch in surplus, some one must go without – is a disagreeable reflection kept wholly out of sight.”
Adams explicitly recalls Malthus’s logic that for every person eating there must be someone starving and that the demand for goods far outstrips both the supply of those goods and the ability to pay for them. Further, as a sceptical representative of the dismal science of political economy, Adams clearly cannot imagine that either turkeys or punch could ever exist in surplus or that consumer demand might ever be in need of stimulation.
Ironically, in Dickens’s world everyone is potentially a beggar at “nature’s mighty feast”, for even Scrooge finds that he must ask to be admitted to his nephew’s Christmas dinner. Scrooge, who felt that the prisons, Union work-houses, Treadmill and Poor Law furnished sufficient “Christmas cheer of mind or body to the multitude”, is soon lectured to by the Ghost of Christmas Present about his own possible worthlessness in heavenly eyes:
‘ “ Man,” said the Ghost,” if man you be in heart, not adamant, forbear that wicked cant until you have discovered What the surplus is, and Where it is. Will you decide what men shall live, what men shall die? It may be, that in the sight of Heaven, you are more worthless and less fit to live than millions like this poor man’s child. Oh God! To hear the Insect on the leaf pronouncing on the too much life among his hungry brothers in the dust!”’
The man with more money is cautioned against thinking of himself as much more than “the Insect on the leaf,” which fortunately has food and by pure chance lives above “his hungry brothers in the dust.” To think that one’s good fortune somehow gives one the right to decide whether someone else has the right to live or die is to Dickens obviously morally wrong.
Victorian readers and hearers of A Christmas Carol found irresistible its message to eat well at Christmas and to invite others to do so. Perhaps the best-known reaction to A Christmas Carol is that of Thomas Carlyle. Jane Welsh Carlyle, in a letter to Jeannie Welsh of December 28, 1843, tells how after her husband had read the presentation copy that Dickens had sent him earlier in December, he was inspired to hold a series of dinners:
“A huge boxful of dead animals from the Welshman [Mr.Redwood] arriving late on Saturday night together with the visions of Scrooge – has so worked on Carlyle’s nervous organisation that he had been seized with a perfect convulsion of hospitality, and has actually insisted on improvising two dinner parties with only a day between – Now the Improvisation of dinner parties is all very well for the parties that eat them, simply, but for those who have to organise them and help to cook them, c’est autre chose ma chere! I do not remember that I have ever sustained a moment of greater embarrassment in life than yesterday when Helen [her cook] suggested to me that “I had better stuff the Turkey – as she had forgotten all about it”! I had never known “about it”!
But rather than admit her ignorance to her servant, Mrs. Carlyle then triumphantly recalls her success: “I proceeded to stuff the Turkey… ‘Fortune favours the brave’ – the stuffing proved pleasanter to the taste than any stuffing I ever remember to have eaten – perhaps it was made with quite new ingredients! – I do not know!” Perhaps thinking of Carlyle, Thackeray, at the end of his February 1844 review in Fraser’s Magazine of A Christmas Carol, comments on the story’s effect upon its readers:
“A Scotch philosopher, who nationally does not keep Christmas-day, on reading the book, sent out for a turkey, and asked two friends to dine – this is a fact! Had the book appeared a fortnight earlier, all the prize cattle would have been gobbled up in pure love and friendship, Epping denuded of sausages, and not a turkey left in Norfolk. His royal highness’s fat stock would have fetched unheard-of prices, and Alderman Bannister would have been tired of slaying. But there is a Christmas for 1844, too; the book will be as early then as now, and so let speculators look out.”
There is also an especially touching instance of a New England manufacturer who, after hearing Dickens read the story in Boston on Christmas Eve in 1867, gave his employees the next day off and beginning the next year gave all his employees a Christmas turkey. No doubt, many others were similarly inspired.
What matters from the Keynesian perspective, however, is not so much Scrooge’s new-found generosity to the gentleman who had solicited him earlier on behalf of the poor but his extravagance in spending his own money. Not only does he have the little fellow standing outside his window fetch the poulterer’s man with the prize turkey but he also promises him half a crown if he returns with the man in five minutes. Scrooge is suddenly willing to pay two and a half shillings to a boy for five minutes’ work, which is what Bob Cratchit, working six days a week, was paid for a whole day’s labor. On top of that, Scrooge is eager to send the poulterer’s man with the turkey by cab to Camden Town, more than five miles from the City of London, in order to deliver the turkey to the Cratchit family. So, while we don’t learn how much Bob Cratchit’s new, increased salary will be, we do recognize that Scrooge is quickly learning how to take pleasure in spending his money and is doing so in high style.
The #1 issue in the US for labor and justice-----PROTESTING AND CLOSING NEO-LIBERAL ECONOMICS AT UNIVERSITIES -----and creating media outlets promoting what for me is a successful Keynesian social capitalism.
Here is the problem for WE THE PEOPLE-----this video shows US citizens confusing the issue of OBAMA BEING FROM KENYA-----with Keynesian economics. This title suggests Obama is a KEYNESIAN as national media has these several years but Obama was always HAYEK/LEO STRAUSS LAISSEZ-FAIRE the opposite of Keynesian. CLINTON/OBAMA were sold as Keynesian because they allowed MASSIVE LOOTING OF OUR US TREASURIES AND DIRECTED THOSE TRILLIONS TO A SELECTED FEW GLOBAL RICH. We see government intervention into the US economy but it has nothing to do with KEYNESIAN stimulus----it is GLOBAL LAISSEZ-FAIRE because all of that US Treasury money went to global 1% and their 2%.
HAYEK MEETS LEO STRAUSS GIVES US CLINTON/BUSH/OBAMA.
FDR and NEW DEAL social democracy was called Keynesian because the Federal stimulus went to rebuilding our US economy creating conditions for American consumers to have money in their pockets for consuming American-made products. That is supply and demand and any citizen qualifying for a small business loan----hired by government projects were assured that ability to accumulate wealth and were encouraged to spend by being able to own homes----by cars-----go on vacations. Government stimulus back then did not go to corporations because---- the US after the 1929 economic crash needed to rebuild a REAL FREE MARKET by growing business competition.
Obama had no intention of using Federal money for US free market growth----he was sending that money to global 1% and their 2% in crony, corrupt, and selective enrichment. That is HAYEK AND LAISSEZ-FAIRE.
Obama Is Not A Keynesian, He's An American!
Uploaded on Nov 4, 2010A few people from the stewart/colbert rally letting the reporter know that they dont think President Obama is a KEYNESIAN.
Taking Hayek Seriously
influence: Barack Obama is the #1 Hayekian in the World
Posted on March 1, 2009 by Greg Ransom
Ask your average economist what Friedrich Hayek’s central claims in economics are — the claims that made Hayek the most controversial economist in the world over the last 100 years — and the likely answer will be: 1) Hayek claimed that the market is the best mechanism ever invented for efficiently allocating resources to maximize production; and 2) that there is a connection between the freedom of the marketplace and freedom more generally. The first of these in the economics literature is often called “The Hayek Hypothesis”. The second claim is sometimes referred to as “The Hayek-Friedman Hypothesis”.
These have been massively controversial and contested claims. But the current President of the United States, Barack Obama, is a believer in both, as Obama confessed to New York Times reporter David Leonhardt on Aug. 20, 2008: “The market is the best mechanism ever invented for efficiently allocating resources to maximize production. And I also think that there is a connection between the freedom of the marketplace and freedom more generally.”
How did Obama come by his understanding and belief in the Hayek Hypothesis and the Hayek-Friedman Hypothesis? Well, no doubt in part because Obama was reading Hayek and Friedman in the 1980s. Indeed, one of Obama’s closest intellectual associates is Hayek quoting U. of Chicago law professor Cass Sunstein, now a member of the Obama administration. And another is Obama’s chief economic adviser, Larry Summers, who explains his understanding of economics this way: “What’s the single most important thing to learn from an economics course today? What I tried to leave my students with is the view that the invisible hand is more powerful than the [un]hidden hand. Things will happen in well-organized efforts without direction, controls, plans. That’s the consensus among economists. That’s the Hayek legacy”.
No matter what you might think about the unfolding of contemporary political events, the world isn’t what is was in the 1930s and 1940s when the “Hayek Hypothesis” and the “Hayek-Friedman Hypothesis” stood as a shocking challenge to mainstream “progressive” thinking. As historian Alan Brinkley points out, the intellectual environment shifted decisively soon after the publication of Hayek’s The Road to Serfdom, even if it took decades for for “mainstream” economists — such as Paul Samuelson — to finally “get it”, and although it must be admitted that a few — such as Robert Heilbroner — never quite did. We are no longer living in the 1930s. And we shouldn’t pretend that we are.
And finally, it should be noted that the great intellectual “hero” of the 1930s — John Maynard Keynes — didn’t believe in either the Hayek Hypothesis or the Hayek-Friedman Hypothesis, as Roger Garrison and Ralph Raico explain. So for all the talk of “going back to Keynes” the talk in its most important sense is mere fantasy — we can’t go back again because it is impossible for us once again to be as economically and as politically naive as was John Maynard Keynes in the 1930s.
The right wing Republicans and then far-right Bush neo-cons HATED Keynesian economics because it lifted all boats and allowed WE THE PEOPLE accumulate wealth to be that consumer that drove the most successful US economy ---and indeed the best economy in world history. Right wing corporatists did not like Keynsian because it took control of the economy away from global Wall Street and corporations and kept US economy stable and free market small business, regional businesses strong competing against corporations for market share---TAKING ALL THAT PROFIT FROM THOSE NASTY GLOBAL 1% AND THEIR 2%.
THAT IS THE ONLY REASON CLINTON/BUSH/OBAMA REPRESENTING THE GLOBAL RICH HATED OUR SOCIAL DEMOCRACY.
'And finally, it should be noted that the great intellectual “hero” of the 1930s — John Maynard Keynes — didn’t believe in either the Hayek Hypothesis or the Hayek-Friedman Hypothesis, as Roger Garrison and Ralph Raico explain. So for all the talk of “going back to Keynes” the talk in its most important sense is mere fantasy — we can’t go back again because it is impossible for us once again to be as economically and as politically naive as was John Maynard Keynes in the 1930s'.
While government intervention prohibited another Wall STreet fraud from bubbles and bust economic enrichment of a few-----all those local economies across the US kept corporations from creating economic stagnation and workers were able to accumulate wealth not caring if corporations came or went. Keynesian economics KEPT WALL STREET PLAYERS FROM USING OUR ECONOMY FOR BOOM BUST SELECTIVE ENRICHMENT----and it created structures to assure oversight and accountability of our economy stopping further economic disruptions for several decades......until CLINTON/BUSH/OBAMA brought back LAISSEZ-FAIRE turning government revenue funding into GLOBAL WALL STREET AND GLOBAL CORPORATE FRAUD AND CORRUPTION.
IT WAS THE LAISSEZ-FAIRE HAYEK/LEO STRAUSS THAT KILLED OUR US ECONOMY NOT KEYNESIAN ECONOMICS.
Keynesian Economics Explained: What is it? How is it Implemented? Why doesn’t it Work?
May 16, 2014 by John-Pierre Maeli 1 Comment
I’ll be frank with you… many Americans are downright pathetic when it comes to economics.
They don’t know much, if anything about how the economy works. And it’s a problem you and I are having to deal with today.
Politicians, economists, and misguided hippies think they can throw money at the economy to fix it. But it doesn’t work that way.
It might work when you’re planting a “victory garden.” You can spread the seeds anyway you like. You can even sprinkle water like a drunk Russian spilling his vodka all over the pavement.
It’s a garden. How bad can it get?
But that’s not how the economy works.
However, John Maynard Keynes would say otherwise. His economic theories have influenced politicians ever since the Great Depression, regardless of party affiliation.
And the US is still feeling the effects of Keynesian policies to this day.
This is why it’s necessary for you to understand what Keynesian Economics is.
- It’s a failed economic policy, but few Americans know that.
- It’s the foundation for Big Government, but few Americans realize it.
- It wastes your hard earned money, but nobody tells you.
What is Keynesian Economics?
I can go at this two ways. One from a strictly economic theory viewpoint, or one from a policy standpoint. I’ll be focusing mostly on the policy side of things. It’s easier to see the ramifications, not to mention understand it.
Simply put, Keynesian economics is the idea that the Free Market can be tweaked through government intervention. This “tweaking” translates into pumping money into the economy 90% of the time. It’s important to know that Keynes’s economic theory doesn’t consist solely of deficit spending.
The main themes behind John Maynard Keynes’s economic theory are that…
- Insufficient spending causes unemployment
- Stimulating demand can raise spending and lower unemployment.
- Wage reduction during recessions makes the situation worse
- Excessive saving encourages recessions and depressions
- Balanced government budgets tend to worsen economic troubles
- And, active government policies help a slacking labor market (i.e. unemployment)
Lowering taxes, removing government regulations and reducing government spending are the typical responses taken by classical economists. Increased deficit spending, taxes, regulations and government control in the market are the typical Keynesian responses.
Keynesian Economics then, is the excessive use of the government to fix the economy. It believes that the state can remedy the ills of the market.
Why Doesn’t it Work?
Deficit spending is a big part of how Keynesian economics is used in the US and other nations.
What is deficit spending?
Well, it’s when the government borrows and spends a ton of money. This money is directed into public sector and welfare programs that are meant to raise consumer spending. You can’t spend money if you don’t have a job.
To Keynes, unemployment was a problem that the government had to fix. The best way to fix it is by hiring unemployed Americans. Who hires these people? The government does.
Now here’s the fun part…
The government pays these new employees right?
Where do they get the money to pay them?
From taxes on products, businesses, income, etc.
What do these once unemployed government employees use to buy their goods?
They use their government paychecks (aka taxpayer money).
You smell where I’m stepping?
The reason why deficit spending doesn’t work is because it’s a circular cycle. Here’s what I mean…
It’s like if your friend took a twenty dollar from you, waited a few hours, and then gave it back to you after you cut his grass.
Did you earn anything back? You had the exact same amount of money in the beginning.
taxing the employed so the gov. can fix highways that didn’t need fixing.
This is the essence of Keynesian Economics. The government gets its revenue from Americans through taxes. You have to raise taxes and borrow to do deficit spending. That means there’s less money in the private sector. Later on, the government gives it back, saying it’s “stimulus.”
But in reality, they’re handing you back money you already had before they taxed you.
The only stimulus that’s happening is to the coffers of the state and politicians.
Why the State Can’t Create Demand
One factor of Keynes’s belief is that low spending, coupled with a low demand for goods and services, causes unemployment in economies (especially in recessions).
His answer to this is to use government policies to create demand, or at least increase it.
This is a gross misunderstanding of how the market works.
The government can’t control market forces. Whenever it tries, it fails miserably. Corruption and monopolies ensue, as do price hikes and unemployment.
Ever heard of the Invisible Hand of the market theory? It says that there’s an invisible force that guides market actions and keeps everything in working order. This isn’t some weird cultish spiritual doctrine. It’s the principle that the market can self-regulate itself without outside forces (i.e. the state) intervening.
You can’t control that. It’s not possible.
Where the gov. tries to control the market, corruption & waste occur. Creating or boosting demand means that you’re going against the natural flow of the market. You’re fighting the consumers’ power by saying they should want a specific product more than they do.
Why Government Jobs Are a Lie
Keynesian economics claims that it can fix high unemployment through government work programs. Either the government hires workers directly, or they hire them indirectly (building highways, dams, etc).
How does the government fund these job creation programs?
They can do it by taxing, borrowing, and printing money. All three choices hurt the economy one way or another.
- Taxes reduce consumers’ disposable income, which means demand for clothes, appliances and other goods will go down. This then affects employers who then lay off employees.
- Government borrowing increases the price of lendable funds, which limits the amount of investment open for the private sector. This means less factories, companies, and expansions will be built.
- Printing more money increases inflation, which lowers the purchasing power of the dollar. It also leads to increased unemployment.
However, the prevailing wage has come to be known as the union wage. Union wages are routinely viewed as the best in a community and are routinely adopted for government work projects.
As you know, unions aren’t known for their low wage standards. As a result, public work programs are paying their laborers jacked up salaries that go against supply and demand laws.
The high wage job that’s created replaces low wage jobs in the area. As always government jobs kill private sector jobs.
Also, most of the money allocated toward public work programs don’t go to pay laborers. The majority of it pays administration fees.
The federal government’s own Office of Management and Budget (OMB) reported that during the 1970s only 2 per cent of all the money allocated for local public works programs went to persons previously unemployed. Much of the money apparently went to “the lawyers, accountants, engineers, and consultants” brought in to plan the programs and to workers already employed. [emphasis added]
Why can’t the government create jobs? Because it takes money from the private sector and uses it to pay hiked up wages and government employees who enjoy comfy jobs.
Two Popular Examples of Keynes’s Economics at Work
I could name several examples of Keynesian economic policies at work. But for time reasons, I’ll leave you with two specific real world pictures of it at work. The first is the New Deal, and the second is the recent stimulus packages.
Why is the New Deal the first example?
The New Deal was one of the first large scale stimulus programs in American history. You could argue that it legitimatized deficit spending in American politics.
Between the NRA allowing companies to create monopolies propped up with government force. To the AAA totally messing up the agricultural industry. All the way to CPA and WPA programs putting Americans to work building dams, roads, sewers and the like.
The New Deal spent money the US didn’t have to fix a problem they had no business in.
At the core of the New Deal was the belief that the government could solve the spending, manufacturing, and unemployment problems the US was facing.
Put Americans to work with government programs. Bring spending up by allowing businesses to raise prices and wages, while cutting supply. Stop farmers from overproducing by paying them to not grow crops and destroy sections of their crops and livestock.
Why is the New Deal a perfect example of Keynesian economics at work?
Because it used massive deficit spending measures to pump the economy back to life.
Why are the recent stimulus packages the second example?
Yes, there have been several stimulus programs over the past few years. In 2008, Congress passed the Economic Stimulus Act, costing around $152 billion. The American Recovery and Reinvestment Act of 2009 was passed in 2009, and will cost over 831 billion between 2009 and 2019.
Another stimulus package is being pushed by Obama. It would cost around $302 billion and would include a $600 million grant program to create jobs rebuilding infrastructure.
Deficit spending (these costs are being added to the debt), job creation programs, and private corporations being given government aid to stay alive (too big to fail).
This is Keynesian economics in action.
Stop gov. stimulus and let the “too big to fail” businesses fail. Say no to Keynesian Economics.
Believing that Keynesian economics works is the wider of the two paths. It’s the easier one to walk on.
It doesn’t take much faith to stick to and trust.
The narrower path is believing in the Free Market. It’ll work itself out.
However, if you’re feeling like screwing things up then government intervention is the way to go.
Keynesian economics is the art of control. You’re trying to control the market through government programs and money pumping. You’re trying to take matters into your hands. You think you can tweak the economy.
Well, you’d be wrong.
You can’t control, manage, or tweak the market.
You can’t do it with government regulations, stimulus, or agencies. You can’t do it, period.
This is the ultimate failure of Keynes’s theory. He thought he could mold the market into something better by way of government interference.
It's no coincidence that this article is written by someone interested in small business------Laissez-faire kills free market for the 99%. If FDR social Democratic Keynesian economics were allowed to continue without CLINTON/BUSH/OBAMA we would have seen more and more US citizens lifted----less and less use of Federal safety net programs-----we would have needed less and less government intervention BECAUSE our US economy would really have been FREE MARKET, STABLE, AND HEALTHY. That is why CLINTON/BUSH/OBAMA were desperate to bring the US economy down ------they did not want this social Democratic KEYNESIAN economic model to SUCCEED.
Hayek/Leo Strauss are the neo-liberal/neo-conservative laissez-faire economists wanting that empire-building, accumulating wealth anyway you can LAISSEZ-FAIRE back in Europe and the US. It was Leo Strauss who said----TELL THE PEOPLE WHAT THEY WANT TO HEAR----THEN DO WHAT GLOBAL WALL STREET SAYS. This gave us CLINTON/BUSH PRETENDING to be left social democratic or right conservative Republican when they were both global 1% and their 2% extreme wealth and extreme poverty.
It was CLINTON/BUSH/OBAMA that made Federal spending especially on social safety nets soar these few decades because they were defrauding these programs by the hundreds of billions----that is not Keynesian----that is LAISSEZ-FAIRE.
by Angie Mohr
British economist, John Maynard Keynes (1883-1946) wrote his seminal "The General Theory of Employment, Interest and Money" in 1935. This book has been the cornerstone of economic practice for many countries, including the United States, for decades. Keynes believed that government should manage consumer demand through policy and taxation, thereby avoiding inflation and unemployment, the results of too much and too little demand, respectively. Keynesian economics has several positive outcomes.
Higher Employment Levels
In recessionary periods, employment drops off and unemployment rates soar as businesses cut back on the size of their workforce. Lack of employment then decreases consumer demand for products and services as families tighten their belt. Thus, a dangerous downward spiral is created. When the government steps in to financially stimulate businesses, those companies begin to hire once again. When the government invests in public works projects, they directly increase employment. With both methods, the downward spiral is halted.
Stabilization of the Banking Industry
As witnessed during the 2008 to 2009 recession, instability in the American economy led to banks and other lending institutions tightening up on lending. Without access to funding, small business start-up and growth halted, and the real estate industry suffered as mortgages were difficult to obtain. When the government steps in to guarantee loans, lenders are more confident in providing the capital needed in both the business and consumer markets.
Tighter Control on Government Spending
While Keynesian theory allows for increased government spending during recessionary times, it also calls for government restraint in a rapidly growing economy. This prevents the increase in demand that spurs inflation. It also forces the government to cut deficits and save for the next down cycle in the economy.
New Tools to Monitor a Country's Economic Output
One of Keynes' goals was to be able to monitor the total economic output of a country, an action that, at that time, had not yet been done in America or England. Keynes developed the precursor to the Gross National Product, in which the health of the economy can be measured by its production versus its capacity. By understanding and measuring these indicators, a government is better able to predict recessionary and inflationary cycles, and is thus better equipped to step in early to intervene in negative situations.
Moderation of Interest Rates
In an overly-stimulated economic cycle, the demand for loans to increase consumption and investment outstrips lenders' abilities to provide them. This causes increases in interest rates, fueling inflation. Under Keynesian theory, government spending in such a market is curtailed, lowering the overall demand for loans and cooling off interest rates and, ultimately, inflation.
Below we see the REAGAN/CLINTON era installation of LAISSEZ-FAIRE NEO-LIBERALISM ECONOMICS around the world---Asia, Latin America, US-----I showed how Latin America was as devastated by these decades of massive frauds and government corruption with extreme wealth for 1% and their 2%....that occurred because of the policies below-----all of this dismantled social democracy breaking down all public sector oversight and accountability ---outsourcing all that is public and then allowing systemic fraud and corruption -----MANIPULATION OF INTEREST RATES AND INFLATION DATA hiding real inflation and unemployment to justify zero interest rates for the corporations and rich. This is exactly what Clinton/Bush/Obama did here in the US with the US FED committing systemic Wall Street fraud from Greenspan to Bernanke---now Yellen. THIS IS ALL LAISSEZ-FAIRE ----and all the policies below dismantled our KEYNESIAN economic policies that created stable economies, free markets, and broad wealth distribution.
FUGIMORI was simply installed to be that Clinton/Blair/de Silva--------pretending to bring left social policy while always intending to install World Bank/IMF policies deliberately moving all wealth of each nation to those global 1% and their 2%.
THE CONGRESSIONAL POLS FROM CLINTON/BUSH/OBAMA WERE ROBBER BARON POLS KNOWING THEY WERE KILLING AMERICA AND ITS PEOPLE.
'However, many do not attribute the Fujishock to Fujimori. In the 1980s, the IMF created a plan for South American economies called the Washington Consensus.
The document, written by John Williamson in 1990, consists of ten measures that would lead to a healthy economic policy. Under pressure from the International Monetary Fund (IMF) caused the Peruvian government to follow the guidelines set by the international finance community. The ten points were:
Reordering of public expenditure
Tax reform (Broadening)
Liberalization of interest rates
Competitive exchange rate
Liberalization of foreign direct investment
Deregulation of barrier entry and exit, safety regulations, and governed prices
Property rights for the informal sector
The IMF was content with Peru's measures, and guaranteed loan funding for Peru. Inflation rapidly began to fall and foreign investment capital flooded in. The privatization campaign involved selling off of hundreds of state-owned enterprises, and replacing the country's troubled currency, the inti, with the Nuevo Sol'
This is when we knew for sure our National Public Media was taken by global Wall Street......it is well documented that Obama came to office a HAYEK NEO-LIBERAL LAISSEZ-FAIRE POL and he left office the same---but here is NPR telling us Obama was Keynes. NPR also sold Obama as a second LEFT SOCIAL DEMOCRATIC FDR----when Obama was a third far-right global Wall Street BUSH TERM.
What global Wall Street and national media are trying to do is hide the fact that global 1% and their 2% spent these few decades literally looting our Federal, state, and local treasuries INCLUDING WHAT THEY ARE CALLING GOVERNMENT STIMULUS/SPENDING. We know all the stimulus went to global Wall Street----to corporations expanding overseas---not here in the US-----AND TO TAX BREAKS FOR THE RICH AND CORPORATIONS. One third of REAGAN/BUSH/OBAMA so-called KEYNESIAN government spending were tied to tax breaks for the rich. Obama and his $20 trillion US Treasury bond fraud-------where is that US city deemed Foreign Economic Zone spending going? To further cripple FREE MARKET ----further cripple labor and wages----all tied to global corporate campuses and global Wall STreet.
THIS IS NOT WHAT KEYNESIAN ECONOMICS WAS EVER MEANT TO LOOK LIKE.
'The Obama administration is betting that won't happen. They're trusting this theory. They're trusting Keynes'.
This is what created those bogus reports of Obama being a socialist---Obama being like FDR----when Obama was the biggest global Wall Street laissez faire global slave trading empire-building do anything to profit CHARLES DICKENS' far-right Libertarian.
It's no coincidence that HAYEK wrote ON THE ROAD TO SERFDOM
Barack Obama Has America Turning to Hayek
Posted on August 15, 2009 by Greg Ransom
Since the beginning of the Obama administration, thousands of Americans have picked up copy of F. A. Hayek’s The Road to Serfdom and are reading it for the first time — or they’re digging out a dusty old copy and they’re re-reading it for the first time in ages. Chance at rightofcourse is doing it. So is Mark at DEPT HAWK. Glenn Beck is doing it. And so is Lynnae. And they are not alone.
If you’re doing it to, I’d like to hear from you.
HAYEK IS LAISSEZ-FAIRE IS THE OPPOSITE OF SOCIAL DEMOCRATIC KEYNESIAN ECONOMICS.
Obama Gives Keynes His First Real-World Test
January 29, 20091:42 PM ET
Heard on All Things Considered
English economist John Maynard Keynes, seen here circa 1940, believed no one in America was smart enough to run it.
John Maynard Keynes is an unlikely hero for our time.
Keynes, a British economist who died more than 60 years ago, inspired President Barack Obama's plan to save the U.S. economy with a massive round of government spending. The British economist published his big theory, the one underpinning most of what Obama intends to do, in 1936.
By the 1980s, many believed Keynes' ideas were utterly discredited. But he is the man who came up with the then-radical notion that a government can pull a country out of a deep recession by spending a lot.
Many would argue that Keynes' 73-year-old theory is being tested, right now, for the very first time. One Keynes biographer, Lord Robert Skidelsky, portrays Keynes as a fascinating figure, equal parts genius and jerk. Keynes ran with the Bloomsbury Group, which included painters and writers such as Virginia Woolf. The Bloomsbury crowd was known for free love and raunchy language, but even they complained in letters to each other that Keynes was too dirty for them.
Keynes could be just as shocking when it came to academic theory, sounding like a socialist one moment and fanatically defending free markets the next.
The one constant was Keynes' faith in the elite. He generally believed that almost any problem could be solved by getting together young men who had been schooled at Cambridge and asking them to take over. He even wanted Cambridge men to run America, because he didn't think anyone in the U.S. was smart enough. He also didn't like Jews, the French or the working class.
Keynes wrote that these Cambridge-led government boards should do everything from running individual companies to determining how many babies should be born and, cryptically, of what quality. Keynes was, after all, on the board of directors of the British Eugenics Society.
Americaphobe To The Rescue
Fast-forward to modern-day America, when the livelihoods of millions of working people are in peril. Who does the national leadership turn to but a bigoted Americaphobe who hates working-class people.
Keynes became this season's go-to solution because of his masterpiece prescription for how to get out of a global depression — The General Theory of Employment, Interest and Money.
"I've read the general theory five times," says Tyler Cowen, an economist at George Mason University. "The first time I read it, I was maybe 18." Cowen has been reading Keynes' book again, this time writing notes and conducting a discussion on his blog, Marginal Revolution.
Cowen says Keynes corrected what he saw as a fundamental error in the economics that had come before. Classical economics teaches that if there's a downturn, the economy will eventually sort itself out. If people aren't buying enough, prices will drop to a point where people start spending.
Keynes' radical insight was to look out the window in the 1930s and see that sometimes things don't right themselves. The economy goes into a downward spiral. The usual dynamic of supply and demand breaks down.
"A failure of effective demand is what he called it," says Alan Blinder, a Princeton economist who served as economic adviser to President Bill Clinton. Basically, people aren't spending enough money, either because they don't have any or because they got laid off or are afraid they're about to get laid off.
If people aren't spending enough money, there's no way for the economy to automatically adjust. During the Great Depression, no one had figured out how to get people spending again. Then came Keynes.
"The Keynesian prescription is if all else fails, the government can spend the money," Blinder says. Normally, in a free-market economy, the public doesn't look to the government to prop up spending. "But Keynes' idea, which was revolutionary at the time, is if the private sector won't do it, then the public sector can do it as a fill-in stopgap," Blinder adds.
Did Keynes Cure The Great Depression?
Like lots of fellow Keynesians, Blinder says Keynes' theory played out in the 1930s, with government spending pulling America out of the Depression. That's become the standard line in school textbooks. But Keynesians say it wasn't so simple as President Franklin Delano Roosevelt getting inspired by Keynes and spending his way out of the crisis.
Yes, Roosevelt expanded government spending, with an alphabet soup of programs. But he never spent as much money as Keynes said he should have. He also did all sorts of things that Keynes opposed, like raising taxes and trying to balance the budget. Keynes said those steps would cancel out any positive effect from spending. Roosevelt bothered Keynes so much that the economist sent him at least one scolding letter.
Then, finally, geopolitical events took over, and World War II forced Roosevelt to spend as much money as Keynes wanted.
Like Prescribing Crack For Coke Addicts
Keynes died in 1946, right after the war, and economists have been fighting about his ideas ever since. One main question is whether Keynes actually got America out of the Depression.
His disciples came to believe that his theories could be used much more precisely — that Keynesian principles could help control the economy more closely than Keynes ever believed possible. Blinder cites a triumphant sense among Keynesians that by carefully tweaking taxes and spending, they could overcome booms and busts — that they could permanently eliminate recessions.
"There was a view that developed in the 1960s, and developed excessively one must admit in retrospect, that we could steer the national economy pretty well — not perfectly, but pretty well," Blinder says. He calls the confident optimism among Keynesians of the time almost laughable. "This was a watch that we were repairing."
One way the economy is not like a watch is that you can repair a watch without politicians. Politicians took the Keynesian message that government spending can be good and ran with it. They paid for the war on poverty and the war in Vietnam. They sent a man to the moon. All the while, they piled up the federal budget deficit, convinced that Keynes gave them a free pass.
Prescribing Keynesianism to some politicians is like prescribing crack to a coke addict. In the 1970s, the patient hit rock bottom. The U.S. had high unemployment, and the Keynesian solution stopped working. The national government spent and spent, but unemployment only got worse. Then came inflation, something Keynesians had no answer for.
IT COULDN'T HAVE BEEN THE ELECTION OF REAGAN AND THE IMMEDIATE INSTALLATION OF GLOBAL WALL STREET NEO-LIBERALISM THAT STOPPED THE KEYNSIAN ECONOMICS OF CARTER/NIXON.
The Return Of Keynes
After the economic misery of the 1970s, it was the Keynesians' turn to walk in the wilderness.
"When I took macroeconomics in the 1980s and early 1990s, the textbooks explained the basic system, but then spent a few chapters showing why the Keynesian system did not work," remembers economist Chris Edwards, now of the avowedly anti-Keynesian Cato Institute. The think tank was founded in 1977, near Keynesianism's lowest point. Edwards says he thought the debate of Keynesianism was settled in the 1980s.
Now, with the new stimulus package before Congress, the Keynesians are back — and economists across the spectrum are calling for government spending. Where are the theorists who oppose it? "I thought this sort of kindergarten Keynesianism, as I call it, the simple idea that the government can spend more money to grow the economy, had died in the 1970s," he says. "But I was wrong."
Edwards is part of a school of thought that replaced Keynesianism. The discipline of economics includes many different groups — the monetarists, the Chicago school and supply-side economics. The Keynesians used taxes and government deficits as their main tools for steering the economy. The anti-Keynesians thought you could have the same effect just by using the central bank — the Federal Reserve — to carefully control interest rates. If the economy overheats, raise rates. If it starts to sputter, lower them.
The Keynesians and anti-Keynesians fought some bitter battles through the 1980s. But by the time of the Clinton administration, most economists agreed on the basics: Some of Keynes' ideas are useful, but in a post-Keynesian world, the interest rate is the most effective tool.
This view held sway until a month ago — Dec. 16, 2008, to be precise. That's the day the Federal Reserve tried to stabilize the economy by lowering the interest rate all the way down to zero percent. The Fed can't go lower, but the economy has kept worsening. The one effective tool seemed to have stopped working.
The Great Experiment
Economists and policymakers started looking around for some other way to fix things. They dusted off some old books and found that there's one guy in particular who'd given a lot of thought to get out of a situation like this.
"So, here's the way Keynes would have done it," Blinder says, sketching points on a blackboard in his office.
The Keynesian formula is straightforward. First, you estimate how much the economy should be producing — given all the people and factories and offices. Blinder's guess is $15 trillion. Then you look at what the economy is actually producing. He puts that at $14 trillion.
The government shouldn't have to spend the entire trillion-dollar shortfall. That's because of something called the "Keynesian multiplier." Every dollar the government spends produces more than a dollar in spending throughout the economy. If the government pays you to build a bridge, you spend your paycheck on rent and food and so on, and then your landlord and grocer have money. Using Keynesian math, you can figure out exactly how much the Obama administration should spend.
Blinder taps his chalk, winding up his calculations. "That would lead you to conclude that you needed about $650 billion as a stimulus," Blinder says. "Voila! That's the kind of number they're talking about right now. You see it in the newspapers every day, a number in that range."
Right now, a lot of economists are supporting the idea of a stimulus package. There are people you'd expect, like Paul Krugman, a proud Keynesian at The New York Times. There are also some surprises, like President Ronald Reagan's chief economic adviser, Martin Feldstein.
Many of the economists say they just don't know whether the Keynesian approach will work. Financial catastrophes don't happen often enough to prove theories like his. In fact, as economists like Blinder will tell you, this is the problem with economics.
"The biggest problem with learning things in economics is the inability to do controlled experiments," Blinder says. "So we don't have, unlike what is the case in many sciences, the definitive experiment. This experiment they did in the 1920s proved that Einstein was right about the perturbation of Mercury. It proved. We can never do that in economics. The best you can have is a really good theory. It's not going to work perfectly in a textbook manner all the time."
Anti-Keynesians say this massive stimulus package is too risky an experiment on an unproven theory. It might not get America out of the recession, they say. It might cause vicious inflation and a bloated government, and leave a trillion more dollars in debt as a constraining burden on Americans' children and grandchildren.
The Obama administration is betting that won't happen. They're trusting this theory. They're trusting Keynes.
Here is Clinton/Bush/Obama-----and here is the World Bank and IMF coming into developing nations in Asia and Latin America set to install Foreign Economic Zones under global neo-liberal economic policies. Sovereign citizens exported as slave labor -----global labor pool brought in as slave labor----all nations' natural resources taken-----all to the benefit of the global 1% and their 2%------this is LIBERTARIAN LAISSEZ FAIRE----coming to our US cities deemed Foreign Economic Zones----
THE OPPOSITE OF SOCIAL DEMOCRATIC KEYNESIAN ECONOMICS.
HILLARY/TRUMP SAME PEOPLE----
Please take time to Google this video as it shows you the FAKE SPENDING CALLED KEYNSIAN ECONOMICS DURING CLINTON/BUSH/OBAMA THAT WAS SIMPLY GLOBAL WALL STREET LAISSEZ-FAIRE LIBERTARIANISM---
Mint Press News added a new video: Economic Imperialism Explained in 2 Minutes.
June 1 · Former 'economic hitman' John Perkins explains how the International Monetary Fund and Federal Reserve are responsible for global poverty and political corruption.
Subscribe to (y) Mint Press News -> http://mintpress.us5.list-manage.com/subscribe/post…