Musings

Thursday, August 26, 2010

Keynes

When I was attending Henry Ford Community College many years ago, I took an Economics class in which we discussed Keynesian theory. The professor presented his theory in a positive and supportive manner. I bought into it completely and felt myself in the know about Economics. The book by Keynes came out in 1936 and in it he stated that the government must step in and stimulate the economy when the private sector falters. He was pointing to the recent Great Depression, of which at time of the books publication, we were still in. This was support for the programs Roosevelt had tried when he became president. Roosevelt was a hero to my father, and not knowing anything on my own, Roosevelt was a hero to me. It was all so clear - if there was not enough money in the economy then the government would add money into it. Big government people loved this theory and they promoted it wherever they could. They took credit for ending the great depression and stated it was proof that the theory was correct. For me: "Yes, yes, my professor suports this and he is so smart, I support it too." (The typical response from the young with a skull full of mush.) After many years in various jobs in the private sector, I came to understand that the world is not that simple. The great depression did not end by government pump priming but by the needs of WWII through the private sector. If it were not for that war the depression would have continued. The Keynesians were taking credit that was not due them. This Keynesian theory continued to be taught and the academics loved it. What makes an economy function well? It is certainly not large government. Many countries have tried the Keynesian theory and all have failed. The socialists are the major supporters of big government and they try it gleefully, only to find they fail. Obama is a beliver in Keynesian theory and is attempting to use it in his "fundamental transformation" of this country. It is just too bad that he has not had experience in the private sector which might have opened his eyes to the truth.

posted by Marcel at 12:11 PM

7 Comments:

  • In the first half of the 1940s, when the private sector was cranking out all those jeeps, tanks and airplanes did they sell them to each other. No, I think the big customer, the one pumping all the money in was the government.
    You may have an argument against Keynes, and i'm sure you do, but this isn't it.

    Za

    By Anonymous Anonymous, at 3:56 PM  

  • Not all government spending is bad. Government spending that enables or enhances the private sector promotes growth and improves our standard of living. Examples are police, fire departments, defense department and infrastructure development.
    What is wasteful and regressive is bloated government agencies whose only purpose is to control the private sector such as DOE, DOA, DOT, EPA, FCC, FDA and the like. Also unsustainable government programs like Social Security, Medicare, unemployment compensation and especially Obama-Care and Cap and Trade will drive the private sector out of business and bankrupt the nation.

    By Blogger John Beauregard, at 5:21 PM  

  • I have never read Keynes but I have been around long enough to know that you cannot improve the economy by taking property away from the productive and distributing it to the non-productive.

    By Blogger John Beauregard, at 5:31 PM  

  • Marty,
    The recovery from the depression started in 1939 when war was looming in Europe and happening in the Far East. Other countries came to us (in spite of the Smoot - Hawley backlash) to buy materials, machine tools, ships, armaments, etc., all in an attempt to forestall war. When war did come we gave England, through Lend-Leese, 50 destroyers. we had to lend because they had exhausted their money to buy other things from us. England called upon other countries in the British Empire for money and they gave: Australia, Canada, South Africa, India, (not Ireland guess why) all to obtain war material to fight off Hitler. All that money flowed to us. Roosevelt declared we would be the "Arsonal of Democracy", and we gladly accepted other peoples money.(Like good capitalists.) Meanwhile, small business flourished and our GDP increased greatly. Gross National Income also increased with all this ecomomic activity, the Country was prosperous. Points to remember:
    1) Kynesian Theory had nothing to do with the recovery from the depression.
    2) Socialists still say that Kynesian Theory is correct, even though there is no place on earth that it has been found to work.
    3) Obama is a Kynesian.

    By Blogger Marcel, at 8:07 AM  

  • Thnk you for the history lesson, but I do have PBS and History Internatiional.

    The GDP grew, how about that. If Ford is working so is the bar on down the street.

    My only point was that the root source of the money was the government.

    But,I give up. Obama is black, nothing I can do about that. And that is the problem.

    good night

    za

    By Anonymous Anonymous, at 10:22 AM  

  • Yeah Marcel. The only reason you disagree with Obama is he is black (or half black) you bigot!

    By Blogger John Beauregard, at 12:20 PM  

  • What a sad and disappointing way to end an otherwise interesting exchange of idea and information.
    Boo!
    -Tracy

    By Anonymous Anonymous, at 6:19 AM  

Post a Comment

<< Home