Perhaps the greatest achievement of the Obama Regime will be demonstrating the utter foolishness of Keynesian economics.
For those who don’t know about Keynesian economics, it’s a theory that increased government spending boosts the economy and less government spending retards the growth of the economy. Under this theory, if government spends more money (running up the debt) during a down business cycle, that cycle will be shallower than it otherwise would be. The government can then cut spending and pay off the debt with the surplus during higher business cycles. The lessened government spending then reduces the maximum, smoothing out the business cycle.
The problem, Keynesians say, is that politicians are reluctant to cut spending and pay down the debt during good times. That is only the first problem with their theory.
The main problem with Keynesian economics is that the theory doesn’t work at all! President Obama and his Democratic allies in Congress have piled up more debt in 18 months than all the previous Presidents from George Washington to Ronald Reagan and we’re still mired in an economic slump. If Keynesian economics had any element of truth or efficacy, the economy would be booming. There would be virtually full employment and everyone would be doing better, kind of like what happened about a year after President Ronald Reagan’s across-the-board tax cuts took effect.
Of course our Government officials subscribe to this failed Keynesian theory, they get to spend more money paying off the special interests that fund their campaigns and buying votes from We the People with our own money.
It’s well past time to throw the failed Keynesian economic theory on the ash heap of failed theories once and for all.
Dan Mitchell, who writes the International Liberty blog, agrees. Here’s a video he made that spells it out.