Keynesian economics advocates using government spending in hard times to stimulate consumption and economic growth. The current British government thinks otherwise. Austerity measures are being enacted in Britain that would leave John Maynard Keynes dismayed about the leadership of his native land. Conservatives in the United States are inspired by Britain’s frugality and say the weak United States of America economy is a repudiation of Keynesian economics.
The fundamentals of Keynesian economics
The cash cycle is what Keynesian economics is all about. An economy gets healthier as people spend. The economy got really bad while the cycle of cash essentially stopped during the Great Depression. Keynes argued that the government must spend to revive the cycle of cash. He was ridiculed by proponents of laissez-faire capitalism, one of the most popular economic theory of the time. Keynes’ ideas were taken to heart by the Roosevelt administration, which spent to build roads, dams and other public works projects. The U.S. economy did really well for about 50 years after World War II came along requiring a ton of govt spending.
Dealing with Keynesian economics isn’t something Europe will do
Europe was hurt badly by the global financial crisis. The economy crashed. U.S. Treasury Secretary Timothy Geithner recommended Keynesian economics to European governments. Europe decided austerity measures was a better plan. Britain is cutting $130 billion in spending that will erase 500,000 jobs and affect the military, pensioners, the middle class and the poor. A higher national debt along with less growth and less tax revenue could be what the British governments ends up with, the Guardian reports Nobel Prize winner Joseph E. Stigliz saying.
Elections under Keynesian economics
The govt stimulus hasn’t helped the U.S. economy at all. This leaves many arguing that the way Britain is doing things is the right way. Voting in others besides the incumbents is what many are saying should happen within the 2010 midterm elections. This is because Keynesian economics has obviously failed us. The White house is saying that ending the stimulus would be really bad. It would mean the downturn would finally arrive. Another group says deficit spending needs to stop. The economy is doing better now.
Information from
Wisegeek.com
wisegeek.com/what-is-keynesian-economics.htm
New York Times
nytimes.com/2010/10/21/world/europe/21austerity.html?hp
National Review
nationalreview.com/corner/251088/obamas-economics-are-loaded-bear-j-d-foster
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