The economic stimulus package initiated by the Obama administration is a textbook example of Keynesian economics. 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. American conservatives are using the example of Britain and the struggling United States of America economy to declare Keynesian economics dead.
The information on Keynesian economics
Keynesian economics is about cash. There is a cycle is goes through. Spending by one person creates earnings for another in a healthy economy. The Great Depression was a time when the cycle of money just stopped. The economy got really bad because of this. Keynes argued the government must spend to revive the cycle of cash. His ideas were shut down as most believed in laissez-faire capitalism at the time. His ideas weren't that. Keynes’ ideas were taken to heart by the Roosevelt administration, which spent to build roads, dams and other public works projects. Then World War II came along with massive govt defense spending and the U.S. economy boomed for 50 years.
Europe won't use Keynesian economics ever
The global financial crisis exposed massive government deficits in Europe as the continent’s economy crashed. Timothy Geithner is the U.S. Treasury Secretary. He spoke with European governments and recommended Keynesian economics. Europe decided austerity measures was a better plan. Britain is cutting $130 billion in spending that will erase 500,000 jobs and impact the military, pensioners, the middle class and the poor. Joseph E. Stigliz is a Nobel Prize winner who spoke with the Guardian about the plan the British govt has decided to use. He said that there will end up being a higher national debt while tax revenue goes down along with growth.
Midterm elections around Keynesian economics
Many think that the Obama administration should start acting like Britain since the United States economy obviously is not doing any better with the government stimulus. Right wing pundits eagerly anticipating Republican gains in Congress are trumpeting the 2010 midterm election as the official declaration that Keynesian economics have failed. The White House cautions that an abrupt end to government economic stimulus will extend the downturn. It is time to get off of deficit spending now that there’s a more stable economy, others argue.
Info 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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