Economics
There is a belief, common to economists, that government intervention is necessary to assist economic growth. The current belief that the reason that the economy is faltering is that job growth has faltered, has not altered this perception, even though it probably should have. Recently both the Bush and Obama administrations have tried many different means of stimulating the economy (much as Franklin Delano Roosevelt did during the "Great Depression"), and these means have had varying levels if success. However, despite some small amount of relief and a stronger stock market, job growth remains stagnant and the economy slugs along with it. The efforts of the current administration toward job growth and creation, whether that be in State of the Union speeches or actually policies, have not produced the desired effects. Why is this? Could it be that the Keynesian methods of economic growth and job production are faulty? This paper looks at the problem from the point-of-view of some of the greatest economic thinkers of the past, examines the fallacies that have been foisted on the public in the past century, and attempts to inject reason in the place of myths.
Keynesian Economics: A Conservative Perspective
One of the acknowledged, by some, economic mind of the twentieth century was John Maynard Keynes. He devised a system of economics that is still one of the most prominently used among Western societies. Although his theory of economics was controversial to many, it is still followed, almost religiously, by others. It is the Keynesian system of economics though that is seen as one of the largest problems by many who believe that the people, and not government, should be the driving force behind a stable economy. As a matter of fact, the author of the article "Job Creation and Other Economic Myths," Fred Buzzeo, seems to believe that adherence to Keynes principles of economics is what has caused capitalism to steadily lose ground in the last century. Buzzeo says that;
"As with most of the pitfalls in economic thinking, John Maynard Keynes is the person responsible for sidetracking most of the generally sound logic of the early profession. It is amazing to see that, with all empirical evidence to the contrary, mainstream economists and government policy makers still cling to the timeworn postulates of the General Theory."
This is a strong statement against someone whom many of the most influential policy makers of today follow. The problem with this assertion is not that Buzzeo is overstepping his bounds, but that so many others agree with him. It seems that despite having fans among the modern elite such as Paul Krugman, who won the Nobel Prize in economics (Buzzeo), Keynes may have even more detractors.
Buzzeo seems to believe that all of the problems with the current economic system stem from Keynes, but that is not entirely true. Keynes may have been a respected economist in England, but he could not make policy. The fault lies not as much with the progenitor of the idea, as with the people with authority who used it to set policy. First the British believed that they saw the merit in Keynes plan and used it to fund the socialist revolution that was invading European economics at the time. Then the United States began going through difficult times of its own and turned to the Keynesian principles of governmental control of the job market and pricing. Hazlitt, in his book Economics in One Lesson, said that "There is no more persistent and influential faith in the world today than the faith in government spending. Everywhere government spending is presented as a panacea for all our economic ills" (17). People who are going through hard times want a way to get out of them. Governmental leaders see this despair and want to, for some reason of their own or due to altruism, fix the issue. Thus, government starts making policy that will supposedly mend the economic rift. The issue here is that the fix generally causes a greater issue.
As Buzzeo mentioned, the fixes that Keynes proposed have been shown to have caused more issues than they fixed. When Roosevelt was trying to determine methods for ending the Great Depression he told his cabinet members and other influential people throughout the U.S. To give him any idea that they had. The result was termed the New Deal. Roosevelt and his administration tried a plethora of different ideas, many of which were scrapped quickly or never left...
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