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You choose a convenient stopping point. It was not until the large weaponized keynesianism of WWII correcting for the austerity of 1937 and the inadequate size of the New Deal that the perpetual high unemployment that characterized the Great Depression was defeated.
Lol...
Look at the beginning of your chart. There were no convinience in the facts i state, these are facts proven by your charts. The US increased debt by 300%, yet you think it was not enough... There was no austerity ever, your chart shows NEW debt, issuing of new debt SLOWED in 1937. Is that austerity?
What got us out of the great depression was not spending as you make it seem, it was the destruction of productive capacity in europe.
I read the New York Times and while I enjoy Paul Krugman and can see the logic in his thoughts, I am generally a skeptic. So, I'd like to hear what informed people think of Keynesian economic theory. Most importantly, I'm interested in interpretations of real-life examples. Krugman makes a solid case regarding the recent economic crisis, saying that government stimulus spending in the USA, while not being a full fix for our economy at this point, has prevented us from going down the path of European countries forced into austerity. Does anyone feel differently?
Keynesian economics much like supply side economics are very much situational. I don't believe you can apply those economics everytime we run into a crisis. I believe that use of keynesian economics was the probably these way to go during the recession.
i've only had an overview of keynesian economics, i've never read anything of his. from what i understand it is based on arguments framed in the times of my great-grandfather's generation, which is why you now have the "post-keynesians."
I am generally a skeptic. So, I'd like to hear what informed people think of Keynesian economic theory. Most importantly, I'm interested in interpretations of real-life examples
A good real life example from history of Keynesian pump-priming (as in spending to get the economy going again) is WWII...where there was a mix of major govt spending on infrastructure as well as production of war material starting in 1939, combined with wage and price controls and rationing (during the war). This is what brought us out of the Great Depression. If we didnt have this there would have been a recovery from the Great Depression, but it would have been a slow stagnant one.
WWII-era "Military Keynesianism" essentially set the stage for that big post WWII expansion that lasted until the 1970s....essentially they transitioned the wartime economy to a peacetime economy, keeping employment high by producing consumer goods vs war material (though defense spedning was up to 10% of the GDP through the 1950s...so still some ongoing stimulus being injected during the early Cold War era.)
So that was the big 'real world' experiment in Keynsianism. Doubtful that this could happen as routine policy.....outside of the national survival motivation that came with fighting something like WWII.
A good real life example from history of Keynesian pump-priming (as in spending to get the economy going again) is WWII...where there was a mix of major govt spending on infrastructure as well as production of war material starting in 1939, combined with wage and price controls and rationing (during the war). This is what brought us out of the Great Depression. If we didnt have this there would have been a recovery from the Great Depression, but it would have been a slow stagnant one.
WWII-era "Military Keynesianism" essentially set the stage for that big post WWII expansion that lasted until the 1970s....essentially they transitioned the wartime economy to a peacetime economy, keeping employment high by producing consumer goods vs war material (though defense spedning was up to 10% of the GDP through the 1950s...so still some ongoing stimulus being injected during the early Cold War era.)
So that was the big 'real world' experiment in Keynsianism. Doubtful that this could happen as routine policy.....outside of the national survival motivation that came with fighting something like WWII.
So how are you so sure there would have been a recovery from the Great Depression? If there wasn't a war, what would have initiated the recovery in the 1940s to make it different from the 1930s?
^
Because there was a slow improvement in the economy after that second dip during FDRs second term. There was slow progress...but it would have been a long, slow recovery...almost like a stagnation... "sort of" like what happened after that panic in the 1870s...it took into the 1880s for the economy to start booming again.
Yes, this is all speculation...perhaps the economy would have recalifbrated to that 'new normal' but we wouldn't have seen anything like what happened with the postwar boom.
The question tho was about Keynesianism. So i think, based on this real-world example, the theory, at least, is probably correct.
I'm always amazed by how ideological and politicized economics debates often become. This happens on this subject more than it does with other subjects, imo.
Everyone is quick to point out that Keynes said that deficit spending is a good idea during recessions. But no one points out that he also said that surpluses are a good idea during prosperity. In other words, the two go together.
Exactly right. Keynesian economics has become synonymous with deficit spending, but the other half of Keynes theory is never included.
Keynesian economics could work theoretically, but when human nature and politics enter into the equation, it becomes unfeasible. Government services spending should drop off to a trickle during the good times to leave more room for deficit spending in the down times. Of course, this never happens because cutting spending is one of the least politically popular things a politician can do.
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