The Death of Keynesian Economics

[elvis]

the entire Keynesian model failed in the 1970s when we had high inflation and high unemployment at the same time.

 

[Bfgrn]

The election results in 2010 did more than take the Speaker gavel from the hand of the most dangerous woman on the planet, it was the death knell of the Keynesian economic theory.

The track record of JM Keynes "Increased government spending to stimulate the economy" has been a total, utter failure here in the USA every time its been tried.

Presidents Hoover and FDR tried it and they took a recession and turned it into the greatest economic decline since Atlantis sunk under the waves. Increased government spending yielded a decade long decline and 20% average unemployment.

In 2008 Obama tried his version and the Stimulus and $1.3 Trillion deficits and the $3 trillion the Fed has pumped out have done nothing positive for the economy; they have only exacerbated the problem. Do you understand that we've poured out almost $5 trillion since the start of 2009 to help the economy and it's not done a single positive thing?

Progressive have lied to use for generation about how the New Deal saved America from Capitalism. Now that they've lost their media monopoly we see the truth: Government Spending = Epic Fail.

It cost the Democrats Congress, it should Krugman his Noble Prize and we should laugh hysterically next time someone suggest we need "more government stimulus" to help the economy.

We just need to get through this period with our nation still intact, then we can laugh.

Right wing revisionists have lied to us for generation about the overwhelming success of the New Deal. Because they want to recreate the plutocracy of the Gilded Age. Reagan and Bush Jr. have accomplished that. The wealth disparity in America today is back to that era, an America with a handful of powerful aristocrats and the rest of America poor.
-------

The latest salvo came Monday morning in a piece by two economists, Harold L. Cole and Lee. E. Ohanian: "How Government Prolonged the Depression."

Defenders of the New Deal will find much to argue with in Cole and Ohanion's account, but for simplicity's sake, I am going to zero in on just one point -- the impact of the New Deal on unemployment.

Cole and Ohanian:

The goal of the New Deal was to get Americans back to work. But the New Deal didn't restore employment. In fact, there was even less work on average during the New Deal than before FDR took office.

How can one make this claim? Unemployment reached 25 percent in the Great Depression, and fell steadily until World War II (although there were some bumps up along the way). Ah, but the revisionist position is that unemployment did not fall as much as it should have. And this argument is based on an interesting interpretation of the available data. As Amity Shlaes, currently the premier anti-New Deal historical revisionist writing for a popular audience, explained proudly in her own Wall Street Journal opinion piece in November, "The Krugman Recipe for Depression," a necessary step is to not count as employed those people in "temporary jobs in emergency programs."

That means, everyone who got a job during the Great Depression via the Works Progress Administration (WPA) or Civilian Conservation Corps (CCC), or any other of Roosevelt's popular New Deal workfare programs, doesn't get counted as employed in the statistics used by Cole, Ohanian and Shlaes.

Let us reflect, for a moment, on what the men and women employed by those programs achieved (aside from earning cash to buy food and pay for shelter, of course). In his paper, "Time for a New, New Deal," Marshall Auerback (pointed to by economist James Galbraith) summarizes:

The government hired about 60 per cent of the unemployed in public works and conservation projects that planted a billion trees, saved the whooping crane, modernized rural America, and built such diverse projects as the Cathedral of Learning in Pittsburgh, the Montana state capitol, much of the Chicago lakefront, New York's Lincoln Tunnel and Triborough Bridge complex, the Tennessee Valley Authority and the aircraft carriers Enterprise and Yorktown.

It also built or renovated 2,500 hospitals, 45,000 schools, 13,000 parks and playgrounds, 7,800 bridges, 700,000 miles of roads, and a thousand airfields. And it employed 50,000 teachers, rebuilt the country's entire rural school system, and hired 3,000 writers, musicians, sculptors and painters, including Willem de Kooning and Jackson Pollock.

In other words, millions of men and women earned a living wage and self-respect and contributed mightily to the national infrastructure. But, according to the statistics as interpreted on the Wall Street Journal editorial page, they were unemployed.

The right-wing New Deal conniption fit - How the World Works

The Forgotten Math: Pre-WWII New Deal Saw Biggest Drop In Unemployment Rate in American History

Rather than apples to conservatives' fuzzy math - let's go to the great equalizer, the Census Data, and specifically Census document HS-29 (available in PDF). Quoting directly from Census data, here are the unemployment rates and total number of official unemployed at the beginning and end of the presidential terms since the Great Depression:

ROOSEVELT PRE-WWII NEW DEAL
1932 Unemployment Rate: 23.6% (12.8 million total unemployed)
1940 Unemployment Rate: 14.6% (8.1 million total unemployed)
Unemployment Rate Change: -9.0
Total unemployment percentage change: -36.7%

ROOSEVELT WWII
1941 Unemployment Rate: 9.9% (5.5 million total unemployed)
1944 Unemployment Rate: 1.2% (670,000 total unemployed)
Unemployment Rate Change: -8.7
Total unemployment percentage change: -87.9%

TRUMAN
1945 Unemployment Rate: 1.9% (1.0 million total unemployed)
1952 Unemployment Rate: 3.0% (1.8 million total unemployed)
Unemployment Rate Change: +1.1
Total unemployment percentage change: +81.0%

EISENHOWER
1953 Unemployment Rate: 2.9% (1.8 million total unemployed)
1960 Unemployment Rate: 5.5% (3.8 million total unemployed)
Unemployment Rate Change: +2.6%
Total unemployment percentage change: +110.03%

KENNEDY
1961 Unemployment Rate: 6.7% (4.7 million total unemployed)
1963 Unemployment Rate: 5.7% (4.0 million total unemployed)
Unemployment Rate Change: -1.0%
Total unemployment percentage change: -13.6%

JOHNSON
1964 Unemployment Rate: 5.2% (3.7 million total unemployed)
1968 Unemployment Rate: 3.6% (2.8 million total unemployed)
Unemployment Rate Change: -1.6%
Total unemployment percentage change: -25.6%

NIXON
1969 Unemployment Rate: 3.5% (2.8 million total unemployed)
1974 Unemployment Rate: 5.6% (5.1 million total unemployed)
Unemployment Rate Change: +2.1%
Total unemployment percentage change: +82.0%

FORD
1975 Unemployment Rate: 8.5% (7.9 million total unemployed)
1976 Unemployment Rate: 7.7% (7.4 million total unemployed)
Unemployment Rate Change: -0.8%
Total unemployment percentage change: -6.6%

CARTER
1977 Unemployment Rate: 7.1% (6.9 million total unemployed)
1980 Unemployment Rate: 7.1% (7.6 million total unemployed)
Unemployment Rate Change: 0.0
Total unemployment percentage change: +9.24%

REAGAN
1981 Unemployment Rate: 7.6% (8.2 million total unemployed)
1988 Unemployment Rate: 5.5% (6.7 million total unemployed)
Unemployment Rate Change: -2.1%
Total unemployment percentage change: -19.0%

BUSH I
1989 Unemployment Rate: 5.3% (6.5 million total unemployed)
1992 Unemployment Rate: 7.5% (9.6 million total unemployed)
Unemployment Rate Change: +2.2
Total unemployment percentage change: +47.2%

CLINTON
1993 Unemployment Rate: 6.9% (8.9 million total unemployed)
2000 Unemployment Rate: 4.0% (5.6 million total unemployed)
Unemployment Rate Change -2.9
Total unemployment percentage change: -36.3%

As you can see, in terms of the unemployment rate - that is, the percentage of the total workforce not working - the pre-WWII New Deal era saw the single largest drop in American history. Yes, I'll say that again for conservatives, just to make sure they get it: The PRE-WWII New Deal era from 1933-1940 - not the WWII era - saw the largest drop in the unemployment rate in American history. And by the way, that even includes the recession of 1937-1938. You can see it right here in graphical format:

Now, it is certainly true that the percentage drop of total unemployed was bigger in WWII than it was in the pre-WWII New Deal era. But as the data show, even by that metric, the pre-WWII New Deal era saw the second largest percentage drop in total unemployed in the 20th century, going from 12.8 million unemployed in Roosevelt's first year in office to 8.1 million unemployed at the end of his second term in 1940. That's a 36.7 percent drop - larger than the Clinton era (36.3%) and, yes conservatives, larger than the Reagan era (a mere 19%). At the absolute minimum, that would suggests the New Deal was a positive - not negative - economic force (and empirically more positive than, say, Reagan's free-market agenda). Again, here it is in graphical format:

These are the hard and fast numbers conservatives would like us all to forget with their claim that history proves massive spending packages like the New Deal will supposedly harm our economy.

The Forgotten Math: Pre-WWII New Deal Saw Biggest Drop In Unemployment Rate in American History

 

[editec]

The election results in 2010 did more than take the Speaker gavel from the hand of the most dangerous woman on the planet, it was the death knell of the Keynesian economic theory.

The track record of JM Keynes "Increased government spending to stimulate the economy" has been a total, utter failure here in the USA every time its been tried.

Presidents Hoover and FDR tried it and they took a recession and turned it into the greatest economic decline since Atlantis sunk under the waves. Increased government spending yielded a decade long decline and 20% average unemployment.

In 2008 Obama tried his version and the Stimulus and $1.3 Trillion deficits and the $3 trillion the Fed has pumped out have done nothing positive for the economy; they have only exacerbated the problem. Do you understand that we've poured out almost $5 trillion since the start of 2009 to help the economy and it's not done a single positive thing?

Progressive have lied to use for generation about how the New Deal saved America from Capitalism. Now that they've lost their media monopoly we see the truth: Government Spending = Epic Fail.

It cost the Democrats Congress, it should Krugman his Noble Prize and we should laugh hysterically next time someone suggest we need "more government stimulus" to help the economy.

We just need to get through this period with our nation still intact, then we can laugh.

The death of the theory?

No.

Likely its the end of the practice at this time, however.

I'll be curious to see how quickly the TEAPARTY team can dismantle the social welfare state.

I'll also be waiting to see if the business community really start hiring thanks to this election outcome.

Any of you supply siders willing to predict what the unemlpoyment numbers will look like in 2012?

 

[Bfgrn]

The election results in 2010 did more than take the Speaker gavel from the hand of the most dangerous woman on the planet, it was the death knell of the Keynesian economic theory.

The track record of JM Keynes "Increased government spending to stimulate the economy" has been a total, utter failure here in the USA every time its been tried.

Presidents Hoover and FDR tried it and they took a recession and turned it into the greatest economic decline since Atlantis sunk under the waves. Increased government spending yielded a decade long decline and 20% average unemployment.

In 2008 Obama tried his version and the Stimulus and $1.3 Trillion deficits and the $3 trillion the Fed has pumped out have done nothing positive for the economy; they have only exacerbated the problem. Do you understand that we've poured out almost $5 trillion since the start of 2009 to help the economy and it's not done a single positive thing?

Progressive have lied to use for generation about how the New Deal saved America from Capitalism. Now that they've lost their media monopoly we see the truth: Government Spending = Epic Fail.

It cost the Democrats Congress, it should Krugman his Noble Prize and we should laugh hysterically next time someone suggest we need "more government stimulus" to help the economy.

We just need to get through this period with our nation still intact, then we can laugh.

The death of the theory?

No.

Likely its the end of the practice at this time, however.

I'll be curious to see how quickly the TEAPARTY team can dismantle the social welfare state.

I'll also be waiting to see if the business community really start hiring thanks to this election outcome.

Any of you supply siders willing to predict what the unemlpoyment numbers will look like in 2012?

The immediate consequences of the horrible and destructive Citizens United Supreme Court travesty is 30 million dollars were spent by corporations and the Chamber of Commerce to elect Republicans. What they fully expect for their investment is the Bush tax cuts for the wealthy extended and permanent if possible, dismantling of Wall Street reform and regulation, repeal of the health care bill, no penalty for outsourcing jobs and the ability to keep all the profits from those off shore jobs. IMO, we've reached the point where the only Americans that have any patriotism is us middle class suckers.

 

[code1211]

Well, since you know so much, perhaps you could answer this:

How is Republican support for moving American jobs to China good for our economy?

And don't say the Republican leadership doesn't support such a move. We both know it would be a lie.

2 things you need to cite:

1. Link to a Republican party Platform plank that spells out what you just said.
2. Demonstrate how the jobs stopped going to China effective with the control of Congress by the Dems in 2006.

If you can prove neither of these things, you are wrong. Period.

It doesn't matter how many scientist self identify as Republican.

Out of curiosity, how many Democrat Congressmen will self identify as unemployed in January?

Hello dumbass. Republicans put troops in Iraq and Afghanistan. Are they still there? Is that the fault of the Democrats?

When the party in power does something, the other party can't always just "stop it". That's not the way our government was designed. Tell me you knew that.

The way our process is constructed, the minority can stop the majority in the Senate. This is Jefferson's idea to protect us from the "Tyranny of the Majority".

However, when the vote to authorize the use of force in Iraq vote was taken, the Senate was 50 Democrat, 49 republican and 1 independent.

In the case of the Authorization of Force in the case of Iraq, a Majority of of the majority party in the Senate, the Democrats, voted to authorize. True, they were weak kneed sycophants who abandoned their principles in hopes of getting re-elected, but they did vote that way.

Anyway, "the party in power" in the Senate at the time was the Democrat Party.

 

[code1211]

When will the democrats understand?

Keynesian/socialist/communist economics will not work.

when will rightwing extremists understand that trickle down economics is a fantasy.

Actually, the Right Wing Extremist is not concerned about trickle down if I understand the Right Wing Extremists. I think they just view it as a jungle where the most fit survive and the others perish. I'm thinking these must be the Libertarians.

Since wealth is created by those with the ideas and the initiative and the creative approaches and the brilliance, the wealth that they create will start with them. Whether it trickles down or radiates out or blooms forth is only words. It starts with the movers and the shakers and the rest of us try to get our piece of the pie.

When you condider that there were less than a billion people on the planet for thousands of years subsisting and now there is a world wide middle class that is growing, the fact that wealth has been created is not even debatable.

The synergy between all of the societal forces, Government, Industry and Services combine to create an atmosphere of tranquility in which to pursue those more civilized goals.

The creative and wise among us who are driven rise to leadership in each of these categories. The rest of us follow or are drawn along in the wake.

If you view the hierarchy as vertical, then "trickle down" is perfectly accurate.

 

[code1211]

The election results in 2010 did more than take the Speaker gavel from the hand of the most dangerous woman on the planet, it was the death knell of the Keynesian economic theory.

The track record of JM Keynes "Increased government spending to stimulate the economy" has been a total, utter failure here in the USA every time its been tried.

Presidents Hoover and FDR tried it and they took a recession and turned it into the greatest economic decline since Atlantis sunk under the waves. Increased government spending yielded a decade long decline and 20% average unemployment.

In 2008 Obama tried his version and the Stimulus and $1.3 Trillion deficits and the $3 trillion the Fed has pumped out have done nothing positive for the economy; they have only exacerbated the problem. Do you understand that we've poured out almost $5 trillion since the start of 2009 to help the economy and it's not done a single positive thing?

Progressive have lied to use for generation about how the New Deal saved America from Capitalism. Now that they've lost their media monopoly we see the truth: Government Spending = Epic Fail.

It cost the Democrats Congress, it should Krugman his Noble Prize and we should laugh hysterically next time someone suggest we need "more government stimulus" to help the economy.

We just need to get through this period with our nation still intact, then we can laugh.

The death of the theory?

No.

Likely its the end of the practice at this time, however.

I'll be curious to see how quickly the TEAPARTY team can dismantle the social welfare state.

I'll also be waiting to see if the business community really start hiring thanks to this election outcome.

Any of you supply siders willing to predict what the unemlpoyment numbers will look like in 2012?

Timing is everything in politics. I think the unemployment figure will go down before 2012, but that is because things are already looking up. The bottom, it feels llike to me, was hit about 6 months ago. We've bounced a tad since then.

There will be a slight rise over the holidays because everyone is feeling good then a little drop then a rise again that starts a trend of slow to moderate rise through the Presidential election.

Will this be due to the just completed election? No. Will policies that reduce the uncertainty for business and the cost to hire an employee encourage new hiring? Probably.

If we continue to triple the deficit in relation to the GDP on an annual basis will that scare the hell out of everyone? Yes.

What's revealing, though, is that if the unemployment rate DROPS to an astronomic 8%, the Republicans will claim victory. We've been down so far so long, it's starting to look like up.

8% unemployment for any long period would be cause for revolution any time back to 1980.

 

[code1211]

The election results in 2010 did more than take the Speaker gavel from the hand of the most dangerous woman on the planet, it was the death knell of the Keynesian economic theory.

The track record of JM Keynes "Increased government spending to stimulate the economy" has been a total, utter failure here in the USA every time its been tried.

Presidents Hoover and FDR tried it and they took a recession and turned it into the greatest economic decline since Atlantis sunk under the waves. Increased government spending yielded a decade long decline and 20% average unemployment.

In 2008 Obama tried his version and the Stimulus and $1.3 Trillion deficits and the $3 trillion the Fed has pumped out have done nothing positive for the economy; they have only exacerbated the problem. Do you understand that we've poured out almost $5 trillion since the start of 2009 to help the economy and it's not done a single positive thing?

Progressive have lied to use for generation about how the New Deal saved America from Capitalism. Now that they've lost their media monopoly we see the truth: Government Spending = Epic Fail.

It cost the Democrats Congress, it should Krugman his Noble Prize and we should laugh hysterically next time someone suggest we need "more government stimulus" to help the economy.

We just need to get through this period with our nation still intact, then we can laugh.

The death of the theory?

No.

Likely its the end of the practice at this time, however.

I'll be curious to see how quickly the TEAPARTY team can dismantle the social welfare state.

I'll also be waiting to see if the business community really start hiring thanks to this election outcome.

Any of you supply siders willing to predict what the unemlpoyment numbers will look like in 2012?

The immediate consequences of the horrible and destructive Citizens United Supreme Court travesty is 30 million dollars were spent by corporations and the Chamber of Commerce to elect Republicans. What they fully expect for their investment is the Bush tax cuts for the wealthy extended and permanent if possible, dismantling of Wall Street reform and regulation, repeal of the health care bill, no penalty for outsourcing jobs and the ability to keep all the profits from those off shore jobs. IMO, we've reached the point where the only Americans that have any patriotism is us middle class suckers.

If Patriotism translates to protectionist trade policies, that's a recipe for depression.

You seem to have discovered that it is not profitable to do business within the USA and therefore, to make money, employers must employ people in other countries.

What's wrong with this picture?

The answer is not to stop playing the game. The answer is to discover how to win at the game. Maybe to create a new game that others want to play that we can win.

The key is to incent the brilliant and the creative to do business here. By imposing penalties on them in addition to the penalties that already make them uncompetitive as "Made in the USA companies" we only drive them further away.

How about we reward them to do business here by making it attractive to do so.

 

[william the wie]

To be more exact beyond survival and sanitation economic activity is a mating display. The loser is not killed but simply has to be content with a somewhat less desirable mate than the winner. Yes, I am a Libertarian.

 

[code1211]

To be more exact beyond survival and sanitation economic activity is a mating display. The loser is not killed but simply has to be content with a somewhat less desirable mate than the winner. Yes, I am a Libertarian.

I'll admit to starting with Libertarian positions in considering what a government should try to be, but, given the realities of society, one must bow to some Liberalism for the many to coexist.

Where one stops on the "slippery slope" defines his political position in our society.

 

[Annie]

The election results in 2010 did more than take the Speaker gavel from the hand of the most dangerous woman on the planet, it was the death knell of the Keynesian economic theory.

The track record of JM Keynes "Increased government spending to stimulate the economy" has been a total, utter failure here in the USA every time its been tried.

Presidents Hoover and FDR tried it and they took a recession and turned it into the greatest economic decline since Atlantis sunk under the waves. Increased government spending yielded a decade long decline and 20% average unemployment.

In 2008 Obama tried his version and the Stimulus and $1.3 Trillion deficits and the $3 trillion the Fed has pumped out have done nothing positive for the economy; they have only exacerbated the problem. Do you understand that we've poured out almost $5 trillion since the start of 2009 to help the economy and it's not done a single positive thing?

Progressive have lied to use for generation about how the New Deal saved America from Capitalism. Now that they've lost their media monopoly we see the truth: Government Spending = Epic Fail.

It cost the Democrats Congress, it should Krugman his Noble Prize and we should laugh hysterically next time someone suggest we need "more government stimulus" to help the economy.

We just need to get through this period with our nation still intact, then we can laugh.

I am not an expert on the great depression, but your statements are a gross oversimplification, and I believe you assert a cause and effect relationship between govt. spending and prolongation of the depression, that is not accurate.

My impression is that after the stock market crash and beginning of the depression in 1929, Hoover did not stimulate the economy. Things got much worse, and the public threw out the repubs and gave the govt. to Roosevelt in 1932, 3 years into the depression and near its bottom. I don't know exactly when the CCC and WPA works programs got up and running, but the voters hated that so much they elected Roosevelt 3 more times (sarchasm)!

What role did securities fraud play and bank over-leverage and subsequent bank failures. Remedies, we got the SEC out of this, and the FDIC, and there were limits on bank leverage set at 15:1 until the republican SEC relaxed the net capital rule for the 5 big investment banks in 2004, leading to their collapse in 2008.

Maybe you can post a scholarly article, like not from a republican shill site and we can all get educated.

Of course a huge problem in the depression was the deflation that took hold. If you bought a farm for $1,000 and planned to sell wheat for $1 a bushel to pay off the note, and wheat fell in price to .50 a bushel, you could not service your debt because you business model was shot, prices had fallen too far to service the debt you had. Nobody would buy anything because they thought if you waited a year you could buy it cheaper. Commerce came to a halt, then unemployment rose, and the economy was in a death spiral, a race to the bottom of economic activity where only commerce that was REQUIRED was conducted. You had to eat, dress minimally, and the dead were buried. Then you were at the bottom and things could begin to get better when there was no farther to go down.

Your impression is wrong.

Hoover's dam folly: Why Keynesian New Deal policies failed - CSMonitor.com

Your lack of a proper understanding of history might indicate why you think you know something about economics.

The Monitor's article is quite right about the 'shovel readiness' or 'need' aspect that seems to be applied to Keyesian spending projects. Most often they are full of unintended consequences, politically laden, and of short term help.

Perhaps more tragic is that those implementing them today in the United States seem to have missed what the following author refers to as Chap 2 of Keyesian lessons:

Obama’s Economics Are Loaded for ‘Bear’ - By J. D. Foster - The Corner - National Review Online

Obama’s Economics Are Loaded for ‘Bear’
October 26, 2010 4:43 P.M.
By J. D. Foster

Shockingly, Europe is going on an austerity binge, wrecking large swaths of the sacred welfare state in the process. These actions have been interpreted as a repudiation of Keynesian economics, for instance in the New York Times’s recent “Europe Seen Avoiding Keynes’s Cure for Recession.” Certainly all nations would do well to avoid Keynes’s prescription of deficit spending and debt to fend off recessions, but in fact Europe is following Keynes to the letter. Instead, it is the United States that has abandoned Keynes to pursue what might be called “Bear Economics,” which I will return to below.

To review, the principle of Keynesian stimulus is that during a recession, total demand — the sum of private and public demand net of international trade flows — is well below potential output, so the obvious mechanical solution is to push up total demand. One might try protectionism — shutting off imports that compete with domestic producers — but that’s properly regarded as suicidal. One might try outlawing all saving, forcing consumers to spend more — again, not a wise course. Government could ramp up spending financed by increased borrowing — an option that politicians are happy to choose, as Keynes realized — and, voila, total demand rises.

The kink in the rope is that when governments increase their borrowing to increase their spending, the money borrowed doesn’t come from thin air (unless the Fed monetizes the debt, a complication we have so far largely avoided ed- Well that was until last Wednesday, when the administration began to do just that...). No, when government borrows more, that leaves less saving available for those consumers who want to borrow and spend, and less for those businesses that want to borrow to invest...

...Despite this failure, economies in both Europe and the Unites States have stabilized, albeit at low growth levels with high unemployment. At this point, Keynesian policy requires a second step: governments must now reduce their deficits and, preferably, eventually run surpluses to pay off the government debt run up during the recession.

Europe’s economy has largely stabilized, or so most analysis suggests. It’s now time to pay the fiscal piper and get budget deficits under control. That is what Germany has done. That is what France and the UK are attempting to do. That is what the markets are demanding of Greece, Italy, Ireland, Spain, and so on. This is Keynesian economics, Chapter Two....

...President Obama’s central economic policy is fiscal stimulus, which is a fancy term for building the national debt ever higher. Despite the stabilization of the economy, Obama shows no signs of reducing the deficits any time soon, neither in his most recent budget or his own statements, which is all the more extraordinary when one considers the growing demands of the electorate for restraining spending.

Thus, it is not Europe that has abandoned Keynesian policies. Europeans are following Keynes and prudent policy by forcing through wise and wrenching reductions in government outlays along with higher taxes. The tax hikes are unwise, but at least they are consistent with the policy.

It is the United States that has abandoned Keynes, and it is doing so at precisely the wrong time. The initial pursuit of Keynesian stimulus was wrongheaded and doomed from the start, as the evidence now shows. Obama pursued Keynes’s policies when he should not have. But now Keynesian policy says to cut spending and reduce the deficits, and the president has abandoned Keynes for Bear Economics. If allowed to continue, this is sure to end badly for the United States — just as it did for Bear Stearns.

 

[CrusaderFrank]

The election results in 2010 did more than take the Speaker gavel from the hand of the most dangerous woman on the planet, it was the death knell of the Keynesian economic theory.

The track record of JM Keynes "Increased government spending to stimulate the economy" has been a total, utter failure here in the USA every time its been tried.

Presidents Hoover and FDR tried it and they took a recession and turned it into the greatest economic decline since Atlantis sunk under the waves. Increased government spending yielded a decade long decline and 20% average unemployment.

In 2008 Obama tried his version and the Stimulus and $1.3 Trillion deficits and the $3 trillion the Fed has pumped out have done nothing positive for the economy; they have only exacerbated the problem. Do you understand that we've poured out almost $5 trillion since the start of 2009 to help the economy and it's not done a single positive thing?

Progressive have lied to use for generation about how the New Deal saved America from Capitalism. Now that they've lost their media monopoly we see the truth: Government Spending = Epic Fail.

It cost the Democrats Congress, it should Krugman his Noble Prize and we should laugh hysterically next time someone suggest we need "more government stimulus" to help the economy.

We just need to get through this period with our nation still intact, then we can laugh.

Right wing revisionists have lied to us for generation about the overwhelming success of the New Deal. Because they want to recreate the plutocracy of the Gilded Age. Reagan and Bush Jr. have accomplished that. The wealth disparity in America today is back to that era, an America with a handful of powerful aristocrats and the rest of America poor.
-------

The latest salvo came Monday morning in a piece by two economists, Harold L. Cole and Lee. E. Ohanian: "How Government Prolonged the Depression."

Defenders of the New Deal will find much to argue with in Cole and Ohanion's account, but for simplicity's sake, I am going to zero in on just one point -- the impact of the New Deal on unemployment.

Cole and Ohanian:

The goal of the New Deal was to get Americans back to work. But the New Deal didn't restore employment. In fact, there was even less work on average during the New Deal than before FDR took office.

How can one make this claim? Unemployment reached 25 percent in the Great Depression, and fell steadily until World War II (although there were some bumps up along the way). Ah, but the revisionist position is that unemployment did not fall as much as it should have. And this argument is based on an interesting interpretation of the available data. As Amity Shlaes, currently the premier anti-New Deal historical revisionist writing for a popular audience, explained proudly in her own Wall Street Journal opinion piece in November, "The Krugman Recipe for Depression," a necessary step is to not count as employed those people in "temporary jobs in emergency programs."

That means, everyone who got a job during the Great Depression via the Works Progress Administration (WPA) or Civilian Conservation Corps (CCC), or any other of Roosevelt's popular New Deal workfare programs, doesn't get counted as employed in the statistics used by Cole, Ohanian and Shlaes.

Let us reflect, for a moment, on what the men and women employed by those programs achieved (aside from earning cash to buy food and pay for shelter, of course). In his paper, "Time for a New, New Deal," Marshall Auerback (pointed to by economist James Galbraith) summarizes:

The government hired about 60 per cent of the unemployed in public works and conservation projects that planted a billion trees, saved the whooping crane, modernized rural America, and built such diverse projects as the Cathedral of Learning in Pittsburgh, the Montana state capitol, much of the Chicago lakefront, New York's Lincoln Tunnel and Triborough Bridge complex, the Tennessee Valley Authority and the aircraft carriers Enterprise and Yorktown.

It also built or renovated 2,500 hospitals, 45,000 schools, 13,000 parks and playgrounds, 7,800 bridges, 700,000 miles of roads, and a thousand airfields. And it employed 50,000 teachers, rebuilt the country's entire rural school system, and hired 3,000 writers, musicians, sculptors and painters, including Willem de Kooning and Jackson Pollock.

In other words, millions of men and women earned a living wage and self-respect and contributed mightily to the national infrastructure. But, according to the statistics as interpreted on the Wall Street Journal editorial page, they were unemployed.

The right-wing New Deal conniption fit - How the World Works

The Forgotten Math: Pre-WWII New Deal Saw Biggest Drop In Unemployment Rate in American History

Rather than apples to conservatives' fuzzy math - let's go to the great equalizer, the Census Data, and specifically Census document HS-29 (available in PDF). Quoting directly from Census data, here are the unemployment rates and total number of official unemployed at the beginning and end of the presidential terms since the Great Depression:

ROOSEVELT PRE-WWII NEW DEAL
1932 Unemployment Rate: 23.6% (12.8 million total unemployed)
1940 Unemployment Rate: 14.6% (8.1 million total unemployed)
Unemployment Rate Change: -9.0
Total unemployment percentage change: -36.7%

ROOSEVELT WWII
1941 Unemployment Rate: 9.9% (5.5 million total unemployed)
1944 Unemployment Rate: 1.2% (670,000 total unemployed)
Unemployment Rate Change: -8.7
Total unemployment percentage change: -87.9%

TRUMAN
1945 Unemployment Rate: 1.9% (1.0 million total unemployed)
1952 Unemployment Rate: 3.0% (1.8 million total unemployed)
Unemployment Rate Change: +1.1
Total unemployment percentage change: +81.0%

EISENHOWER
1953 Unemployment Rate: 2.9% (1.8 million total unemployed)
1960 Unemployment Rate: 5.5% (3.8 million total unemployed)
Unemployment Rate Change: +2.6%
Total unemployment percentage change: +110.03%

KENNEDY
1961 Unemployment Rate: 6.7% (4.7 million total unemployed)
1963 Unemployment Rate: 5.7% (4.0 million total unemployed)
Unemployment Rate Change: -1.0%
Total unemployment percentage change: -13.6%

JOHNSON
1964 Unemployment Rate: 5.2% (3.7 million total unemployed)
1968 Unemployment Rate: 3.6% (2.8 million total unemployed)
Unemployment Rate Change: -1.6%
Total unemployment percentage change: -25.6%

NIXON
1969 Unemployment Rate: 3.5% (2.8 million total unemployed)
1974 Unemployment Rate: 5.6% (5.1 million total unemployed)
Unemployment Rate Change: +2.1%
Total unemployment percentage change: +82.0%

FORD
1975 Unemployment Rate: 8.5% (7.9 million total unemployed)
1976 Unemployment Rate: 7.7% (7.4 million total unemployed)
Unemployment Rate Change: -0.8%
Total unemployment percentage change: -6.6%

CARTER
1977 Unemployment Rate: 7.1% (6.9 million total unemployed)
1980 Unemployment Rate: 7.1% (7.6 million total unemployed)
Unemployment Rate Change: 0.0
Total unemployment percentage change: +9.24%

REAGAN
1981 Unemployment Rate: 7.6% (8.2 million total unemployed)
1988 Unemployment Rate: 5.5% (6.7 million total unemployed)
Unemployment Rate Change: -2.1%
Total unemployment percentage change: -19.0%

BUSH I
1989 Unemployment Rate: 5.3% (6.5 million total unemployed)
1992 Unemployment Rate: 7.5% (9.6 million total unemployed)
Unemployment Rate Change: +2.2
Total unemployment percentage change: +47.2%

CLINTON
1993 Unemployment Rate: 6.9% (8.9 million total unemployed)
2000 Unemployment Rate: 4.0% (5.6 million total unemployed)
Unemployment Rate Change -2.9
Total unemployment percentage change: -36.3%

As you can see, in terms of the unemployment rate - that is, the percentage of the total workforce not working - the pre-WWII New Deal era saw the single largest drop in American history. Yes, I'll say that again for conservatives, just to make sure they get it: The PRE-WWII New Deal era from 1933-1940 - not the WWII era - saw the largest drop in the unemployment rate in American history. And by the way, that even includes the recession of 1937-1938. You can see it right here in graphical format:

Now, it is certainly true that the percentage drop of total unemployed was bigger in WWII than it was in the pre-WWII New Deal era. But as the data show, even by that metric, the pre-WWII New Deal era saw the second largest percentage drop in total unemployed in the 20th century, going from 12.8 million unemployed in Roosevelt's first year in office to 8.1 million unemployed at the end of his second term in 1940. That's a 36.7 percent drop - larger than the Clinton era (36.3%) and, yes conservatives, larger than the Reagan era (a mere 19%). At the absolute minimum, that would suggests the New Deal was a positive - not negative - economic force (and empirically more positive than, say, Reagan's free-market agenda). Again, here it is in graphical format:

These are the hard and fast numbers conservatives would like us all to forget with their claim that history proves massive spending packages like the New Deal will supposedly harm our economy.

The Forgotten Math: Pre-WWII New Deal Saw Biggest Drop In Unemployment Rate in American History

Why do Progressives always leave Harding out of the computations?

Unemployment went from about 12% down to under 4% in less than 2 years.

Why do they never talk about how cutting government spending and taxes did this?

Why?

Why?

Why?

Why?

FDR did "Great" because Progressives continue to lie and forget they lost their media monopoly.

Please tell the American people that if you let Progressives totally revamp the US Economy you'll lower unemployment 1.25% a year over 8 years all the way down to 15%.

That's Great? Seriously?

Obama tried that and he lost Congress in the biggest rejection of ideology ever since Baskin Robins introduced varmint flavored ice cream

You guys need to come to terms with the loss of the media monopoly. Just because you continue to call FDR Great and an economic hero doe not make it so.

 

[CrusaderFrank]

the election results in 2010 did more than take the speaker gavel from the hand of the most dangerous woman on the planet, it was the death knell of the keynesian economic theory.

The track record of jm keynes "increased government spending to stimulate the economy" has been a total, utter failure here in the usa every time its been tried.

Presidents hoover and fdr tried it and they took a recession and turned it into the greatest economic decline since atlantis sunk under the waves. Increased government spending yielded a decade long decline and 20% average unemployment.

In 2008 obama tried his version and the stimulus and $1.3 trillion deficits and the $3 trillion the fed has pumped out have done nothing positive for the economy; they have only exacerbated the problem. Do you understand that we've poured out almost $5 trillion since the start of 2009 to help the economy and it's not done a single positive thing?

Progressive have lied to use for generation about how the new deal saved america from capitalism. Now that they've lost their media monopoly we see the truth: Government spending = epic fail.

It cost the democrats congress, it should krugman his noble prize and we should laugh hysterically next time someone suggest we need "more government stimulus" to help the economy.

We just need to get through this period with our nation still intact, then we can laugh.

the death of the theory?

no.

Likely its the end of the practice at this time, however.

I'll be curious to see how quickly the teaparty team can dismantle the social welfare state.

I'll also be waiting to see if the business community really start hiring thanks to this election outcome.

Any of you supply siders willing to predict what the unemlpoyment numbers will look like in 2012?

8.5%

 

[CrusaderFrank]

The election results in 2010 did more than take the Speaker gavel from the hand of the most dangerous woman on the planet, it was the death knell of the Keynesian economic theory.

The track record of JM Keynes "Increased government spending to stimulate the economy" has been a total, utter failure here in the USA every time its been tried.

Presidents Hoover and FDR tried it and they took a recession and turned it into the greatest economic decline since Atlantis sunk under the waves. Increased government spending yielded a decade long decline and 20% average unemployment.

In 2008 Obama tried his version and the Stimulus and $1.3 Trillion deficits and the $3 trillion the Fed has pumped out have done nothing positive for the economy; they have only exacerbated the problem. Do you understand that we've poured out almost $5 trillion since the start of 2009 to help the economy and it's not done a single positive thing?

Progressive have lied to use for generation about how the New Deal saved America from Capitalism. Now that they've lost their media monopoly we see the truth: Government Spending = Epic Fail.

It cost the Democrats Congress, it should Krugman his Noble Prize and we should laugh hysterically next time someone suggest we need "more government stimulus" to help the economy.

We just need to get through this period with our nation still intact, then we can laugh.

The death of the theory?

No.

Likely its the end of the practice at this time, however.

I'll be curious to see how quickly the TEAPARTY team can dismantle the social welfare state.

I'll also be waiting to see if the business community really start hiring thanks to this election outcome.

Any of you supply siders willing to predict what the unemlpoyment numbers will look like in 2012?

The immediate consequences of the horrible and destructive Citizens United Supreme Court travesty is 30 million dollars were spent by corporations and the Chamber of Commerce to elect Republicans. What they fully expect for their investment is the Bush tax cuts for the wealthy extended and permanent if possible, dismantling of Wall Street reform and regulation, repeal of the health care bill, no penalty for outsourcing jobs and the ability to keep all the profits from those off shore jobs. IMO, we've reached the point where the only Americans that have any patriotism is us middle class suckers.

Wow!

$30Million to talk about a government run by Democrats that overspent by $1.3 Trillion!

Democrats outspend the corporation 43,333 times

 

[CrusaderFrank]

The election results in 2010 did more than take the Speaker gavel from the hand of the most dangerous woman on the planet, it was the death knell of the Keynesian economic theory.

The track record of JM Keynes "Increased government spending to stimulate the economy" has been a total, utter failure here in the USA every time its been tried.

Presidents Hoover and FDR tried it and they took a recession and turned it into the greatest economic decline since Atlantis sunk under the waves. Increased government spending yielded a decade long decline and 20% average unemployment.

In 2008 Obama tried his version and the Stimulus and $1.3 Trillion deficits and the $3 trillion the Fed has pumped out have done nothing positive for the economy; they have only exacerbated the problem. Do you understand that we've poured out almost $5 trillion since the start of 2009 to help the economy and it's not done a single positive thing?

Progressive have lied to use for generation about how the New Deal saved America from Capitalism. Now that they've lost their media monopoly we see the truth: Government Spending = Epic Fail.

It cost the Democrats Congress, it should Krugman his Noble Prize and we should laugh hysterically next time someone suggest we need "more government stimulus" to help the economy.

We just need to get through this period with our nation still intact, then we can laugh.

Right wing revisionists have lied to us for generation about the overwhelming success of the New Deal. Because they want to recreate the plutocracy of the Gilded Age. Reagan and Bush Jr. have accomplished that. The wealth disparity in America today is back to that era, an America with a handful of powerful aristocrats and the rest of America poor.
-------

The latest salvo came Monday morning in a piece by two economists, Harold L. Cole and Lee. E. Ohanian: "How Government Prolonged the Depression."

Defenders of the New Deal will find much to argue with in Cole and Ohanion's account, but for simplicity's sake, I am going to zero in on just one point -- the impact of the New Deal on unemployment.

Cole and Ohanian:

The goal of the New Deal was to get Americans back to work. But the New Deal didn't restore employment. In fact, there was even less work on average during the New Deal than before FDR took office.

How can one make this claim? Unemployment reached 25 percent in the Great Depression, and fell steadily until World War II (although there were some bumps up along the way). Ah, but the revisionist position is that unemployment did not fall as much as it should have. And this argument is based on an interesting interpretation of the available data. As Amity Shlaes, currently the premier anti-New Deal historical revisionist writing for a popular audience, explained proudly in her own Wall Street Journal opinion piece in November, "The Krugman Recipe for Depression," a necessary step is to not count as employed those people in "temporary jobs in emergency programs."

That means, everyone who got a job during the Great Depression via the Works Progress Administration (WPA) or Civilian Conservation Corps (CCC), or any other of Roosevelt's popular New Deal workfare programs, doesn't get counted as employed in the statistics used by Cole, Ohanian and Shlaes.

Let us reflect, for a moment, on what the men and women employed by those programs achieved (aside from earning cash to buy food and pay for shelter, of course). In his paper, "Time for a New, New Deal," Marshall Auerback (pointed to by economist James Galbraith) summarizes:

The government hired about 60 per cent of the unemployed in public works and conservation projects that planted a billion trees, saved the whooping crane, modernized rural America, and built such diverse projects as the Cathedral of Learning in Pittsburgh, the Montana state capitol, much of the Chicago lakefront, New York's Lincoln Tunnel and Triborough Bridge complex, the Tennessee Valley Authority and the aircraft carriers Enterprise and Yorktown.

It also built or renovated 2,500 hospitals, 45,000 schools, 13,000 parks and playgrounds, 7,800 bridges, 700,000 miles of roads, and a thousand airfields. And it employed 50,000 teachers, rebuilt the country's entire rural school system, and hired 3,000 writers, musicians, sculptors and painters, including Willem de Kooning and Jackson Pollock.

In other words, millions of men and women earned a living wage and self-respect and contributed mightily to the national infrastructure. But, according to the statistics as interpreted on the Wall Street Journal editorial page, they were unemployed.

The right-wing New Deal conniption fit - How the World Works

The Forgotten Math: Pre-WWII New Deal Saw Biggest Drop In Unemployment Rate in American History

Rather than apples to conservatives' fuzzy math - let's go to the great equalizer, the Census Data, and specifically Census document HS-29 (available in PDF). Quoting directly from Census data, here are the unemployment rates and total number of official unemployed at the beginning and end of the presidential terms since the Great Depression:

ROOSEVELT PRE-WWII NEW DEAL
1932 Unemployment Rate: 23.6% (12.8 million total unemployed)
1940 Unemployment Rate: 14.6% (8.1 million total unemployed)
Unemployment Rate Change: -9.0
Total unemployment percentage change: -36.7%

ROOSEVELT WWII
1941 Unemployment Rate: 9.9% (5.5 million total unemployed)
1944 Unemployment Rate: 1.2% (670,000 total unemployed)
Unemployment Rate Change: -8.7
Total unemployment percentage change: -87.9%

TRUMAN
1945 Unemployment Rate: 1.9% (1.0 million total unemployed)
1952 Unemployment Rate: 3.0% (1.8 million total unemployed)
Unemployment Rate Change: +1.1
Total unemployment percentage change: +81.0%

EISENHOWER
1953 Unemployment Rate: 2.9% (1.8 million total unemployed)
1960 Unemployment Rate: 5.5% (3.8 million total unemployed)
Unemployment Rate Change: +2.6%
Total unemployment percentage change: +110.03%

KENNEDY
1961 Unemployment Rate: 6.7% (4.7 million total unemployed)
1963 Unemployment Rate: 5.7% (4.0 million total unemployed)
Unemployment Rate Change: -1.0%
Total unemployment percentage change: -13.6%

JOHNSON
1964 Unemployment Rate: 5.2% (3.7 million total unemployed)
1968 Unemployment Rate: 3.6% (2.8 million total unemployed)
Unemployment Rate Change: -1.6%
Total unemployment percentage change: -25.6%

NIXON
1969 Unemployment Rate: 3.5% (2.8 million total unemployed)
1974 Unemployment Rate: 5.6% (5.1 million total unemployed)
Unemployment Rate Change: +2.1%
Total unemployment percentage change: +82.0%

FORD
1975 Unemployment Rate: 8.5% (7.9 million total unemployed)
1976 Unemployment Rate: 7.7% (7.4 million total unemployed)
Unemployment Rate Change: -0.8%
Total unemployment percentage change: -6.6%

CARTER
1977 Unemployment Rate: 7.1% (6.9 million total unemployed)
1980 Unemployment Rate: 7.1% (7.6 million total unemployed)
Unemployment Rate Change: 0.0
Total unemployment percentage change: +9.24%

REAGAN
1981 Unemployment Rate: 7.6% (8.2 million total unemployed)
1988 Unemployment Rate: 5.5% (6.7 million total unemployed)
Unemployment Rate Change: -2.1%
Total unemployment percentage change: -19.0%

BUSH I
1989 Unemployment Rate: 5.3% (6.5 million total unemployed)
1992 Unemployment Rate: 7.5% (9.6 million total unemployed)
Unemployment Rate Change: +2.2
Total unemployment percentage change: +47.2%

CLINTON
1993 Unemployment Rate: 6.9% (8.9 million total unemployed)
2000 Unemployment Rate: 4.0% (5.6 million total unemployed)
Unemployment Rate Change -2.9
Total unemployment percentage change: -36.3%

As you can see, in terms of the unemployment rate - that is, the percentage of the total workforce not working - the pre-WWII New Deal era saw the single largest drop in American history. Yes, I'll say that again for conservatives, just to make sure they get it: The PRE-WWII New Deal era from 1933-1940 - not the WWII era - saw the largest drop in the unemployment rate in American history. And by the way, that even includes the recession of 1937-1938. You can see it right here in graphical format:

Now, it is certainly true that the percentage drop of total unemployed was bigger in WWII than it was in the pre-WWII New Deal era. But as the data show, even by that metric, the pre-WWII New Deal era saw the second largest percentage drop in total unemployed in the 20th century, going from 12.8 million unemployed in Roosevelt's first year in office to 8.1 million unemployed at the end of his second term in 1940. That's a 36.7 percent drop - larger than the Clinton era (36.3%) and, yes conservatives, larger than the Reagan era (a mere 19%). At the absolute minimum, that would suggests the New Deal was a positive - not negative - economic force (and empirically more positive than, say, Reagan's free-market agenda). Again, here it is in graphical format:

These are the hard and fast numbers conservatives would like us all to forget with their claim that history proves massive spending packages like the New Deal will supposedly harm our economy.

The Forgotten Math: Pre-WWII New Deal Saw Biggest Drop In Unemployment Rate in American History

FDR US Unemployment 1932: 24.1%, 1933: 24.9, 1934: 21.7%, 1935: 20.1%, 1936: 16.9%, 1937: 14.3%, 1938: 19.0%, 1939: 17.2%. 8 year Average = 19.8%

Hitler Invades Poland WWII declared 9/1/39

1940 unemployment: 14.6%

So all we needed for FDR great results was for someone to start a World War.

Terrific.

 

[psikeyhackr]

Wars don't create prosperity. Otherwise we wouldn't have had a recession.

I don't think the word PROSPERITY means anything.

There is income and net worth. Our concept of a GOOD ECONOMY is employed people having no wealth and paying rent or mortgages combined with planned obsolescence consumerism. It is just a complicated form of slavery that wastes natural resources.

Accounting should have been mandatory in the schools 50 years ago. So how is it that conservative and liberals and capitalists and socialists and communists have never suggested something so simple? Didn't Adam Smith advocate enlightened self interest.

But our so called capitalists only want enlightened self interest for themselves.

psik

 

[antagon]

I am not an expert on the great depression, but your statements are a gross oversimplification, and I believe you assert a cause and effect relationship between govt. spending and prolongation of the depression, that is not accurate.

My impression is that after the stock market crash and beginning of the depression in 1929, Hoover did not stimulate the economy. Things got much worse, and the public threw out the repubs and gave the govt. to Roosevelt in 1932, 3 years into the depression and near its bottom. I don't know exactly when the CCC and WPA works programs got up and running, but the voters hated that so much they elected Roosevelt 3 more times (sarchasm)!

What role did securities fraud play and bank over-leverage and subsequent bank failures. Remedies, we got the SEC out of this, and the FDIC, and there were limits on bank leverage set at 15:1 until the republican SEC relaxed the net capital rule for the 5 big investment banks in 2004, leading to their collapse in 2008.

Maybe you can post a scholarly article, like not from a republican shill site and we can all get educated.

Of course a huge problem in the depression was the deflation that took hold. If you bought a farm for $1,000 and planned to sell wheat for $1 a bushel to pay off the note, and wheat fell in price to .50 a bushel, you could not service your debt because you business model was shot, prices had fallen too far to service the debt you had. Nobody would buy anything because they thought if you waited a year you could buy it cheaper. Commerce came to a halt, then unemployment rose, and the economy was in a death spiral, a race to the bottom of economic activity where only commerce that was REQUIRED was conducted. You had to eat, dress minimally, and the dead were buried. Then you were at the bottom and things could begin to get better when there was no farther to go down.

Your impression is wrong.

Hoover's dam folly: Why Keynesian New Deal policies failed - CSMonitor.com

Your lack of a proper understanding of history might indicate why you think you know something about economics.

christian science monitor. a bastion of accuracy in economic history. why bother?

 

[Toro]

All real-world economics is Keynesian economics to some degree now.

 

[antagon]

When will the democrats understand?

Keynesian/socialist/communist economics will not work.

when will rightwing extremists understand that trickle down economics is a fantasy.

Actually, the Right Wing Extremist is not concerned about trickle down if I understand the Right Wing Extremists. I think they just view it as a jungle where the most fit survive and the others perish. I'm thinking these must be the Libertarians.

Since wealth is created by those with the ideas and the initiative and the creative approaches and the brilliance, the wealth that they create will start with them. Whether it trickles down or radiates out or blooms forth is only words. It starts with the movers and the shakers and the rest of us try to get our piece of the pie.

When you condider that there were less than a billion people on the planet for thousands of years subsisting and now there is a world wide middle class that is growing, the fact that wealth has been created is not even debatable.

The synergy between all of the societal forces, Government, Industry and Services combine to create an atmosphere of tranquility in which to pursue those more civilized goals.

The creative and wise among us who are driven rise to leadership in each of these categories. The rest of us follow or are drawn along in the wake.

If you view the hierarchy as vertical, then "trickle down" is perfectly accurate.

i think the keynesian observation is one of a circular economy rather than hierarchical for the purposes of following the money. from this perspective, the idea that wealth is created by the brilliant is not wholly supported. its demonstrated in insular underdeveloped economies where the brilliance of the participants is ineffective to create wealth, because there's insufficient commerce to make that happen. brilliance is only a catalyst, alas, and consumers and suppliers constitute the reaction from where wealth comes.

 

[antagon]

All real-world economics is Keynesian economics to some degree now.

i'd agree, but granted that, i say economics is becoming quantitatively and politically less real-world.