Thoughts on Keynsian Economics

Think about it.  When enough people are presented with opportunity, there are many who do not ignore it.  Under the right circumstances, they  cannot ignore it.  Statistically, this tends to cause a shift in whatever macro dynamics are in play.
An obvious case is the question of the implementation of Keynsian Economic Theory.  It was used, with impressive effects, to pull the world out of the great depression.  FDR was a skeptic of investing in “something for nothing”, but his gamble in creating the WPA paid off big time.  What really did the trick was the “forced” government investment in the war machine in the late 1930’s.  The tragedy of WWII also led to the greatest period of prosperity in modern history.  Investment in war is always questionable.  Investment in manufacturing infrastructure worked beautifully.

The “gilded age” of the 1920’s yielded to the “golden age” which lasted into the 1970’s.

It’s simple.  During the depression, what everyone wanted, and needed, was a job.  The WPA filled that need.  During WWII, all the stops were pulled, with seismic economic results.  it seems that when money is flowing, people cannot resist spending it, which is a direct stimulus to growth and prosperity.  Fear subsides and the economy soars.  Of course, it’s not a trivial problem.  Too much spending beyond growth can cause inflation, as was witnessed with “stagflation” in the 1970’s.

Rather than adopting sane fiscal safeguards against inflation, which are known to the Keynsian Economic model,  President Reagan chose to reintroduce fear into the equation with his “trickle down” proposition, which has been a persistent impediment to economic growth to this day.  “Trickle down” is not a theory, it is a voodoo trick intended to persuade people to believe that the monied interests will take care of everybody.  Just ask yourself which is more likely:  Will more people spend more money when they have more money without the fear of being destitute, or will wealthy people invest more of their wealth to build something for everyone’s benefit?  The former makes no assumptions.  It’s a fact, proven by history.

The latter is loaded with assumptions:
Wealthy people are philanthropic – some of them are
Big business is willing to put its wealth at risk without the assurances of a monopolistic sure thing – its stockpile of trillions of dollars shows otherwise.  Most recent investments have only gobbled up smaller enterprises and reduced competition, indicating one goal – a consolidation of wealth into fewer more powerful interests.  More cash in their pockets won’t change this.

President Reagan weaponized fear, and its legacy has been adopted by all of his followers and apologists.

We were privileged to see the Keynsian model at work again when President Obama and Congress passed the Recovery Act in 2009.  Its only problem is that it was an anemic gesture that should have been ten times bigger.  Of course, there was enormous opposition by the usual suspects.  It saved the world economy, but did not set us on a path to prosperity.  FDR experienced the same problem with his initial efforts to save the world from the depression.  It took the the War to seal the deal.

Other examples of public policy that have led to overall prosperity:

Mandatory free public education (mandatory that it must be offered) includes an enormous talent pool whose education has led to unprecedented achievement in all possible ways. Science, technology, arts, global relief from disease and other suffering and even diplomacy that has trumped tribal instincts.  Imagine a world where only Trumps are educated (54% of Republicans think that college education is a bad thing for the nation)

Investment in the humanities.  Where would we be without our culture and entertainment?  (No philharmonic, no Spiderman?)

Veterans Administration and the GI bill: the only real compensation given to veterans for their sacrifice.

NASA:Today’s private space enterprise and our private lives owe a debt to public policy (JFK’s moonshot, velcro).

What is common to all public policy is that everyone contributes to it, and everyone is the beneficiary.

Today: Choose carefully with whom you commingle and lend your support – from the I Ching

Choose carefully with whom you commingle and lend your support.  Living with people in close proximity is not the same as sharing their values.  Sociability without undue intimacy is graceful.  It is important to uncover where your associations are undermining your integrity and eradicate their influence.

Read the text from Richard Wilhelm's translation of the I Ching
WHAT IS required is that we unite with others, in order that all may complement and aid one another through holding together. But such holding together calls for a central figure around whom other persons may unite. To become a centre of influence holding people together is a grave matter and fraught with great responsibility. It requires greatness of spirit, consistency, and strength. Therefore let him who wishes to gather others about him ask himself whether he is equal to the undertaking, for anyone attempting the task without a real calling for it only makes confusion worse than if no union at all had taken place.
We are often among people who do not belong to our own sphere. In that case we must beware of being drawn into false intimacy through force of habit. Needless to say, this would have evil consequences. Maintaining sociability without intimacy is the only right attitude toward such people, because otherwise we should not be free to enter into relationship with people of our own kind later on.
The weight of the great is excessive. The load is too heavy for the strength of the supports. The ridge-pole on which the whole roof rests, sags to the breaking point, because its supporting ends are too weak for the load they bear. It is an exceptional time and situation; therefore extraordinary measures are demanded. It is necessary to find a way of transition as quickly as possible, and to take action. This promises success. For although the strong element is in excess, it is in the middle, that is, at the centre of gravity, so that a revolution is not to be feared. Nothing is to be achieved by forcible measures. The problem must be solved by gentle penetration to the meaning of the situation (as is suggested by the attribute of the inner trigram, Sun); then the change-over to other conditions will be successful. It demands real superiority; therefore the time when the great preponderates is a momentous time.   “

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Today: I Ching

Today: Problem is not whether you will live and how rich you can be” Yogi Bhajan

“Problem is not whether you will live and how rich you can be. The problem is how much impact you have, how many legacies you leave, how much grace you show, and how much vastness you experience.” Yogi Bhajan
(via Ram Anand)

 

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