Keynesian Economics

Keyesian economics still works. The formulas, the ideas are still true. Remember that spending to one person is income to another person. For the economy as a whole, spending equals income. GDPis the income of the United States.  Consumer spending is 70% of GDP and people are not spending.  Business are making record profits, but they are not spending due to consumers not spending, or it could be they want more record profits. Net exports have been improving but the country as a whole is importing too much and we are not making anything. So, what do we do?

Government spending is the best way.Government spending is the answer. Now, it is not government by itself. Government gives money to local and state governments, to business, contracts to build roads, fix bridges, create broadband networks, to fix pipelines, to create a high speed rail system. If government contracts business, these are high paying, long term jobs. A school is a long term job. Firefighters, police are long term jobs, just as the military is a long term job. Creating a rail road system will take years to complete across the country. It is not a five year job but 20 and 30 year jobs. If demand is stimulated, income and
jobs will increase. Increased demand will increase sales at retail stores, resturaunts, gas stations. Increased demand will increase other private jobs and increase incomes of people to go shopping. When consumers have no confidence and business is not spending, the government can help. It can work. It has to be large. The New Deal during the Great Depression helped but it was not large enough. World War II was large and did the trick. World War II was a planned econonmy where the government took over and set prices, set wages, created jobs, drafted men and had bonds, propaganda and controlled the entire economy. This piece is not advocating a takeover of the economy but for a large 21st Century New Deal, big, strong and with new jobs to create a better US economy.