Job loss numbers have just been reported for January.  598,000. The worst in 34 years. The worst I have seen in my lifetime. A statistic I hope I will never have to see again.

So how will Obama and his talented team of ivy-leaguers fix this? It seems they have turned to the Keynesian economic theory of spending government funds to save the economy. The Keynesian prescription for a faltering economy was that, if all else fails (meaning the private sector cannot revive spending and cutting the interest rate is not an optimal choice) then government spending, and lots of it, can eventually bring an injured economy back to health. A recent, intriguing article on NPR.com compared Keynes’ 73 year-old theory to today’s economic crisis. Though some argue that Keynesian economics is outdated and unproven, many of today’s influential economists support the idea of a large (possibly the largest) stimulus package to revive the U.S.’s and, in turn, the world’s, atrophic economy.

As the Wealthy Reader website refers to it, the Obama team is “prescribing aspirin because they believe the patient has a hangover, when what the country really needs is chemotherapy for debt cancer.”

The Obama administration is putting a lot of trust in the economic theory of John Maynard Keynes. But will it work?

Emily Holbrook

Click here to comment

Comments

Will Keynes' Theory of government spending revive our economy? Well, considering the government has spent itself into incredible debt and we're still in this economic slump, I'd say it doesn't seem to make much sense to create more government debt to "stimulate" the economy. It is extremely unlikely the government will change spending practices after this "stimulus" bill. We'll then double the debt and it will set the stage for great excuses to raise taxes since cutting programs means losing votes. Raising taxes does not stimulate businesses to invest in growth which in turn grows the overall economy. Thus, Keynes' Theory in a perfect world wouldn't be necessary and in our imperfect world is illogical.

- Ben Hoffman
North Dakota State University (Grad Student)