Dollars and Sense
The economy, a social phenomena created by the greed that embodies human nature, is a never-ending loop full of extravagant ups, and tragic downs. Inflation, recession and depression are all factors of a growing economy, and though countries have been destroyed by this powerful force, America survived due to government intervention spurred on by John Maynard Keynes. Through public works projects, the encouragement of budget deficits, Roosevelt’s New Deal and his writing of “The General Theory”, Keynes pushed for state spending and promoted economic ideals during the Great Depression which are still seen in many modern governments today.
In a time of unemployment and lack of demand, public works projects commissioned by the government offered a way back towards nominal economic function. The Great Depression killed the working class, with large companies laying off employees as products would not be bought due to people not having jobs, and so the cycle continued until rock-bottom was hit. The prevalent theory at the time was that the economy would fix itself, but Keynes believed otherwise. According to Frances Perkins, President Roosevelt’s Secretary of Labor at the time,
“[Keynes] pointed out once more that a dollar spent on relief by the government was a dollar given …show more content…
Classical thought is most easily compared to America’s conservative party today, the economy will function best with a government that functions least. Friedrich Hayek and supply-side economics developed as a response to Keynes’ thought, stating that investments in capital and lowering barriers to goods would improve the economy. In short, where classical economics propose the economy be best if left alone, and Hayek proposed that mass supply of product creates demand, Keynes hypothesized that demand creates
The economy, a social phenomena created by the greed that embodies human nature, is a never-ending loop full of extravagant ups, and tragic downs. Inflation, recession and depression are all factors of a growing economy, and though countries have been destroyed by this powerful force, America survived due to government intervention spurred on by John Maynard Keynes. Through public works projects, the encouragement of budget deficits, Roosevelt’s New Deal and his writing of “The General Theory”, Keynes pushed for state spending and promoted economic ideals during the Great Depression which are still seen in many modern governments today.
In a time of unemployment and lack of demand, public works projects commissioned by the government offered a way back towards nominal economic function. The Great Depression killed the working class, with large companies laying off employees as products would not be bought due to people not having jobs, and so the cycle continued until rock-bottom was hit. The prevalent theory at the time was that the economy would fix itself, but Keynes believed otherwise. According to Frances Perkins, President Roosevelt’s Secretary of Labor at the time,
“[Keynes] pointed out once more that a dollar spent on relief by the government was a dollar given …show more content…
Classical thought is most easily compared to America’s conservative party today, the economy will function best with a government that functions least. Friedrich Hayek and supply-side economics developed as a response to Keynes’ thought, stating that investments in capital and lowering barriers to goods would improve the economy. In short, where classical economics propose the economy be best if left alone, and Hayek proposed that mass supply of product creates demand, Keynes hypothesized that demand creates