Quote from jamis359:
Heh heh... you are joking, right? What a quaint idea ... right out of the 1770's. That's the problem with free market / Austrian economics, it is far too simplistic for a modern world. Maybe these ideas worked when farmers hauled turnips by the ox cart.
Keynes wrote: "Our criticism of the accepted classical theory of economics has consisted... in pointing out that its tacit assumptions are seldom or never satisfied, with the result that it cannot solve the economic problems of the actual world." Amen. The free market will never have an answer for employees or children without health care, for example.
Keynes' key idea is that government intervention is necessary to mitigate imbalances inherent in free markets. During recessions when unemployment is high, aggregate demand is low because people aren't working, production slows as businesses try to prevent excess inventory. Government spending programs boost employment and demand, restoring growth in production.
Best of all, empirically Keynesian systems work. See the GDP expansions of 1933 to 1940 in the U.S. and the GDP expansion of Germany in her postwar years.
