You may have heard and will probably continue to hear the term “Keynesian” economics if you listen to discussions about our economic woes. “J. M. Keynes (1883-1946) was a British economist. Keynesian economics is pedestaled upon “the presumption that government spending, whether for munitions or other goods, creates an addition to the economy’s aggregate demand, which brings into employment labor and other resources that otherwise would remain idle. The economy gets not only the additional production occasioned by the use of those resources but still more output via a “multiplier effect.” Hence the Keynesian claim that even government spending to hire people to dig holes in the ground and fill them up again has beneficial effects; even though the diggers create nothing of value, the multiplier effect is set in motion as they spend their newly acquired income for consumption goods newly produced by others.”[1]
This is the logic behind President Obama’s extraordinary expansion of government to solve all problems. It is bad economics. Robert Higgs, Senior Fellow in Political Economy for The Independent Institute says, “Such theorizing never faced squarely the underlying reason for the initial idleness of labor and other resources. If workers want to work but cannot find an employer willing to hire them, it is because they are not willing to work at a wage rate that makes their employment worthwhile for the employer. Unemployment results when the wage rate is too high to ‘clear the market.'”[2]
The welfare state has produced an entitlement mentality, which is as dependent upon the government as a drug addict is to a needle. When the government pays people for doing nothing, i.e. unemployment for able-bodied individuals, etc. (digging holes and refilling them), the marketplace cannot thrive and produce jobs because too many choose to relax in the care of the ever-providing hands of the god government. What is lost is a sense of dependence upon God, dignity as a human, freedom, and private property. It has been, and will forever continue to appear, promising in the short run, but in the long run is absolutely unsustainable.
As Margret Thatcher so accurately and famously said, “The problem with socialism is that eventually you run out of other people’s money to spend.”
Scripture reminds us, “if anyone is not willing to work, then he is not to eat, either.” (2 Thessalonians 3:10).
[1] http://www.independent.org/publications/article.asp?id=317; accessed 9/26/12
[2] ibid
