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What makes Keynesian economics successful?

Keynesian economics is the theory that the government can stimulate economic growth by intervening in the private sector.
Keynes says GDP=C+I+G+NX So the assumption is that if you increase any variable in the equation, the GDP will increase accordingly.


Asked by Carpy at 3:56 PM on Apr. 23, 2011 in Politics & Current Events

Level 39 (114,053 Credits)
This question is closed.
Answers (49)
  • Imo, nothing...

     Keynesian economics fails because of an effect called "Crowding Out."  Simply put, for every dollar of government spending, private investment must be reduced by the same amount.  Since the government does not have a surplus of money to spend, it must sell treasury bills to finance this spending.  Thus, personal and corporate savings are used to buy these T-bills, and these funds are no longer available for private spending and private investment.  Thus any increase in government spending is exactly offset by a reduction in private investment and private spending. 


    Answer by agentwanda at 4:28 PM on Apr. 23, 2011

  • I think it's been proven quite effectively that intervention by government in the private sector does little to nothing as far growing the economy.

    Answer by Anonymous at 4:07 PM on Apr. 23, 2011

  • Government intervention won't help any part of the economy and it won't produce jobs either. Jobs are created by healthy companies that can afford to hire, not the Govrnment.

    Answer by minnesotanice at 4:35 PM on Apr. 23, 2011

  • When they stop trying it?

    Answer by NotPanicking at 4:04 PM on Apr. 23, 2011


    Answer by itsmesteph11 at 4:52 PM on Apr. 23, 2011

  • And what do you think the situation would be now without the bailouts of Wall St. and the auto industry ?

    First and foremost, the UAW would have to renegotiate their contracts in light of the new economic reality and THAT is why Obama bent the US taxpayer over and gave GM our money to keep one of his main contributors in power. As Trumka boasts, he visits the WH two or three times a week and talks to someone there each and every day.

    We would be so much better off if GM had filed Chapter least 8 billion dollars better. Wall Street and the banks would have reshuffled and kicked Geitner and Goldman Sachs to the curb along with other Obama beneficiaries of our tax money and Obama would not have had the "currency" to foist Obamacare on the public. The whole sordid picture is slowly aemerging along with the co-conspirators in Congress.

    Answer by annabarred at 9:23 PM on Apr. 23, 2011

  • A quote below from an excellent article that intelligently refutes the notion by some, including some Canadians, that government can influence the economy in a positive way by spending out tax dollars for us. Reading this well-thought out and researched article by Patrick Barron will inform the naive and pro Keynesian supporters.

    "All government spending is parasitical. The less government we have the better off we are. No one would claim that an increase in crime (thus making more police necessary) or an increase in international tensions (making a larger military necessary) would be good for an economy."

    Answer by annabarred at 8:47 PM on Apr. 23, 2011

  • Carpy, that is rubbish . Without Government intervention in the 1930's , meagre though it was, your free capitalist economy would have reduced the US to a wasteland of starvation and misery .

    Revisionist history taught by Marxist professors will convince even the more intelligent student that history is not to be believed but to be interpreted by them, and their authority position validates this real rubbish and allows it to ferment in the students brain until we have an entire generation of historically illiterate puppets that bleat this Marxist tripe.

    The article below is but one of hundreds that

    Article written by Thomas DiLorenzo is professor of economics at Loyola University Maryland and a member of the senior faculty of the Mises Institute.

    The New Deal Debunked (again)

    Answer by annabarred at 9:12 PM on Apr. 23, 2011

  • Government intervention won't help any part of the economy and it won't produce jobs either. Jobs are created by healthy companies that can afford to hire, not the Govrnment.

    OMG, I actually agree and voted you up! Will wonders never cease.

    Answer by DSamuels at 6:03 PM on Apr. 23, 2011

  • Did someone hack Gert's account? I agreed and voted her up too.

    As to the OQ..I think our current economy is proof they DO NOT work.

    Answer by yourspecialkid at 6:16 PM on Apr. 23, 2011