Keynes, Explained Briefly

Fantastic article from Aaron Swartz arguing for John Maynard Keynes’s continued relevance:

So those are Keynes’ prescriptions for a successful economy: low interest rates, government investment, and redistribution to the poor. And, for a time — from around the 1940s to the 1970s — that’s kind of what we did. The results were magical: the economy grew strongly, inequality fell away, everyone had jobs.

But in the 1980s, the rich staged a counterattack. They didn’t like watching inequality — and their wealth — melt away. There was a resurgence in classical economics, Keynes was declared to have been debunked, and interest rates were raised drastically, throwing millions out of work. The economy tanked, inequality soared, and things have never been the same since. For a while people talked about levels of inequality that hadn’t been seen since the 1920s. Then they talked about a recession the size of which hadn’t been seen since the 1930s.

Once again, Keynes provides us with the instructions on how to get out of this mess. The question is whether we’ll follow them.