Keynesian Economics: The Structure Of A Failure

Today, Reuters reported an explosion in Naples, Italy. The target of the blast was the office of Equitalia, which is a tax agency. Last year, Greek riots were taking place in Athens due to the fear of government entitlements drying up. And in 2010, who could forget the hissy fit riots by the French because of pension reform?

Why are these demonstrations turning ugly?

European nations that have embraced the Keynesian model are finding that the baby boomer generations will require more than what the government can take in and provide for them. Europe is already taxed to the gills and the population is highly dependent on entitlements. Europeans believe government owes them.

So what happens when revenues cannot meet the demands of the expenditures? With taxes already through the roof, the only answer is to borrow money.

Of course we all know that there comes a time when the debt has to be paid. The thing that makes this difficult is, the same conditions that caused the Euro governments to go into debt in the first place are still present. If a population cannot bear to absorb more taxes, the only real option left is to cut spending. But whenever any of these governments try to reform programs that are becoming increasingly expensive, the population goes into a rage. They take to the streets, damage is incurred, people get hurt…. all because the economy is wrapped up into a large government model with no opportunity for growth.

So when an article makes the claim that Keynesian economics leads to violence, we can have a better understanding of why. Getting people used to getting free stuff that they do not have to pay for and then taking it away, only leads to anger and rage. Giving men a fish to eat every meal but not teaching him how to catch it himself, only leads to desperation and violence.

This is what the current group of Democrats in this country have embraced as their economic model. Take away, give away, and pay for it by taxing the producers so they cannot produce enough to maintain. Then, borrow like hell in the process to make up the shortfalls.

It’s easy to see why trying to import Euro economics is foolish and stupid. America has always been best when it exports its ideas to Europe, and Europe has always been at its best, when it imports them.

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2 Comments

Filed under Economics, Progressives

2 responses to “Keynesian Economics: The Structure Of A Failure

  1. Coming soon to a country near you..,.,

    This system is inherently bound to fail. As debt increases taxes have to keep pace to continue to pay the interest. Between the wealthy having less money to create jobs and the government having more money tied in interest debt, there are fewer jobs created. This leads to fewer people to shoulder the tax burden who in turn have to pay for yet more people on the dole. Eventually the debt reaches a tipping point in which there is no more ability to increase tax revenue, nowhere left to borrow from, and vastly more people depending on a government who can no longer afford to pay for them.

    Add to this an economy in which a large part of the jobs created are in the public sector. This is a double whammy. They are not producing anything to contribute to the growth of the economy and they are acting as a drain on the government’s resources, further straining the debt.

    Finally make the system worse by promising free health care among other give-aways.

    Any of this sound familiar? We are headed for trouble in this country my friend and we are running out of time to reverse it IMHO.

    • It doesn’t help that the GOP is so fractured and that the establishment within the party is overwhelmingly supporting a moderate RINO who is vulnerable as a flip-flopper. He’s light years better than Obama, to be sure. But he has to get elected. And what incentive is there to elect a candidate who is Dem Lite?

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