I’m on the Keynesian side. Yet the biggest weakness of modern Keynesian economics is it doesn’t have a clear answer for how much spending is necessary in an economy, like ours, in which wages keep dropping and government debt keeps growing. Simply arguing “more” won’t cut it.
John Maynard Keynes urged that governments “prime the pump” to stimulate demand but pump priming has limited effect if the well is running dry.
Both sides of the modern debate have neglected the scourge of widening inequality.
We’re now witnessing what happens when all of the economic gains go to the top, and the rest of the population doesn’t have enough purchasing power to keep the economy going.
Robert Reich says neither austerity nor Keynesian stimulus will help the American economy.