British economist John Keynes developed a theory known as Keynesian economics.
There are many fallacies within this theory that permeate modern society, policy, and decision making. Below, I’ve highlighted one fallacy that was particularly interesting to me.
For Keynes, government investment is the golden goose.
He preached that the major responsibility of government was to create full employment, even if unscrupulous borrowing and debt must be taken on to do so.
Although Keynes likely did not envision permanent government intervention, but rather a temporary catalyst for employment and business investment activity, it’s involvement and deficit spending became expected – even, the recommended – course of action for many nations.
Someone once asked Keynes, “Government spending appears to work in the short term, but what about the long-term consequences?” Keynes’s famous answer was, “In the long term, we are all dead.”
It’s clear that the long term feasibility of government spending is as much of a myth as the golden goose.