Why Keynes Would Agree With The Idea of Government Supported Investment at Home

In Keyne's day, the structure of economies was very different from what it is today. His emphasis on short term investment to get job numbers up was speculative to say the least. New investment could introduce new technology that would spur on efficiency of labour and reduce employment numbers. Schumpeter the economic historian understood what Keynes did not understand and that was the real dynamic of the business cycle within an economy that's evolving. However, put Keynes and Schumpeter together and you get a better perspective of what new investment might do. You also see where US economic policies fight each other. One is that America wants jobs, but has implemented policies that encourage unemployment and inefficiency.

The reason is that economists designing American policies are not very skilled in applying all the economic sciences together in an integrated fashion. They produce piecemeal policies that an economic historian would regard as ludicrous. Too many investment ideas don't mix macro and micro economic concepts very well or neglect non linear economic dynamics and product mix evolution. Bad understanding of economics leads to ineffective policy and huge mistakes in macroeconomic management such as we have seen. Business schools, economics departments, and economic history departments are just that separate schools of practice and thought leading to a mishmash of weirdness and inconsistency.

Spending on new equipment will help growth in a domestic context such as the United States in the modern context because of the shift of employment to other economies. It is extremely important to reduce the cost of capital investment in an advanced economy competing with a labour rich economy. Get rid of the taxes on investment in the United States and growth will result and it will be in keeping with the ideas of the great economists. Reduce capital gains taxes in advanced economies in order to slow down the export of jobs to labour rich economies.

The cost will be greater economies of scale rising in advanced economies and more employment in the labour rich economies. The source of growth in an advanced economy that has skilled labour must be investment in capital that can use that labour and achieve efficiencies.

To encourage investment in equipment, and to create jobs in an advanced economy, it is not a good idea to have a weak exchange rate as that will encourage inefficiencies of all forms and the export of efficient manufacturing to other countries.

Will not time reveal the lasting importance of friends and mutual respect? Be kind to those who think well of you and those you know and try to add positive elements to your world. Promote peace in your heart and sunshine in the minds of those around you by your own good works. Elevate the level of discussion by thinking less of the issues and more of how you can reduce the tension of stress that arises with honest disagreement. Relax by breathing more deeply and consciously.