"In the Long Run We Will All Be Dead". After the Long Run We Will Have Hell to Pay

"In the Long Run We Will All Be Dead". After the Long Run We Will Have Hell to Pay How Keynesian Economics Destroyed the Economies of Western Europe Lex Loeb Contributor Network . John Maynard Keynes is famous for saying that in the long run we all are dead as a way of justifying government fiat money printing to stimulate an economy in the time of the great depression when governments doing nothing in laissez faire fashion did not seem to be restarting economic growth. Assuming Keynes might have been right after governments first created the great depression situation by having their unnecessary international protectionist trade war, his solution was not to undo the government trade protectionist damage done by the politicians but rather to allow those bad laws to stay in place with more to come. The politicians never took any responsibility for their own stupid mistakes which included high tarrifs on foreign goods that froze trade in place on an international basis, Higher taxes imposed and forced devaluations of currencies against competitors to attempt to have all countries show a trade surplus and non a trade deficit. What really froze the world markets in the great depression started with unfair reparations placed on Germany as the vanquished power of world war one and then the mercantilist competition for all countries to have a trade surplus no mater the cost. One economies froze up around the world because of the government interference the same governments that created those unnecessary conditions were interested in expanding their influence. In The US we had the Roosevelt Alphabet soup of agencies created and over staffed. Keynesian economics was completely appealing as an excuse for government to finance it's expansion by just printing money at the same time FDR found he would need to confiscate Gold and devalue the dollar by virtue of doing so in order to prevent American citizens from having viable alternatives to the US dollar currency economy. In the short run it took almost ten years for any of the stimulus spending by FDR to get the country out of the funk of the great depression. In The long run we all were dead but in the end we would have to go on a bigger spending spree by the time world war two started. Government went on its biggest spending spree ever to that point around the world and not just in the US. In Europe spending on world war two led to the ultimate bottoming of their economies after the war. The British empire with the sun that never set was doomed as a result of the cost of that final world war. Governments still found Keynesian economics appealing as an excuse to spend money created by printing it. Time goes on and most everyone from those ancient times is now likely already dead and the economies and governments that seemed to most benefit from Keynesian economics in the past now seem to have the most to pay or they conveniently transferred these liabilities to banks and bond holders as we see across Europe today and not just in Greece , Spain, Portugal and Ireland which are more recent Keynesian basket case economies. In the longer run it seems we all will have to pay for the governments putting everything on credit today. The real costs to an economy of Keynesian economics is not the immediate credit debit situation everyone sees. Where the costs are highest in the future is in lack of productivity throughout an economy and lack of any incentive based industrial base to create wealth out of. One tends to see the economies that develop out of Keynesian economics as high unemployment cafe life amusement parks where the government buys the coffee with grand plans for tourism as the economic stimulus in a quest to have hard currencies from abroad flow in. Governments are busy subsiding expensive high speed rail systems that their own people can barely afford to pay for the services of. The economics of failure is not only tolerated but enshrined as the prefect institution of big government thus. Big flashy infrastructure building never seems to do more than create more toll booths with sky high prices re-imposed on the people who had thought they were getting a free ride from the politicians. Governments then having over extended their plans are forced to sell such flashy infrastructure creations as acts of privatization at a loss. That is a loss of money they borrowed on credit believing that in the long run we are all dead. Well we just happen to out live their expectations of our premature deaths required to justify their profligate spending. Europe is further along with such public planning ventures into bankrupting themselves and their private houses of finances than we are in the US but with the election of politicians like most of the Obama democrats and many of the middle of the road socialist tolerating Republicans we are on the same road to serfdom as Europe is. Limitations on government spending being only slightly better than in Europe over all in the US has lead to the US having the greatest productivity of any large nation on earth. The friction of having government spend and waste money and over charge us for supposedly basic services like substandard education would completely sap the wealth of the country and it's productivity if we allowed the government to continue raising taxes or using regulations to do exactly the same thing. One reason for greater US productivity is the lack of a US energy policy over the years. The US has not wasted billions like Europe and Japan did fostering a nuclear industry at the expense of other forms of energy that include gas and coal burning plants. Europe destroys productivity with 50% plus taxes on gasoline at the pump. It is pretty obvious why Europe with central planned economies is failing and why the US economy will survive them if we don't imitate them to be non sell out fashionable socialists or Marxists in our present president's thinking. Once an economy gets in trouble again after the last Keynesian transfusion of cash to government the politicians can only imagine adding more fuel to the fire by giving themselves a quick fiat pay raise. In the long run we all will be dead from that because the people will invest their wealth outside of the government system doing such things as buying gold at infinitely higher prices rather to go down with the big ship of failing government. The economy can survive in spite of government by getting out of their loop and that can benefit foreign countries at the expense of our own. We see government regulations getting to intricate and complicated so it is no wonder that most manufacturing escapes to places like China where pollution happens and government pretends it sees no consequences. Money also escapes quietly and instantly as investment dollars leave the country sometimes permanently as the finance creates viable foreign competitors. All the while the Keynesian economic quick fix is going to continue to go on and on. To the extent that Keynes was right the government interpretation is that it should be spending wildly rather than getting the stimulus by cutting regulations and taxes thus increasing incentives in an alternative incentive based economy that does not require government putting it's own interests and benefits first. Only one out of ten FDR government "investments" had any long term value to the economy . Most of these were dams built for electricity and irrigation purposes but none of the dams is known to have reduced national tax rates. The dams tend to give away local subsidies while they do add to the gross national product there always tended to be a concentration of benefits going to certain industries or urban areas. Government never sold off the largest dam systems to private investors and realized any profit but used these systems to build up more permanent government offices with expanding populations of bureaucrats none adding any extra out put in kilowatts or irrigation water. Less and less gets spent maintaining the dams until eventually they will probably collapse one by one . The most centrally planned government states tend to be the biggest economic disasters in the short run and the long run so it is amazing that the theory that Keynes put forward survives still. In the beginning the theory was that Keynes was going to provide quick easy government monopoly fiat money financing to the government in Britain he wanted to grow. In the long run that government would first kill the economy supporting it and then destroy itself completely. It might take several generations of real capital fleeing the country quietly as foreign investment. Fortunately the incentive based economy always exists whether it is the in the realm of the black or gray markets. That ultimately means that all the big fancy central planning projects of the government are play things for the wealthy who have the means not to pay taxes. The game goes on until unemployment reaches 25% or more has it now has in a number of advanced European economies. 25% is the top unemployment rate in the US in the great depression. Those people will find they have access to an incentive economy as the state economy collapses but they have to be aware they could end up like Chinese wage earners after communism earning very little than subsistence money per hour of labor as a result of government's long term laying waste to the economy because they believed in the long run we would all be dead and their debts becoming our debts would not matter. Beware of the politicians who tell us that they offer quality government investments that the private sector can't match or has no insight to make the vital investments in because in the long run we will all get a lot less for a lot more spent and in the long run we will be paying for government waste and then probably later to dismantle the mess they create either that or we end up giving away at a discount something we spent to much to develop to someone smart enough to have retained capital to buy the government fiasco at a discount that can make it profitable again at our expense as consumers. A prime example of government waste programs that ended badly at many times the initial high expense were public housing projects that went up fast plowing under neighborhoods that were better and then got torn down just a few years later. with trillions of dollars in expenses corrected for inflation today. Supporters of big government expansion end up holding an empty bag. In the long run we are all dead leaving an empty bag and a rich entitled aristocracy that calls itself the bureaucracy. That is the real investment that those politicians are offering who say government makes great investments we should pay for on the installment basis.