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Wednesday, March 24, 2010

Keynesian economics, a better choice for Democracy

“The liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it comes stronger than their democratic state itself. That, in its essence, is fascism - ownership of government by an individual, by a group,”
-Franklin D. Roosevelt

The American economy in the last 30 years has been dominated by corporate power and rich men. The American people saw their voices drowned out as rich institutions and entities bought influence in our government as if it was a stock. The Guilded Age was returning once again. Woodrow Wilson said "If there are men in this country big enough to own the government of the United States, they are going to own it." This concentration of wealth was and is a direct threat to our Democratic-Republic.

But, with the passage of healthcare reform, if you're alive and reading this in March of 2010 you just witnessed a monumental moment in American History, you've actually witnessed an economic revolution. The Reagan revolution is dead, Bush '43 put the final nail in the coffin.

For those of us who're old enough to remember Reagan or know what his policies advocated we know that The Gipper did his best to destroy protections that unions offered, and campaigned for a government that took a hands off approach to market forces. Emphasizing the Austrian School of economic theory Reagan went a step beyond just advocating a government that was hands off, he demonised government and played on some of the worst emotions in mankind, greed and selfishness.

It was government intervention into the market place and progressive tax structure that gave us the largest middle class the world had ever known, it was called the great compression and it wasn't a gradual creation, it took only 8 years. As my favorite economist Paul Krugman illustrates this transformation below.

For those of us who thought there was no alternative to the supply-side Austrian doctrine that every college teaches as gospel in ECON101, we only need to dust off a book (or read it for free here!) known as 'The General Theory of Employment, Interest and Money' written by John Maynard Keynes a British economist. Keynes' book was the guiding economic theory that built America's strong middle class and it was Reagan and the Austrian School of economics that began to dissolve it as seen below.

For those of you curious, we've also just witnessed a political revolution as well, this was a Republican Waterloo “This health care bill is forever.” so said Bush's speech writer. This is a major recommitment of government and for those of us who know that a government has a place in the economy, as well as a role to defend American freedoms and rights. We have a hands on government once again that's willing to roll it's sleeves back and get to work for the American people.

We can breath a sigh of relief, we must not let our guard down but we've helped to add another security in an otherwise insecure world. Never again will Americans have to worry about their child, spouse or loved one being dropped from coverage, or being denied insurance because of a pre-existing condition. And this is the change that President Barack Obama has brought to our country.

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