What Would Keynes Say Now? →
John Cassidy’s distillation of Keynes is essential reading (for instance: both traditional GOP and Democratic responses to recession are essentially Keynesian—whether lowering taxes or increasing spending, the government is doing something). The full piece is unfortunately behind the New Yorker paywall but he summarizes key points on his NYer blog:
1. In the short-run, demand is what drives economies, not prices.
2. In a demand-driven economy, many types of unfavorable and self-sustaining outcomes are possible, including lengthy slumps.
3. The role of the government is to sustain demand and help the economy avoid such disastrous outcomes.
I regard these statements as truisms, even though others would dispute them, to varying degrees. Once you get beyond them, things get murky.
