Labour and Keynesianism

Labour is to return to Keynesian economics apparently according to weekend briefings - it is to spend the country out of a recession.

However, as the Adam Smith Institute notes, Labour only seems to have understood one half of what John Maynard Keynes advocated.

It is true that he said governments should increase spending in a downturn to help stimulate demand in the economy. However, he also used to advocate saving money in the good years so that money could be spent in the bad.

Gordon Brown's economics involves high public borrowing and spending in the good and bad years.

The result? The highest debt in the world and obscene burdens to be borne by future generations.

UPDATE: Andrew Neil has an excellent post about the marginal effects Keynesian economics has had historically with helping revive an economy during a downturn and cut unemployment. It failed when FDR tried it and most recently when the Japanese have tried it in the 1990s. It will fail again when Labour tries to increase spending and bring forward its big capital investment projects. What this country needs is tax cuts!