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My opinion of Keynesian economics is that it works better in theory than it does in practice. The main reason for this is that those who hold political office have a hard time following Keynes’s prescriptions. The problem is that those prescriptions are not always politically feasible.
It is easy for politicians to carry out Keynesian ideas at first. These ideas are implemented when there is a recession. Taxes are cut and government spending is increased. Since this does not harm anyone, no one is angry. The government has to borrow to do this, but the debt is not large at first and so there is no harm done.
The problem comes when the country comes out of recession. At that point, the government is supposed to stop stimulating the economy. It should allow taxes to rise a little and/or it should cut back on government spending a little. This is where the problem arises. Politicians do not want to do either of these things because people get mad when they do. The government keeps on stimulating the economy and two bad things happen. First, the debt goes up. Second, the economy becomes “used to” the stimulus and it has less of an effect.
Then, when real problems occur and there is a need for a real stimulus (like in 2008 and 2009) the government debt is too big and the Keynesian policies cannot work as well as they should. For these reasons, Keynesianism is better on paper than in real life.
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