The Validity of Keynesian Economics
The economic situation in this country has changed vastly in the past twenty years. Our former model growth is no longer sustainable. The primary causes of this: demographics.
The demographics of the Developed World is quite an anomaly. If we follow traditional evolutionary concepts we would assume that the population growth in a more prosperous society would be greater than in a less prosperous one. More resources would mean more opportunities to reproduce. However, the advent of birth control and the spread of progressive social values have negated this effect, causing family size to fall into freefall.
Why is a shrinking population bad? Many would claim that the world is overpopulated as it is and shrinking populations are blessing, not a bane. The statement that the world is overpopulated is difficult to verify, yet it is also difficult to disprove. By what yardstick do we measure overpopulation? The average American uses exponentially more resources than the average Indian, yet India has far more people. Therefore, we cannot classify certain countries as overpopulated when others use far more resources as the overconsumption of resources is the reason why overpopulation is decried in the first place. Nevertheless, the state of overpopulation on this world is irrelevant to this discussion. Regardless of the population balance, a shrinking population is highly antagonistic to the traditional capitalist system currently used in most of the Developed World.
Economic growth in the traditional sense is fundamentally rooted in population growth. More people means more producers, more innovators, and more consumers. If the standard of living is constant and the population grows it inevitably sees economic growth. However, we can no longer rely on this method for growth. Immigration is always an option, albeit highly undesirable for certain segments of society. However, we must ask ourselves “What happens when every country develops? Where will we get immigrants?” Unless we intend to keep large segments of the human population in a sort of developmental limbo where poorer countries are confined to perpetual misery for the sole purpose of utilizing their populations as cheap labor we need to find another system.
This situation is avoidable. Furthermore, we can retain the enormous gains we have made in personal freedoms and without seeing massive economic contraction due to shrinking economies. The answer is mixed economic system that combines elements of capitalism and socialism; Many refer to this as Keynesian Economics.
In America socialism is a sort of dirty word, commonly flailed at political opponents with the intent of discrediting their ideas. This is a reasonable reaction considering the massive injustices committed by socialist countries in the past. Nevertheless, we cannot continue to cling to this ideology. While socialism, is in many regards a very poor economic system, it has some highly desirable features, most notably the extensive social safety net. By no means am I proposing to implement socialism. This would likely be a failure. However, as populations age and we lose members of our workforce, we will not be able to ride off of simplistic laissez-faire economic growth in the future.
The benefits of the implementation of this system would be far reaching. We would be able to build a society based on the needs of the consumers not the producers. Economic growth would become superfluous. We would measure the health of an economy based on the standard of living, not some arbitrary measure of the value of production and the growth in this value. Nevertheless, this system does have its flaws. Many would claim that increased government intervention stymies innovation and growth, growth which brings greater material abundance to multitudes of people. Therefore, it is impossible to claim the superiority of Keynesian economics over the traditional laissez-faire system. There is an an enormity of benefits to the laissez-faire system, most notably its capacity to boost innovation. Nevertheless, it also has its flaws. We cannot confine ourselves to a certain methodology merely due to past mistakes.
Ultimately, implementing a mixed system is likely the best decision. A mixed system would draw aspects from the best minds of both ideologies. We cannot negate the ideas of those we disagree with. We must instead objectively consider all viewpoints. Doing otherwise would not only be naive, but would also undermine the fundamentals of our democracy. To effectively operate a democracy we must consider all viewpoints of an issue. If we fail to do this, we are merely a clandestine oligarchy operating with a democratic face.