Keynes is still right

In his recent article Mr. Armey argues that the Keynes’ economic principles are inapplicable in the current economic situation. I believe that given his experience as a former majority leader of the House of Representatives and being a chairman of FreedomWorks Foundation, he knows that using budget spending during the economic downturn is a useful tool for policy makers. I gladly agree with that, but not with the application of Keynes’ ideas that Mr. Armey provides.

For instance, he argues that “"Stimulus" spending often does more harm than good, because it takes more money out of the system than it creates and thereby destroys jobs and leads to stagnation and diminished prosperity for all”, completely forgetting that the money for the stimulus package will be borrowed and not come from higher taxes or printing the money. During current economic downturn it is feasible to borrow money to keep local businesses going, providing them with contracts. Government contracts are not going to be as efficient as private business; however, it is still be better than taking the economy down the spiral of high unemployment and growing expectations of a depression. Better times will bring more money, which equals to higher tax revenues and the debt could be successfully eliminated during those times.

This game is about choosing the lesser of two evils, and in the end even distributing free contraception would drive the economy in the short run.