The Keynesian 'Solution'

Dictionary.com describes John Maynard Keynes as follows:

1883–1946, English economist and writer.

British economist who proposed that high unemployment, being a result of insufficient consumer spending, could be relieved by government-sponsored programs. He also advocated deficit spending by governments to stimulate ecomomic activity.

English economist who advocated the use of government monetary and fiscal policy to maintain full employment without inflation

Keynesian economics has dominated the American political economy for decades, going back at least to the great depression. It was Keynesian policy which FDR used to get us out (cough, gag) of the depression. In the late 1960s early 1970s Richard Nixon (who had taken us off the gold standard completely) stated “We’re all Keynesian now.”

Virtually every president since at least FDR has been to some extent or the other, Keynesian, no matter what else you may say about him. That even includes Reagan, though possibly to a lesser extent.

As can be seen from the above definitions, one of the main, perhaps THE main tenant of Keynesian economics is that during times of economic slowdown, the government should spend money on infrastructure and various projects in order to provide jobs, spur consumer spending, etc. This, supposedly will get the economy through the tough times. Once the economy recovers, the government spending can be curtailed. It is a form of planned economy.

Sounds good on paper to the layman, but there are more than a few drawbacks.

To start with, it really does not work. As I have said elsewhere, the state of the economy was at least as bad, if not worse in the late 1930s, after years of FDR, than it was when FDR took over. FDRs programs were, among many other things, Keynesian.

It is not a natural thing for the whole economy to be in a downturn all at the same time. Unfortunately, most people think that the free market will frequently result in a total economic meltdown, at which point some government intervention (in the form, at least, of Keynesian policies, if not outright socialism) is required. However, while no possible economic system can ever insulate every individual from hardship, the free market will never end up in an economic meltdown. The meltdowns that do occur (such as 1929 onward and our current situation) are almost always directly related to government intervention. However, the solution proposed by our government leaders? More government intervention. Make sense to you??? Yeah, me neither.

1929 was the result of government intervention. The as bad or worse situation of 1938 was due to continued government intervention.

Second, it is as close to an absolute fact as anything in the world that once government spending is started, it is not stopped. Many of the programs for economic recovery of the 1930s are still with us today. This causes continued deficits and other problems which result in further economy wide problems on down the road.

Third, and most importantly, there are long term negative effects of this type of spending (deficits and higher taxes and the further economic hardships that occur due to these things). When asked about what the effects of his policy would be in the long run, Keynes himself famously quipped, “In the long run, we’re all dead.” There ya go. That’s the philosophy we want to hand down to our kids, right? We want policy which we believe (rightly or wrongly) will benefit us, but who gives a rip what it will do to our descendents? Sure, count me in. I don’t care what Jr. says.

Now, what to do about our current mess? First off, let us be clear. Our problems are not the result of the free market gone wild. Our problems are directly related to over arching government intervention into the lives and businesses of individuals and corporations, from bad, even terrible tax policy, from wretched spending programs, from freedom squelching regulations, from currency devaluing monetary policy, and on and on. The proposed solution? More government. Create money out of thin air and spend it on ‘infrastructure,’ and a myriad of other social programs. In short, the current proposed solutions are the same old tired Keynesian policies which have actually contributed to the current mess.

In the end, I have no idea exactly how all this will turn out. But I can promise you, absent any major change, the direction we are heading is wrong. We can keep putting band-aids on our severed jugulars and keep the patient alive until hopefully, in the long run, we are all dead, OR we can care about our descendents and try to fix the problems permanently with sound, honest money, low taxes, limited government, and so forth.

What do you think?

Another Freebird Falls

I heard on the way home last night, that Billy Powell, keyboardist for Lynyrd Skynyrd, passed away.

Powell's story was an interesting one. He had been classically trained as a pianist. In high school, he befriended Leon Wilkeson, future bassist for Skynyrd. Ultimately, he began working for the band as a roadie, setting up and taking down equipment, etc. No one in the band really knew that he even played an instrument, let alone that he was good.

One night in 1972 after the band had played at a prom (can you see Skynyrd playing a prom???) Billy had a few minutes and he sat down at a piano, and began playing "Freebird." Ronnie Van Zant was blown away. "Man, you mean you've been working with us for two years, and you can play like that??? We've been wanting to add a keyboardist. You're in the band."

The rest is history. Other members of the band have joked about Billy's playing. The problem is in holding him back. He does not know when to not play. he plays constantly, throughout the song. Although classically trained, Billy's work with Skynyrd produced more of a 'honky tonk' piano style.

This band (a favorite of my youth, and one that still holds a special place in my heart and mind) has had perhaps the most tragic history of any band. Everyone, of course, knows about the plane crash of October 20, 1977. That crash killed the heart and soul of Skynyrd - Ronnie Van Zant, as well as the most recent addition - Steve Gaines, who had replaced Ed King as third guitarist.

In subsequent years, guitarist Allen Collins was seriously injured (and his girlfriend killed) in an alcohol related auto accident. Collins was left permanently crippled.

In 1987, the band reunited and embarked on a reunion tour. On October 20, the ten year anniversary of the plane crash, they played the Birmingham-Jefferson Civic Center. Your's truly was present, about 15 rows back from the stage. It was a great show. Included were Gary Rossington, Powell, Leon Wilkeson, and Ed King (original 3rd Guitarist). I'm thinking Artimus Pyle may have manned the drums that night, but I am not sure. Of course Johnny replaced his brother Ronnie on vocals. A touching moment was when Allen Collins came onto the stage in his wheelchair and praised the band, and encouraged everyone to not drink and drive.

The show was great and the band has been playing with varying lineups ever since. However, most of what they have done is insignificant tripe compared to the old days.

Since that night, however, Allen Collins subsequently passed away (I think around 1990) from further complications going back to his accident. A falling out occured amongst many of the old members. Ed King was kicked out (he claims that as a Californian, he was never accepted by the other members, even in the old days - even though he is responsible for the licks on Sweet Home Alabama, their biggest hit) Artimus Pyle has had major legal battles and is no longer welcome ni the band. Many of the old timers speak ill of Rossington.

In 2001, Leon Wilkeson died of liver problems, likely related to years of not living right.

Now, Powell dies at 56. He had a history of heart problems, and was significantly overweight in later years. I am sure that he had had substance abuse issues in his life too, but I have no idea if that was a demon he had conquered or if he still dealt with it.

During the original years of Skynyrd fame (1973-1977) the band had 6 or 7 members at any one time on any one album. With some rotation, this included a total of nine people. Of these, at least five are now dead (unless there are others I am unaware of.) Of these, Powell lived the longest, and that only to 56. The only ones still living are original drummer Bob Burns, replacement drummer Pyle, Original 3rd guitarist (and sometimes bassman) Ed King, and Gary Rossington. Of the current Skynyrd recording/touring group, only Rossington is present. King has had major heart problems. Pyle has had major legal problems. I don't know much about what has happened to Burns.

I got into Skynyrd after the plane crash - probably first latching on to their music around 1980. During my high school years, all of music could be divided into two categories. There was Lynyrd Skynyrd, then there was everything else. I've grown a great deal since then, thankfully. But the original Skynyrd will always have a place in my heart. Powell was an incredible talent, and, from what I could tell seemed to be a nice, soft spoken gentleman. He will be missed and remembered fondly.

Incidently, the childhood friend/neighbor I grew up with - his birthday was October 20, the day the plane went down. Now Powell dies on January 28 - my son's 19th birthday. Weird.