America's economy is suffering from a severe infection of conservatism

There's a good reason why economics is called "the dismal science." Want to know what is wrong with traditional pre-Keynesian economics? When there are jobs that need to be done, willing people ready to do the jobs, and more than enough consumers ready to buy the output if they had jobs that gave them the money to buy what they need, what stops them from getting together and expanding the economy? Bankers and traditional economists, that's what. The following is from Robert Reich:

Before Keynes, economists were gloomy naysayers. "Nothing can be done," "Don't interfere," "It will never work," they intoned with Eeyore-like pessimism. But Keynes was an unswerving optimist. Of course we can lick unemployment! There's no reason to put up with recessions and depressions! The "economic problem is not — if we look into the future — the permanent problem of the human race," he wrote. [Snip]

Keynes' basic idea was simple. In order to keep people fully employed, governments have to run deficits when the economy is slowing. That's because the private sector won't invest enough. As their markets become saturated, businesses reduce their investments, setting in motion a dangerous cycle: less investment, fewer jobs, less consumption and even less reason for business to invest. The economy may reach perfect balance, but at a cost of high unemployment and social misery. Better for governments to avoid the pain in the first place by taking up the slack.

Keynes had a hard sell, even in the depths of the Depression. Most economists of the era rejected his idea and favored balanced budgets. Most politicians didn't understand his idea to begin with. "Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist," Keynes wrote. [Snip]

As the Depression wore on, Roosevelt tried public works, farm subsidies and other devices to restart the economy, but he never completely gave up trying to balance the budget. In 1938 the Depression deepened. Reluctantly, F.D.R. embraced the only new idea he hadn't yet tried, that of the bewildering British "mathematician." As the President explained in a fireside chat, "We suffer primarily from a failure of consumer demand because of a lack of buying power." It was therefore up to the government to "create an economic upturn" by making "additions to the purchasing power of the nation."

Yet not until the U.S. entered World War II did F.D.R. try Keynes' idea on a scale necessary to pull the nation out of the doldrums — and Roosevelt, of course, had little choice. The big surprise was just how productive America could be when given the chance. Between 1939 and 1944 (the peak of wartime production), the nation's output almost doubled, and unemployment plummeted — from more than 17% to just over 1%.

Never before had an economic theory been so dramatically tested. Even granted the special circumstances of war mobilization, it seemed to work exactly as Keynes predicted. The grand experiment even won over many Republicans. America's Employment Act of 1946 — the year Keynes died — codified the new wisdom, making it "the continuing policy and responsibility of the Federal Government ...to promote maximum employment, production, and purchasing power."

And so the Federal Government did, for the next quarter-century. As the U.S. economy boomed, the government became the nation's economic manager and the President its Manager in Chief. It became accepted wisdom that government could "fine-tune" the economy, pushing the twin accelerators of fiscal and monetary policy in order to avoid slowdowns, and applying the brakes when necessary to avoid overheating. In 1964 Lyndon Johnson cut taxes to expand purchasing power and boost employment. "We are all Keynesians now," Richard Nixon famously proclaimed. Americans still take for granted that Washington has responsibility for steering the economy clear of the shoals, although it's now usually the Fed chief rather than the President who carries most of the responsibility.

Keynes had no patience with economic theorists who assumed that everything would work out in the long run. "This long run is a misleading guide to current affairs," he wrote early in his career. "In the long run we are all dead."

Today America's conservatives have (again) run the American economy aground, and the solution is (again) anathema to the Republicans and the Blue Dog Democrats.

They'll bail out the banks (which they deregulated into ruin), but as they look at the American automotive industry, all they see is the opportunity to destroy the United Auto Workers Union. They really think that the economy will get better on its own, and that they can play their class-warfare political political games and complete the destruction of effective unions with impunity. That's the kind of thinking that has created the current and worsening economic crisis.

America is really suffering because of the conservative Reagan Revolution, and George Bush is once again AWOL as he was when he was in the Texas Air National Guard. Conservatism has failed (again.) It's time to drag it out of the shadows, put a stake through its heart and allow the American economy to once again become productive.