I wonder if FDR read Keynes...

Keynes seems to find his British countrymen heading into a depression much like the one the United States experienced at about the same time. Due to the growing unemployment rate the British government began disbursing tax money to the unemployed to give them financial relief. In Keynes view this was a waste of money entirely. It wasn’t enough money to actually help these people and pull them out of poverty, but cumulatively it was enough to tank the British economy as the unemployment fund was just draining the country of tax dollars. In a way it reminds me of our current welfare system which seemingly dumps money into people who are unemployed and while it is not enough money to pull someone out of poverty, it is enough to persuade someone from working a legal job that creates tax dollars because once they do that, they lose their free ride. As Keynes states, “Since 1921 we have paid out to the unemployed in cash a sum of 500 million pounds—and have literally got nothing for it.” Just like our current welfare system in the US, these cash handouts keep people poor and do not encourage a vigorous push to return to the workforce and actively find employment.

Keynes saw ongoing economic problems that were bound to lead to an economic crash sooner or later, as no country can absorb such exorbitant loss of money year after year and not see any financial damage as the guaranteed result. This goes to bring up a good point. Economies do not just tank without reason, in fact whenever an economy tanks it is usually a slow process having to do with countless economic problems or a flawed system. For example, the United States’ current economic issues have been in the works for years. There have been many small problems such as the inefficiency of the welfare system, but the big problems that led us to our current state have to be our flawed credit system that we as a whole greedily allowed our finance firms to take advantage of. If anyone thought about it, we have been screwed for a while. While major finance firms were buying subprime loans like it was their job as the returns were supposed to be amazing, it is hard to believe that people didn’t believe the whole subprime thing could fall like a house of cards if even a small percentage of people went into default… Especially in a country that has such liberal bankruptcy laws and does not have a debtors prison, not that I think a debtors prison would be good. In 2006, people as a whole were spending largely more money than their income. That stat alone is terrifying as it should not be a possibility. The fact that our system allowed people to spend other people’s money to such a degree would have been cause for Keynes to write an essay about the US in the early 2000’s.

I wonder what would happen in our current situation if our country decided to do what FDR did in the 1930’s to bail us out of our economic problems. To me it seemed like Keynes and FDR were on the same page. Instead of handing money out, FDR used the money to pay people to work on the infrastructure. That way people were not just receiving money for being poor, but earning it for creating value. If we scrapped our welfare program and instead paid people on welfare money to fix our railways, our bridges, and help with other areas of our infrastructure at least nobody could say the United States has literally gotten nothing from their handouts of money to the unemployed. Of course there probably are not as many jobs the United States can give out now supposed to in the 1930’s for improving the infrastructure, but the point is if the US is going to give people money for not working, why not make them do something to earn it so it is not a handout, but a salary.