The problem with Keynesian economics, sad to say, is that it's incompatible with democracy. Ordinary citizens of a democracy — or of any other political system, for that matter — always like more, and never like less. Hence, only half of the Keynesian formula ever is implemented. (Well, maybe "ever" is a slight overstatement, because Bill Clinton sort of moved in the right direction during the boom years of the nineties.)
Until very recently, Keynesianism was almost an automatic response to recession: cut taxes and increase government spending to stimulate the economy. The problems always arose during the good times — the boom times. That's when, according to Keynes, we're supposed to raise taxes and cut government spending, to keep things from overheating and build up a reserve to see us through the next recession.
Unfortunately, that second part of Keynesianism is the hard part. When incomes and profits are up, and lots of tax money is flowing into government coffers, the suck-up politicians of democratic governments say, "Hey! We've got the money! Let's make the voters happy by cutting their taxes and tossing lots of bucks around! While we're at it, we can toss even more bucks at the special interests who pay for our election!"
Everybody's doing better (except for those "fixed income" suckers and the minimum wage crowd, who can't handle the inflation), so everything goes swimmingly until the next recession. It's been going on for about eighty years now.
Note, however, that during those boom times the big benefits go to the special interests — and the most special of those interests, at least since Reagan was president, have been the very rich.
Yeah, I know — if you read this blog, it's not exactly news to you.
So now we're at a point when Keynes (like most contemporary economists) would recommend stimulus. Thanks to eighty years of getting Keynes wrong, though, our national debt is a bit on the high side. The "democratically elected" pols — Republicans, especially, but plenty of Democrats as well — are righteously demanding austerity. But why, especially when we need stimulus so badly, and interest rates are so low?
The answer, of course, goes back to those extra-special interests — the people and institutions that own that debt. They can never be losers, of course, so the rest of us have to pay.
I'm too old and lazy to start a revolution and, frankly, I wouldn't know even where to begin now that revolutions seem to start on Facebook and Twitter. I have to tell you, I'm not optimistic. Any suggestions?