A classic debate about economic stimulus
Talk of stimulus has revived the work of John Maynard Keynes, a 20th-century British economist who urged government spending to fight recession. A century earlier, French economist Frédéric Bastiat gave a different view. Here are excerpts from Keynes's "The General Theory of Employment, Interest, and Money" and Bastiat's, "What is seen, and what is not seen."
John Maynard Keynes on the need for government action
The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes.
At the same time we must recognize that only experience can show how far the common will, embodied in the policy of the State, ought to be directed to increasing and supplementing the inducement to invest; and how far it is safe to stimulate the average propensity to consume, without forgoing our aim of depriving capital of its scarcity-value within one or two generations. It may turn out that the propensity to consume will be so easily strengthened by the effects of a falling rate of interest, that full employment can be reached with a rate of accumulation little greater than at present. In this event a scheme for the higher taxation of large incomes and inheritances might be open to the objection that it would lead to full employment with a rate of accumulation which was reduced considerably below the current level....
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