The Insidious Social Breakdown Caused By Government Adoption Of Keynesian Policies.

Hunter Hastings
Oct 29, 2018 · 4 min read

When we talk about the state of the national economy, we tend to focus on consumption. We talk about standard of living, which is a consumption measure. We want it to grow — we want people to consume more. We talk resentfully about the income and wealth of entrepreneurial titans like Jeff Bezos, and we are thinking about their enormous consumption possibilities. It causes us envy, because consumption is our measure of success.

Similarly, we think in policy terms of redistribution of wealth and income, through all kinds of welfare programs. These are designed so that poorer people can consume more.

This consumption compulsion has two major sources. One is John Maynard Keynes, whose General Theory insists that it is the total consumption by the population that drives the economic growth, economic success and economic well-being of a nation. He pulled this notion out of thin air and brought no economic reasoning to support it.

The second is governments, who gleefully seized on Keynes’s novel theory, recognizing that, by promising people more consumption (and doing so under the guise of sound economic planning), they could buy themselves votes and popular support, while claiming the support of recognized economic theory.

A new book (The Once And Future Worker by Oren Cass) suggests that this focus on consumption produces detrimental economic and social results, and actually destroys the foundations of a strong society.

The result of preferring consumption as a focus of policy instead of production is to deprive producers and over-reward consumers. Wage levels have been stagnant, millions have left the workforce because it is unrewarding, productivity growth declines, families become unstable (unemployment or intermittent employment is often a cause), and communities crumble when their productive assets, such as factories, lose viability and are not strengthened or replaced. Polls begin to indicate that producers — workers — are, “in general, dissatisfied with the way things are going in the United States at this time” (Gallup’s phraseology).

Half of Americans born in 1980 were earning less at age 30 than their parents had made at that age. And there are “deaths of despair” — mortality rates have risen since the turn of the century for middle aged white Americans, driven by higher levels of suicide, liver disease and drug overdoses for those without a college degree.

In making GDP growth and rising consumption the central objective of public policy, government is focused on “a truncated and ultimately self-undermining concept of prosperity”, says Cass in a summary of his thesis. Workers have no standing in this view of the economy. Neither do families and communities. When jobs vanish, government offers a welfare cheque and expects recipients to be grateful. Towns without jobs are just places people should leave behind. Various forms of retraining are offered — arrogantly — without asking whether this is what people want and whether the training will work. Maintaining a healthy, inclusive society is not the goal.

What if people’s ability to produce matters more to them than how much they can consume? What if the export of our productive capacity to foreign countries has left us with fewer chances to create well-paying, productive and meaningful jobs for Americans? A labor market in which workers can support strong families and communities is the central determinant of long-term prosperity. When people can build on a foundation of productive work, they can find purpose and and satisfaction in providing for themselves and producing for others. Prosperity is the emergent property of a virtuous cycle in which producers are awarded respect, dignity and gratitude for what they do.

In economics, this shift of focus from consumption to production is captured in Say’s Law. As Per Bylund explains: production precedes consumption.

We work to produce, in order to serve others, and to serve ourselves, both with the rewards the market provides and the pride and self-esteem we derive from our productive labor.

Yet government policy works in the other direction. Taxation and regulation reduce the demand for work in the economy. Health care and higher education are subsidized, while energy production and manufacturing are penalized. Capital moves to the tax-favored and regulation-favored sectors and out of others. Excessive environmental regulation escalates and penalizes industry, even though there is little marginal impact on air quality or climate conditions.

The supply of work is heavily biased by our education system; “college or bust” results in a workforce of “busts” ad an oversupply of useless college graduates. America needs a co-equal vocational track that prepares students to move into the labor force, with priority over the college track.

Immigration policies can result in an oversupply of incoming low cost labor at the expense of domestic workers. We must make sure that immigrants bring skills we can’t supply from the domestic labor market. International trade is evaluated by its effects on consumption; looked at through a production lens, we see that it reduces domestic capacity to produce and allocates capital away from important American industries, building industrial ecosystems and supply chains outside the United States.

The prioritization of globalization, GDP growth and consumption growth, and higher education leaves behind many American workers. The leftist elites will not tolerate “any deviation from the borderless, green, multicultural, college-educated, ….consumption-oriented society”. Anyone who does not agree is labeled ignorant. The left has no concern for the quality of our society. Oren Cass suggests that we start to get serious about valuing work and productivity, rather than consumption and ideology.


Originally published at Center for Individualism.

Center for Individualism

Leading the revival of Self-Reliance and Individualism

Hunter Hastings

Written by

Executive Director at Center For Individualism

Center for Individualism

Leading the revival of Self-Reliance and Individualism

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