Skip to content


August 23, 2016


John Maynard Keynes, my all-time favorite economist and the British representative to the Bretton Woods Conference in New Hampshire in 1944 where the world’s postwar economic plans were drawn and the American dollar became the world’s reserve currency, was known for many brilliant insights, not the least his insistence that demand (not corporations, not capital, not brilliant supervision, not less taxes and regulation) makes the economic world go around. Indeed and for instance, America’s greatest era of economic growth (post WW II to the 1970s) came when income taxes were at 90% and inheritance taxes were at nearly 80% levels.

Today’s booming stock market has nothing to do with economic growth, as can be seen. With tepid demand, we are not growing, our economy is underperforming as a result of a stagnant wage regime since the 1970s, and unbelievably, the financial sector continues to push for even greater wage inequality, yet less taxes, regulation etc., all of which would further and demonstrably hamper economic growth. A fairer sharing of the economy’s income and wealth with corporate workers and workers generally would result in increased demand which would in turn help solve such problems as unemployment in the general economy, lack of revenues to fund education, infrastructure repair and renewal etc. Thus it can be readily seen that the greed of the financial sector affects not just their underpaid workers but all of us who contribute to their paper profits while desperately needed public projects go unattended as a result of the financial sector’s not merely outsized but command of a world-historically disproportionate share of the nation’s wealth.

The insight of Lord Keynes in re demand is right to a fault, and I am not his only disciple; Nick Hanauer in the Summer Edition of The American Prospect magazine writes: “In business, the first, second and third most important thing is demand.” He is right and, of course, Lord Keynes, who died two years after the Bretton Woods Conference, was right. However, not many CEOs are Keynesians these days; most adhere to the low wage model to jack up their bottom lines and impress shareholders and stock market quarterly analysts and their boards of directors (who, among other things, pass out bonuses to CEOs – a rather cozy arrangement among those who would perpetuate wage inequality under the pretense that there is a connection between low regulation/taxes and economic growth).

The only “economic growth” involved in the current distribution of the economy’s income and wealth is in the financial sector and its Swiss and Cayman Islands accounts; corporate workers have suffered stagnant wage rates since the 1970s (even though worker productivity has boomed). Such productivity, unlike the some 40 years prior to the cutoff date in the 1970s when it was shared with corporate workforces, has been totally hijacked and folded into stock values rather than shared as wages since the 1970s and is a substantial factor that has led to the current crisis in wage inequality and consequent lack of economic growth which all of us must suffer in order to enrich the paper shufflers on Wall Street.

Even so, I have come to believe it’s not just money that motivates the vast majority of CEOs to wage the war of pro wage inequality to fatten their corporate bottom lines at the expense of their corporate workers. I think it’s a matter of power as well, and CEOs and their unproductive casino workers on Wall Street will never admit that demand is what makes the economic world go around because such an admission would detract from the fiction and their incessant propaganda that they and their congressional stooges are with their brilliant supervision and lack of regulation and fair tax rates somehow responsible for booming economies (though such claims of leadership were rightly and notably absent during the Great Depression when, presumably, management was just as “brilliant” but demand tanked disastrously to a near failed state status, thus proving the Keynesian thesis beyond doubt). Truth is a scarce commodity these days among shills for the rich in the business press.

In Part II I will discuss more Keynesian wisdom, parasites and a solution. Stay tuned.     GERALD      E

From → Uncategorized

Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: