Keynesian Approach

Robert Reich has an abridged bio on John Maynard Keynes, economic advisor from the Depression Era. Here's an excerpt:

Keynes' basic idea was simple. In order to keep people fully employed, governments have to run deficits when the economy is slowing. That's because the private sector won't invest enough. As their markets become saturated, businesses reduce their investments, setting in motion a dangerous cycle: less investment, fewer jobs, less consumption and even less reason for business to invest. The economy may reach perfect balance, but at a cost of high unemployment and social misery. Better for governments to avoid the pain in the first place by taking up the slack.

Keynes was the mastermind behind the idea that government funding of jobs and getting the people to work helps in a recessed/depressed economy. That is why Obama is proposing 2.5 million jobs (see Presidental [elect] address posted below) for infrastucture development and greenification of government buildings & schools. AND LIBRARIES!!!

Governor Palin, on the other hand, is promoting (see her statements during the infamous turkey video) the idea that failed so very miserably during the Great Depression -- that government has to cut spending and balance budgets during an economic downturn. See the full Reich blog on John Maynard Keyes as to why that is a very stupid thing to think. Or, actually, simply look at the colossal failure of the Hoover Adminstration.