Why would Keynesian Economics work?

Only everything.

Actually, Keynesian Economics has NOTHING to do with taxation. It has to do with getting out of a recession, of which taxation is a detriment. Hence no wide scale tax raises have occurred recently.

Keynes simply wanted government to take up the slack in economic spending that individuals and businesses were no longer doing. That's it. Neither business nor individuals can prime the economic pump during a recession.

Edit: Huh? Tax cuts? Really? You have to have income to tax for there to be cuts. Last I checked cutting the tax rate on zero income is still zero income. AND it's SPENDING that's the problem in a recession. In a recession, money kept from a tax cut will more likely be SAVED, instead of spent. That feeds the recession.

kind of hard to have productivity WHEN EVERYONE IS OUT OF WORK!!!! Again, Keynesian model has nothing to do with how to get out of recession with taxes. Put ALL taxes to ZERO, knock yourself out. The recession will still carry on. It would have no real effect.

Pure Keynesian economics doesn't work, as the state will eventually go broke. Pure laissez-faire economics does not work as basically all consumers get exploited by business trying to make as much money today as they can. Eventually they completely dry up demand, and market crashes.

fyi- most people who use term progressive are right wing nut jobs. Find a place somewhere in the middle. If you assume that the past is the greatest time in our history, we are in trouble. I suggest you research progressiveism, and not just by watching Glenn Beck. Progress is not a dirty word, nor is change. If it is to you, I suggest you go find a loin cloth and move into a cave.

Balance of these two systems is required. If the deregulated policies of the past administrations (note- i didn't say bush- I mean past few) didn't cherry pick too much future business (i.e. instead of spending next year, I'll spend today) short term Keynesian economics would have worked. The hole that was dug from excessive deregulation cause an unwinable position for the American people.

I doubt under consumption led to this recession. Before 2008 USA had the largest disposable income it's ever had, and was not saving any money (Americans save little of income), all while having some of the lowest taxes over the past 50 years (in 2009 47% paid no federal income tax!). If we didn't spend that on something, we must have blown lots of cash at the racetrack. The overproduction theory is possible. That was due to deregulation though. As it became easier for any tom dick or harry to buy cars and houses beyond their means, manufacturing went way up to meet this demand fueled by credit. That is pure unrestricted capitalism fueled by deregulation.

Some of your points are sound. Some are not grounded in reality. I wish you Beck and Palin loads of luck in all your endeavors.

"Overall, Keynesian Economics can only prolong an economic downturn, just like it did with FDR. Only thing it really does is give people false hope."

Not true- first off- history tells us that the economy grew rapidly under FDR. Maybe you mean the extremely high taxes he put in place? Sure they were high- but isn't it fiscally responsible to fund the war you are fighting? As for prolonging the downturn: right now economy is not reacting to the fundamentals, it is reacting to headlines. The media coup of the government that has been attempted by Fox News has slowed the economy more than any actions by government has.

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1-sorry about assumption. Most people I know who use progressive as an attack are Beck fans.

2-Making that distinction to me is like the distinction between extreme left and extreme right, commies and fascists. Few things work well in their extreme form, including politics.

3-that's true, but the other side uses it as an attack, and often ends up sounding like Luddites. True progress is good, using term progress as a shield to say all you do is right is not good.

With regards the unemployment, the question there is much deeper than whether or not theeconomic policy had the effect of increasing unemployment, or if all the boys coming back from war whose jobs had been filled by women entering the workforce, who didn't want to go back to sitting at home. The pool of workers had potentially doubled (ok. maybe not that extreme, some wanted to stay home still). So the true measure can not be applied to just the economic policy.

Again, I reiterate: extreme policy either way is dangerous. Balance is key.

What Keynesian economics really is, is an attempt to create an economic theory to try and minimize the long term damage that excessive taxation and governmental control of an economy can create.

Taxation and regulation act as a brake, or a slowdown on the economy. It's very similar to the air-conditioning unit on a car, it runs off of the engine, and takes some of the engines horsepower with it.

Keynesian economics attempts to smooth out this damage. When the economy is running smoothly, it can take the added weight of the taxes and regulations, it doesn't run as well, but it can withstand it. When it begins to falter, then the dead weight of government can cause a mild economic downturn, to turn catastrophic.

The smoothing is done by a controlling of the brake. When the economy is crashing, Keynesian economics calls for an increase in government spending, as well as a decrease in the taxes. This has the effect of not only removing the dead weight, but also giving a much needed boost. HOWEVER when the economy is booming, then Keynesian economics calls for a dropping of government spending coupled with an increase in taxation. The economy can withstand the extra dead weight in boom times, and government needs to pay off the amount of debt that was acquired during the downturn.

Real Keynesian economics still requires government to balance the budget, it just allows the actual balancing to be spread out...So while it may need to borrow to pay for the increased spending during a downturn, it's required to pay off that debt during the boom times.

The problem is that government can't stop spending, which was one of the major critiques of Keynesian economics from day one, and ignored in the rush to spend like drunken sailors.

With the failure of Keynesian stimulus, the late Austrian economist's ideas on state power and crony capitalism are getting a new hearing.

Hayek is not the only dead economist to have garnered new attention. Most of the living ones lost credibility when the Great Recession ended the much-hyped Great Moderation. And fears of another Great Depression caused a natural look to the past. When Federal Reserve Chairman Ben Bernanke zealously expanded the Fed's balance sheet, he was surely remembering Milton Friedman's indictment of the Fed's inaction in the 1930s. On the fiscal side, Keynes was also suddenly in vogue again. The stimulus package was passed with much talk of Keynesian multipliers and boosting aggregate demand.

But now that the stimulus has barely dented the unemployment rate, and with government spending and deficits soaring, it's natural to turn to Hayek. He championed four important ideas worth thinking about in these troubled times.

First, he and fellow Austrian School economists such as Ludwig Von Mises argued that the economy is more complicated than the simple Keynesian story. Boosting aggregate demand by keeping school teachers employed will do little to help the construction workers and manufacturing workers who have borne the brunt of the current downturn. If those school teachers aren't buying more houses, construction workers are still going to take a while to find work. Keynesians like to claim that even digging holes and filling them is better than doing nothing because it gets money into the economy. But the main effect can be to raise the wages of ditch-diggers with limited effects outside that sector.

Second, Hayek highlighted the Fed's role in the business cycle. Former Fed Chairman Alan Greenspan's artificially low rates of 2002-2004 played a crucial role in inflating the housing bubble and distorting other investment decisions. Current monetary policy postpones the adjustments needed to heal the housing market.

Third, as Hayek contended in "The Road to Serfdom," political freedom and economic freedom are inextricably intertwined. In a centrally planned economy, the state inevitably infringes on what we do, what we enjoy, and where we live. When the state has the final say on the economy, the political opposition needs the permission of the state to act, speak and write. Economic control becomes political control.

Even when the state tries to steer only part of the economy in the name of the "public good," the power of the state corrupts those who wield that power. Hayek pointed out that powerful bureaucracies don't attract angels—they attract people who enjoy running the lives of others. They tend to take care of their friends before taking care of others. And they find increasing that power attractive. Crony capitalism shouldn't be confused with the real thing.

The fourth timely idea of Hayek's is that order can emerge not just from the top down but from the bottom up. The American people are suffering from top-down fatigue. President Obama has expanded federal control of health care. He'd like to do the same with the energy market. Through Fannie and Freddie, the government is running the mortgage market. It now also owns shares in flagship American companies. The president flouts the rule of law by extracting promises from BP rather than letting the courts do their job. By increasing the size of government, he has left fewer resources for the rest of us to direct through our own decisions.

Hayek understood that the opposite of top-down collectivism was not selfishness and egotism. A free modern society is all about cooperation. We join with others to produce the goods and services we enjoy, all without top-down direction. The same is true in every sphere of activity that makes life meaningful—when we sing and when we dance, when we play and when we pray. Leaving us free to join with others as we see fit—in our work and in our play—is the road to true and lasting prosperity. Hayek gave us that map.

It would NOT work! Do you have any idea how POOR Kenya is?

I bet you have never even been to Kenya or studied their economics.