John M. Keynes - The Man Behind the Mess

It's no secret I hate Keynesian economics. I've been bashing that stupid ideology here for a while. He reminds me of L. Ron Hubbard, the guy who founded the Church of Scientology. Neither of them intended for their ideologies to catch on and spread. To their luck (and our dismay), it did. One doesn't have to read too far into Keynes' writings to find some of the poor logic and argumentation. Today's Keynesian Konundrum: the Egyptian pyramid projects.

Keynes used the pyramids as an example of sound centralized economic planning, a benefit for all, and the way things ought to be. In his mind, the pharoah had massive building projects that employed hundres or thousands of people, thereby employing people, paying them, and these people in turn pay each other, and everything is hunky-dory, right?

Not really.

For one, the Egyptians were not that stupid, and much of the labor put into the building of the pyramids was derived from slave labor, which has very low overhead costs. But Keynes' idiotic pyramid analogy isn't fatal because of some bizarre historical fact. It fails economically (surprise!) too.

As Paul Cantor notes in the hyperlink above, one of the failures of the pyramid scheme (pun intended) is due to the fact that this only leads to massive debt accumulation on the part of the government. Why? Because a pyramid doesn't do anything for anyone in any significant, economic, or financial manner. The Egyptians pay out the labor force for a pyramid, but the pyramid doesn't bring back revenues, and the taxation the government places upon the workers is fractional compared to what is paid out. It's a lose-lose situation for the Egyptians.

And so now we have Barack Obama, lord and protector of American jobs touting the same rhetoric - wanting to "create jobs" where there were none; jobs which have no direct economic benefit once they're done. Oh sure, the people he employs will have jobs and pay taxes (because that's really what it's all about, right?), but the government will only sink deeper into debt for it. Slapping a few coats of paint on a federal building doesn't help much. In essense, government sponsored/endorsed make-to-work programs only drive up government debt. Why? Because the output produced by the laborer doesn't generate financial benefit for his/her employer, Uncle Sam (or, in Keynes' example, Pharoah).

Private corporations, however, exist to make money. They employ people who help them generate revenue in the hopes of keeping a profit. If the profitability they garner is turned around to expand, develop, and grow the company to make even more money. The benefits to society are legion. For one, John Q. Worker still gets his paycheck, just as he would by building pyramids or painting the hallway in the Pentagon. However, by working for XYZ Company, he's helping them make a profit, which will ensure that he has a job in the future because his employer is (hopefully) turning a profit and can continue to have him employed. His job, unlike the pyramid worker's, is not financed by other people's taxes or by government debt.

He can work freely and happily knowing he's not straining his neighbor out of a more abundant life.