Keynesianism, once a driving force behind American economic policy and political debate, is now dead.
The economic philosophy developed by John Maynard Keynes in the wake of the Great Depression served as beacon of ideas and initiatives. In its heyday, the mere existence of Keynesianism created modern American liberalism and conservatism and launched nearly a century-long debate.
Keynesianism took over economic policy in the form of New Deal and the presidency of Franklin D. Roosevelt. Preaching the importance of government intervention in the market in order to stabilize the economy, early Keynesianism took the form of the various social programs instituted by FDR.
While historians and economic professions dispute the true effects of the New Deal on the Great Depression, it was a large part of popularity of FDR and his four-term presidency.
This sparked the divide in between liberals, those who supported the New Deal and early Keynesianism, and the conservatives who opposed it. Democrats, the party of FDR, quickly aligned itself with liberalism and Republicans did the same with conservatism.
The big break for Keynesianism after FDR’s death came in the 1948 election. Thomas Dewey, who won the Republican nomination in 1944 as a conservative, ran as more of a liberal, accepting many of FDR’s social programs, to further oppose primary opponent and diehard conservative Robert A. Taft.
While Dewey was unsuccessful in the general election, his primary victory aligned the Republican Party with liberalism. While the conservative wing would still have a presence, the Republican Party was a liberal party until 1964.
From 1948-1964, Keynesianism dominated both parties. While Kennedy would briefly flirt with conservative ideas in his short presidency, the status quo of Keynesianism was strictly upheld. Johnson even expanded Keynesianism in American policy through the Great Society Acts.
Even as conservative Barry Goldwater’s 1964 Republican primary victory expressed the Republican’s move away from Keynesianism, the philosophy still continued to dominate the Democratic Party, national policy, and still a place in the Republican Party.
The hardest blow Keynesianism faced with the presidency of Ronald Reagan. Reagan shattered American perceptions by rejecting Keynesianism while simultaneously launching American into a decade of economic boom, forever casting doubt on the once spotless reputation of Keynesianism.
However, Keynesianism remained dominant after Reagan despite not being evermore unpopular with the American people.
George H.W. Bush promised Americans “no new taxes” and then raised taxes and expanded welfare. Likewise, Bill Clinton promised Americans a “third-way” economic system but also practiced Keynesianism.
The proud resurgence of Keynesianism came in 2007 as the Great Recession took hold of the nation. George W. Bush bailed out large companies and intervened in the market in order to curb the effects of the Recession. Obama continued these policies in 2009 and onward and even doubled-down on Keynesianism through Obamacare, a nationalized healthcare safetynet.
This brings us to the death of Keynesianism, a philosophy killed by three components; the failures of Obama, the success of Trump, and the Democratic embrace of socialism.
Obama’s embrace of Keynesianism was nothing short of a trainwreck. His economic policies were beyond unpopular and ineffective. Americans were forced to sit back and watch their insurance premiums fly and the economy stagnate.
Trump, much like Reagan, rejected Keynesianism and was met with historic economic success. Instead of stagnation, Americans have seen the national GDP and the stock market skyrocket and national unemployment and jobless rates plummet.
The rise of candidates like Bernie Sanders, Elizabeth Warren, and Alexandra Ocasio-Cortez shows that Democrats, perhaps wisely, are abandoning the sinking ship of Keynesianism and onto the lifeboats of socialism.
Will Keynesianism come back one day? Maybe. This is not the first time Keynesianism has been declared dead. However, with the rise of national awareness on politics and the abandonment of Keynesianism on both sides, it is highly unlikely, perhaps impossible.
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