Day 1: My Favorite Economist

If I were to proclaim that Keynes was undoubtedly my favorite economist, I would be deemed as quite unoriginal and simply following the crowd. Why would I choose someone who is known widely by every single person on the planet (and their parents and their grand-parents and probably their children too, you get the point)? Well, it's because I thoroughly believe that Keynes is worth the hype. He is worth every piece of recognition he got and his brilliancy deserves to be cemented and immortalized in the decades to come as well.

Keynes's practicality is his forte and is the reason why I hold him in such high regard. He saw a real crisis in the form of the Great Depression, and instead of resorting to pessimism and age-old, ineffective economic theories like many of his counterparts did, he offered revolutionary ideas that broke out of the confines of classical orthodoxy. His intellectual flexibility was miles ahead of his time.

In a bid to reflect upon my favorite economist and his contributions to the field of Economics, I decided to embark on a 15-day journey which I will spend exploring his novel ideas. Welcome to 15 days of Keynes!

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Day 13: Multiplier Effect

I am hungry. I buy two huge margherita pizzas. The cost of the pizzas to me is income to the seller. What the seller spends out of this income would be income to someone else. This goes on and on and on. This becomes an economy-wide chain reaction, or the "multiplier effect" as Keynes called it. Thus, consumption rather than thrift promotes economic growth, and the government should stimulate demand. Each unit of money it spends increases economic activity, not by one unit, but by one unit times a multiplier. The expenditure more than pays for itself! This seems like the panacea to all economic evils: the government should just spend and spend and this initial injection will further create waves of spending and thus, reboot the economy. However, this solution of spending more and not worrying about the incoming due bills sounds a bit too idealistic and "too good to be true" to me.

Day 3: In the Long Run, We are All Dead!

Today, I attended quite an interesting Public Economics lecture on government grants. My professor was talking about how the US government had approved $2.2 trillion worth of loans and grants in order to soften the blow of the COVID-19 pandemic on the most affected families and businesses. He then asked a fundamental question that left us pondering: "Do these hefty government grants and packages financed by taxpayers' money which benefits only a select few make good economic sense?" This brings us back to the 20th century, specifically the 1930's, and how Keynes's influential ideas led to aggressive government policies, rescuing the global economy from the Great Depression. Keynes was a staunch proponent of short-term policy interventions and famously believed that, "In the long run, we are all dead." Yes, things might get better in the future, but why wait for when no one will be alive to reap the fruits of the future? In times of economic crisis, the...

Day 11: Tackling the Business Cycle

As emphasized priorly, Keynesians staunchly believe in activist policies to reduce the amplitude of the business cycle. According to Keynes, the business cycle is the root of all economic evils and is the most important of all economic problems. To tackle this, Keynes advocated for countercyclical fiscal policies that act against the direction of the business cycle. For example, deficit spending on labor-intensive infrastructure projects to stimulate employment and stabilize wages during periods of economic downturns. In a situation of abundant demand-side growth, Keynesians would lobby for raising taxes to cool the economy and prevent inflation. They also rely on monetary policies in certain situations (minus periods of liquidity trap) to stimulate the economy, like reducing interest rates to encourage investments.

15 Days of Keynes.

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