Keynesian Economics in Action

With the election of President John F. Kennedy , a group of young, idealistic and talented intellectuals and technocrats were assembled in Washington, DC. Among them were young economists who had come of age after the war and had been schooled in Keynesian economics. The first edition of Paul Samuelson ’s (Nobel Laureate 1970) Economics: An Introductory Analysis was published in 1948. This book was responsible for spreading the Keynesian gospel not only in the United States but around the world. Their outstanding beliefs were that a better world was possible and that they had the know-how to build it. Their views on economic matters are reflected in the Economic Reports of the President for those years. The economy was considered machinery that could be fine-tuned to deliver a desirable combination of inflation and unemployment rates. The Keynesian influence was quite apparent.

The unfinished business of economic policy includes (1) the achievement of full employment and sustained prosperity without inflation, (2) the acceleration of economic growth, (3) the extension of equality of opportunity, and (4) the restoration of balance of payment equilibrium. Economic Report of the President, 1962

Our tools of economic policy are much better tools than existed a generation ago. We are able to proceed with much greater confidence and flexibility in seeking effective answers to the changing problems of our changing economy. Economic Report of the President, 1965

I am more than half-convinced that he had, in truth, an abnormal gift, and a sense, something—I know not what—that in the guise of wall and door offered him an outlet, a secret passage of escape into another and altogether more beautiful world. At any rate, you will say, it betrayed him in the end. But did it betray him? There you touch the inmost mystery of these dreamers, these men of vision and the imagination. We see our world fair and common, the hoarding and the pit. By our daylight standard he walked out of security into darkness, danger, and death. But did he see it like that? H. G. Wells, “The Door in the Wall”