A central idea in modern economic policy debate is the Keynesian view that government must borrow and spend to “prime the pump” when the economy encounters a downturn.  Keynesian economics has been dogma since the 1930s, and is the ideological lynchpin of almost all economic decision making in Washington today.

More recent economic research has cast doubt on whether Keynes’ theories were right.  Some hold the almost heretical view that the efforts of the federal government during the 1930s actually worsened the depression.  (read here and  here)

Unfortunately, economics does not easily allow “experiments” but fortunately, we can compare the results of various economies in the past, and try to correlate national results with their governments’ economic policies.

Such a study can be found here, under “Austerity Works. It’s Time to Give It a Try“.

Logic and common sense have always suggested that borrowing your way to prosperity was foolish, but the supposed Keynesian success with the depression of the 1930s argued otherwise.  Up until now, Keynesians have dominated in policy circles.

With recent academic work, new analyses of the depression of the 1930s, and empirical evidence from around the world, we may well find that logic and common sense were right after all.