Tuesday, July 9, 2013

The Long-Term Problem of Full Employment

John Maynard Keynes quoted by brilliant blogger Sandwichman in a comment to this post at EconomistsView.

"4. After the war there are likely to ensure [sic] three phases-
"(i) when the inducement to invest is likely to lead, if unchecked, to a volume of investment greater than the indicated level of savings in the absence of rationing and other controls;
"(ii) when the urgently necessary investment is no longer greater than the indicated level of savings in conditions of freedom, but it still capable of being adjusted to the indicated level by deliberately encouraging or expediting less urgent, but nevertheless useful, investment;
"(iii) when investment demand is so far saturated that it cannot be brought up to the indicated level of savings without embarking upon wasteful and unnecessary enterprises."
[Keynes's ultimate cure for the third phase?]
"It becomes necessary to encourage wise consumption and discourage saving,-and to absorb some part of the unwanted surplus by increased leisure, more holidays (which are a wonderfully good way of getting rid of money) and shorter hours."

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