WHAT'S ON BRITSKÉ LISTY

Czech Republic has one of the lowest debts in the world

12. 7. 2010 / Václav Adam

What would John Maynard Keynes, one of the most important economists in history, do today? (He has been dead for a long time, but his ideas are still very alive.) He would not advise even the reducing of civil servants. The reduction of sources for salaries in the public sphere is a good thing, but the objective should be to make the public administration more effective, not just to darn the holes in today's budget.

Nowadays it would lead us to a) a cutback in demand b) an increase in unemployment, thus creating strains in the social system.

J. M. Keynes would, on the contrary, advise the introduction of progressive taxation, with the goal of getting more money into the real economics. The government would should use the proceeds from the progressive taxation on public investments -- such investments that would have multiplying effects, like in the construction of apartment buildings or in infrastructure.

"If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing." (The General Theory of Employment, Interest and Money by John Maynard Keynes, published by Harcourt, Brace and Company, chapter 10).

What would be useful is to increase the utilization of funds from the European Union by improving the rules. It is possible to consider ecological investments, like the construction of purifying polluted water, etc. That, which the wealthier people would lose in the progressive taxation, they would get compensated by the economic revival, which would positively affect the growth of their businesses. The lower classes would gain from a decrease in unemployment. The middle classes would profit from the increase in salaries, influenced by the acceleration of economic growth.

Keynes` book revolutionized the understanding of economic theories -- his thoughts led to Franklyn Delano Roosevelt's New Deal, which aimed at solving the world economic crisis that created the Depression of the 1930s. The New Deal has its critics, but according to many it was what saved the U.S. from the emergence of fascism.

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