Recommended: They Gave a Recovery and Nobody Came

There is a very interesting posting over on Reason.com by Tim Cavanaugh: They Gave a Recovery and Nobody Came. He argues that the economic figures show that as far as Keynesian economic models are concerned, the recovery has already happened.  Despite the repeated claims by Keynesians that the problem with the economy is that consumption is down, the government's own figures show that both personal and government consumption is now higher than it was before the recession, so there is no aggregate-demand gap at the moment. But of course the disastrously-high unemployment figures have hardly moved, so clearly the Keynesian model of what needs fixing is simply wrong.

Cavanaugh argues that Keynesian economics has no way to deal with high indebtendess -- its models are essentially blind to that condition -- but that it is just the high indebtedness of companies that is keeping unemployment high, along with all the uncertainty over future taxes, future regulations, and future employee health care costs. It is, he argues, just too uncertain a future for companies to hire lots of new workers.

All in all an interesting alternative view of our problems.  And since the current Keynesian view of what is wrong and how we ought to fix it is by now clearly wrong, we need fresh ideas like this.