Keynesian theory does not work

Why democrats continue to believe in Keynesian theory is beyond comprehension when you consider historical empirical evidence.

Government spending does not produce long term economic growth. When government spends more, it purchases real resources and absorbs labor, land, equipment, and materials out of the market, therby raising the cost of production for private sector businesses, reducing the profitability or margin of a business. When businesses can no longer make a positive margin much less a profit, then they go bankrupt or cut costs (cut jobs).

Alberto Alesina of Harvard published a major long term study of fiscal policy changes in 18 countries (18 economies) in the Sept 2002 "The American Economic Review". They found that "fiscal stabilizations that have led to an increase in growth consist mainly of [governmentt] spending cuts, particularly in government wages and transfers, while those associated with a downturn in the economy are characterized by tax increases."

Ireland is an example. In the late 1980's they cut government spending by 7% of GDP, slashed the tax rates on capital gains and on business profit, and experienced excellent economic growth. By contrast, Japan ran budget deficits from 1993 to 2005 and accomplished nothing in terms of improving economic conditions (stagnant) and their standard of living.

Some of this discussion is from Alan Reynolds' acticle in the February 2009 issue of National Review.

And remember these famous and true quotes:

"Never base policy on a forecast."
- John Kenneth Galbraith

"In this present crisis, government is not the solution to our problem; government is the problem."
- Ronald Reagan

And have a good laugh at this one (or cringe in fear):

"It is only government that can break the vicious cycle [...]"
- Barak Obama 2009