One day, there was a company that decided to run a strictly Keynesian approach to its business model. The Keynesian company was founded and ran a business model which took the money that it invested and saved it for future investment, payed their employees good wages, and kept their net revenue for future investment. Over ten to twenty years the company had reasonable prices, a good product, well paid employees that worked hard and several locations and the owners were very comfortable. They were known for the best service, best products, and good prices. During times when their revenue decreased, this company had cash saved to protect their existence and continue their employees wages and needed no assistance.
At another time, another company decided to run a strictly laissez-faire approach to its business. This company took a gigantic loan in the beginning to start a large company, paid its employees as little as possible and worked them as much as possible in a 40 hour work week. When they had positive net revenue, they cut their prices for as long as possible and had very little cash to sit back on. What cash was saved up was immediately given to the owners and the company ran by a shoestring. During the recession, they found that the demand for their product decreased, so they closed stores and fired employees (being their largest expenditure). The net loss in revenue from those locations was greater than the costs to hire employees but only in the long term. So, they closed more stores, and eventually were a tenth the size and were able to maintain their large salaries and have low prices. After the doldrums were over, they were a tenth the size they once were, by firing their employees and closing storefronts. They were not known for their products anymore because they had been surpassed.
I do want my government's finances to be run like a business, that is why I hate austerity and support Keynesian policies.
Obama 2012.
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