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IN the long run, we are all dead, is an oft-quoted quip of Lord Keynes. But, in the long enough run, he is the one, it seems, who comes back to life. At least that is what the US is discovering. A time there was when, in that country, the Government's intrusion into the economy was not only suspect, but was altogether taboo. It was enjoined to leave all economic players alone, confining itself to the role of a facilitator and regulator. This was also the time-honoured prescription thrust by the Bretton Woods duo — the IMF and the World Bank — down the gullet of all countries hapless enough to seek their handouts.

September 11 has brought about a sea-change in this as in many other assumptions. Now, economists, academics, corporates, the business community as a whole and the public at large are all for the Government taking a big hand in bailing out the ailing economy by "stimulus packages" which are only another name for massive injection of billions of federal dollars to prop up business enterprises on the verge of collapse.

There is, in fact, a long queue of corporates with begging bowls on their hands: Airlines, airports, Amtrak, mass transit system, utilities, roadways and much else. In short, everyone in the private sector is pressuring the Government to go the whole hog in the use of fiscal levers which were anathema to them barely a year ago. The immutable maxim of free market economy once was that enterprises which could not make themselves profitable should be allowed to go belly up. No longer. There is more and more clamour for the Government to rush to the succour of sick companies to neutralise the calamitous effects of job losses and steep fall in economic growth.

In this background, the destruction of the Twin Towers of the World Trade Centre has come as a blessing in disguise, much as the multi-front war on terrorism itself.

Indeed, the political, business and financial circles are happily, so to speak, looking forward to the reconstruction of the Towers as a reassertion of America's prestige and pride, and to the replenishment of the arsenals of the US to prepare itself for a war of indeterminate period on terrorist groups and States.

The reason is simple. These would lead to astronomical investments in industry, engineering, manufacture, technology, infrastructure and so on, putting substantial amounts in the hands of people of all categories. This, in turn, will push up demand for all kinds of goods and services, including development of prime estate, new industrial and residential complexes and the like. There will follow creation of new jobs by the thousands, which will mean more income, more demand, more spending, more production — well, the vigorous and virtuous Keynesian circle in its classical sense.

This was precisely what the Second World War did for the US in terms of prosperity and expansion. The Americans can hardly be blamed if they are ardently hoping for action replay.

B. S. Raghavan

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