Tax reduction is also celebrated as a way to sustain aggregate demand during recession. As a way to stimulate demand in times of negative growth or stagnation, there remains only direct and active intervention by the state to create employment. In an ideal world this last would not be necessary. In the real world of recurrent and prolonged stagnation there can be no effective alternative. To intervene, the government must borrow and accept the reality of a larger deficit in the public accounts.
Public borrowing can, over time, be a fiscally conservative act.
When the economy recovers and public revenues rise, there must then be the discipline that brings simulative expenditure to an end. In brief, Keynesian doctrine suggests that the government should, in times of serious unemployment, run deficits to support the flow of aggregate demand and a wise government could stabilize the economy close to full employment and avoid fluctuations and inflation. Later the numerous problems associated with such a program became apparent. The educational levels of the work force, the supply and quality of capital plant, the role of technology and technological advance, had separate lives of their own. They are not the major subject of concern.