Keynes is Dead, Long Live…Keynes?
July 6, 2010 Leave a comment
John Maynard Keynes was an economist…or at least a political activist who used economic-sounding arguments to justify government intervention.
In the 1930s, he was THE economist, if you believed in that government intervention.
But, as we all know, his Theory proved to be a complete failure. It failed to produce results during the Great Depression, but staggered on until the 1970s, when it failed so spectacularly, causing staflation, that it was pronounced dead, even by Liberals in the US and open socialists around the world.
But, unfortunately, George Bush came along in 2001, and after having run as a free marketer, governed as a Keynesian. He infected the political scene with the premise that you could stimulate an economy out of a downturn, by having the government spend massively, even as it increased regulation (in part, by putting strings on the spending). When the economy fell into trouble because of his bad foreign and domestic policies, he responded with Stimulus and Bailout™ packages. That trademark, of course, means that he must pay the Keynes estate a royalty for each mention.
Obama, having run as the Anti-Bush, has committed the perplexing political suicide of simply building on every Bush precedent…most of which really are more Liberal Democrat in tenor, anyway…and one of the symptoms is that he continued the Stimulus and Bailout™ packages.
The problem, as we predicted and is now proving true, is that stimulus spending and bailouts don’t help the economy: They hurt it.
This pattern of behavior has caused what people denying the word Depression call a “double dip recession”, which we’re entering (again) right now.
The only way out, is to end the Keynesian meddling, and let the economy grow on its own. Japan and Sweden learned this the hard way, after each suffering a “lost decade” in the nineties. Now it’s our turn.