Saturday, February 11, 2012

On Keynesian Economics 1

The more that I learn about Keynesian economics, the more that it flat-out perplexes me. I mean, just the very notion that massive deficit spending (a lot of it seemingly haphazard at times) can somehow lead an entire nation to prosperity seems itself quite ludicrous (the robbing of Peter to pay Mr. Paul, yada yada).............................................................................................And then, of course, there's the increasingly spotty record of the theory as it's practiced. Herbert Hoover, probably the original Keynesian pol (he of the beneficent hand); that blankety-blank practically taxed and spent the United States into oblivion. FDR (who actually WASN'T a disciple of Keynes) continued along these lines and actually added to it with his own brands experimentation, micromanagement, etc. (the NRA, his act to make bank branches illegal, his insanely high increasing of excise taxes, etc.). The end result was a 12 year long depression (it wasn't until Truman came along and loosened up price controls, trade restrictions, taxation, etc. that the American economy truly recovered)..............................................................................................A much more recent example of Keynesianism failing to deliver would obviously be the Japanese fiasco. From 1990 to 2005, Japan had no less than 10 fiscal stimulus programs (infrastructure, etc.) at a cost of over 100,000,000,000,000 yen and the only thing that they had to show for it was a massive debt (at one point, a 130% of GDP!) and countless boondoggles............................................................................................Of course, you always have the usual suspects/apologists such as Krugman saying what they always seem to say, "The Japanese just didn't spend ENOUGH money." But, really, folks, I ask you, isn't that getting just a little lame; that whole "it just wasn't massive enough" argument? I mean, it's certainly getting lame from my perspective.

2 comments:

Dervish Z Sanders said...

Lame? Yes, I agree, incredibly lame. You misrepresenting Krugman, that is.

Will "take no prisoners" Hart said...

He's never met a stimulus package or government initiative that was too big.