I admit I frequently listen to NPR while driving, and yes, I find it corporatist and statist. But I enjoy listening to it nonetheless.
This morning, there was a worthwhile piece on John Maynard Keynes, and who he was, as his intellectual economic philosophy (often called Keynesian Economics) is very much reflected in both the current Bush administration as well as President Obama’s administration.
Who is Keynes? He espouses the type of economic interventionism I find detestable. His most famous book, “General Theory of Interest, Employment, and Money” essentially supported government intervention, especially when times get bad economically. We can all see how this is the dominant philosophy today: if there’s some sort of problem, the government can fix it. At bare minimum, a government infusion of cash is crucial to getting the economy going. So goes the by-now unquestioned philosophy.
The piece (by Adam Davidson) started out explaining how Keynes was essentially an iconoclast, a shock-jock of sorts. At some point, the book was brought up in addition to his contradictory economic beliefs (he was at times a free market guy). What was not discussed was that the book toys with the idea that is now accepted as concrete truth. Keynes doesn’t really try hard to persuade the reader this will work. It’s more of a question: will this work? Later in life, he actually opposed the philosophy the book espouses.
The host asked Adam Davidson whether it works. Ah, here’s a great question with a simple answer: no. As evidence, consider the huge government growth during the New Deal, which even Keynesians admit didn’t get us out of the Great Depression. Nor did such government prevent the 1982 recession, nor the dot.com bust, nor the current housing collapse and economic debacle.
Adam Davidson pointed to World War II as evidence that this Keynesian idea does work, as many do believe, oddly enough, that WWII brought America out of the Great Depression. Makes no sense to me, but many believe it.
Adam Davidson also pointed out that critics point to failures in the Kennedy and Nixon administrations (Nixon famously said, “We are all Keynesians now.”) as evidence why it does not work.
Then the host’s excellent question: “Why do we use it, then?” In other words, in such a time of crisis, why are we turning to a controversial and unproven philosophy as if it is a bedrock principle? Why are we trusting something we have no business trusting?
Adam Davidson’s stunning answer: because there’s no real alternative. There’s really nothing else of this weight.
This was about the most ridiculous statement I’ve ever heard. Socialists, anarchists, and libertarians alike should find this statement about as ludicrous as can be. What about Austrian economists like Nobel Prize winning Frederick Hayek, or Ludwig von Mises, or Murray Rothbard? What about Milton Friedman? What about a host of other intellectual heavyweights who actually knew (with greater certainty than Keynes) what they were talking about?
This is a shallow and ridiculous justification for Keynesian economics.
In short, it is beyond frustrating to me that we are compelled to submit to leaders who blindingly follow a foolish, immoral, and unproven philosophy with so much at stake. How many more government economic failures do we need before we realize that a) we can’t pay for this system of economic hyperinterventionism and b) it doesn’t work. We need another system: the Constitutional system of freedom set up by our founders.