By using this site, you agree to our Privacy Policy and our Terms of Use. Close
Mendicate Bias said:

Are you totally against Keynesian economics or just in the governments approach to it regarding the current economic problems.

Wouldn't you say, even though the economic theory itself did not exist at the time, that a keynesian principle was used in response to the great depression.

Wouldn't it also be rational to say that any centralized government, no matter the counry will always take a keynesian approach to a fiscal crisis, versus allowing instability to threaten their government?

I'm totally opposed to it because even if there's merit to the idea in theory, it requires that governments spend more only when they need to in order to stimulate demand and then reduce spending when times are good. The first part isn't the problem, but of course, the latter is. The temptation for the government to do more, more, more is even greater when times are flush. (I still get a laugh when I think about the 2000 presidential debates when Bush and Gore were debating how we should spend all these "huge" surpluses we were going to be running.) Then when the latest government-stoked bubble bursts and the economy goes into a tailspin, you're already tapped out and buried under a mountain of debt.

So Keynesianism just seems like a silly, borderline utopian notion that is premised on the idea that there are Top Men who have good intentions and take the long view and will always make the right call, rather than a bunch of fallible humans and craven politicians who just want to do the most expedient thing for the short term. New Keynesians are even more given to hubristic fantasies about what they (the aforementioned Top Men, naturally) can accomplish beyond simply stimulating the way out of an economic downturn and seem to believe they can coax the economy to do exactly as they please with no unintended consequences.

And sure, it's not surprising that any government will generally use any excuse to grab more power, whether or not it's actually warranted, and economic downturns are the perfect opportunity to do so. Politics tends to attract people who are in love with power, and while politicians probably do genuinely believe they are doing good things, they'd also generally prefer to strangle an economy to death with their own two hands than to let it flourish without them micromanaging every aspect of it. Such is the nature of a control freak. I don't know that it's "rational", but it's certainly to be expected.