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John Maynard Zombie


Economic heavyweight John Maynard Keynes is often quoted for his observation, “In the long run, we’re all dead.” Keynes’s ‘long run’ arrived long ago, but his disproven theories march on. For our current rash of bailouts or spend-and-tax “stimulus programs”, blame Keynes.

Harvard economist Greg Mankiw directs a shotgun blast at Keynesian thinking:

People don’t usually spend their money buying things they don’t want or need, so for private transactions, this kind of inefficient spending is not much of a problem. But the same cannot always be said of the government. If the stimulus package takes the form of bridges to nowhere, a result could be economic expansion as measured by standard statistics but little increase in economic well-being.

You needn’t be an economist to benefit from reading the whole thing.

Mankiw suggest this spend-at-all-costs mania results from the work of Keynsian disciple Paul Samuelson. Samuelson’s textbooks became dogma and catechism in nearly every econ program over the last half-century.

As in zombie movies, the hordes are infected. Daring to deviate from the Keynsian faith opens one to attacks on character and motive. Any hope for a bright and living future rests within isolated pockets of clear-thinking economists:

Second, on the economics of the matter, opposing such a stimulus package -- for macroeconomic reasons or for public-choice reasons or for both reasons -- is hardly a sign of economic dementia.  It's possible, again, that the stimulus reflects good economics and that opposition to the stimulus (such as is expressed by my colleague Dick Wagner, by Ed Lopez, and by other economists listed by DeLong) reflects weak economic reasoning.  But to treat Keynesian fiscal stimulus as beyond-question appropriate -- to treat economists who reject Keynesian theory and policy as buffoons -- is simply nonsense.  Or worse: such treatment seems like the actions of a political hack.

To claim that government cannot spend resources that it doesn't first acquire from the private sector is hardly bizarre.  To claim that taking resources from the private sector reduces demands in those industries from which the resources are taken is hardly bizarre.  To claim that any economic activity stimulated by increased government spending is offset by economic activity elsewhere slowed by government's need to get the resources it spends is hardly bizarre.

Grab a torch and join the resistance!