Obamanomics Makes Bad Keynes Worse

by Ryan on February 6, 2010

in Economy,Politics

British economist John Maynard Keynes had a number of theories that the Left loves because Keynes finds a nice cozy place for big, powerful government in free markets.  Keynes was an advocate of the government taking a huge role in investment, something corporatists everywhere could cheer!  So, while I do not agree with the benefits of Keynes’ demand-side economic theories, which takes money from one part of the economy and merely shuffles it somewhere else with the government at the helm, the Left has taken much of his approach over the years and tweaked it to do their populist bidding.

Keynes believed that government stimulus during economic recessions should be temporary to make the business cycle less harsh on investment, giving people more confidence in spending.  Makes you feel nice, but not very good math.  Also, spending like Obama (and Bush before him) which creates “structural deficits” was also something Keynes likely did not condone; instead he wanted deficits to be temporary during the tough times and paid for during the good.  Raising taxes on anyone to raise government revenue during the economic downturn was something he believed to be nearly suicidal to an economy — even Keynes knew that was dumb!

Carnegie Mellon economist Allan Meltzer believed that even Keynes would “roll over in his grave if he could see the things being done in his name.”  Considering Obamanomics uses failed Keynesian theories as its premise while including damaging structural deficits does not bode well for our economic future — whatever Frankenstein-like economy emerges from this latest Keynesian plunge will not be pretty. Obamanomics will take the world’s biggest economy and pull it back to the 1970s — and who wants to go back to the ’70s!

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