Putting Our Hope in Keynes

President Obama and the Democrats are dealing with this economic crisis by following the economic theory of John Keynes, published in 1936. Much could be said about his theory, specifically that it really is unproven. In fact, textbooks in the 1980s used several pages to show how it was bad theory to follow and for a decade or more, it was considered a washed up theory. Now it’s back in vogue, and it fits perfectly with socialist agendas because it is viewed that the way to get out of a recession/depression is for the government to spend if people won’t (due to fear and wanting to save). Democrats now have a justification to spend away due to Keynes’s economic theory, and they are. The stimulus package is filled with pork, but it’s ok, this is what we need to do according to Keynes. Keynes model would say that by spending 700 Billion, you’ll raise GNP by 1 Trillion dollars. One economist says this is the first time in history that the theory is being tested to this degree. He is concerned that we are relying upon a theory that has never been proven and that we are taking a huge risk. If it works, Obama and Keynes win. If not, we’re all in huge trouble. Huge national debts must be paid back some day. As our currency becomes less valuable because of high national debt, interest rates will rise.

What’s additionally interesting is to consider the man himself. He was an elitist, bigoted, perverse man who believed Americans were idiots and that manipulating human genes to improve the race was a beneficial and imperative thing to do (a eugenicist). He lived an openly gay lifestyle for years before marrying a woman whom he stayed with until he died (I wonder what the pro-gay crowd that says you can’t change your sexual orientation think of that!). He hung out with upper-class liberals who promoted living with no moral constraints. But even among this group, Keynes was considered extreme in his behaviors and beliefs. His peers wrote that Keynes was too dirty even for them. He loved the spotlight and would say outrageous things just to get the attention of the press. He thought the only people smart enough to run a country, including the US, were graduates from Cambridge. Everyone was inferior. Great! We have a dirty, bigoted, elitist British snob setting the pace for our economic policy! Lord help us!

Reference: NPR: This American Life: The New Boss