Here’s the thing. All those economists are Keynesians. They agree because they subscribe to Keynesian policies that are fundamentally flawed. We could discuss the Keynesian oddities—deficits are good, consumer spending (not production) is king—but I don’t need to get into it.
Because I know this: I don’t like the intellectual milieu from which Keynes sprung and its progeny that have saddled higher learning for the past 30 years.
Our universities are awash in theories and wrongheaded assumptions that were formulated in the first half of the twentieth century: Kinsey on sexuality, Picasso on art, Mead on anthropology, Freud on sex-obsessed psychiatry, Cage on music, Woolf on literature, Justice Douglas on law.
Keynes is cut from the same fabric as those thinkers. They had serious personal issues that bled into their novel theories. “Connaturality” is how Thomas Aquinas may have explained it: flawed moral lives create flawed thinking.
I won’t go into Keynes’ personal life, but suffice it to say, it wasn’t stellar. And regardless, we know he came up with his novel theories at the same time that all those other novel theories came out. Even if we don’t know the reasons the first half of the twentieth century created so much wrongheadedness that became higher-learning gospel in the second half of the twentieth century, we ought at least to distrust those novel theories.
We’ve seen those wrongheaded theories wreck the family fabric, turn Hollywood into a cesspool, give us modern art, warp First Amendment jurisprudence. It’s not farfetched to say those theories have gnarled all areas of the American landscape. The only thing they haven’t wrecked yet is the economy.
But of course the evidence that they’ve wrecked that, too, is in the process of getting revealed. Everyone sees it and knows about it, but they await the Obama economic team to show them it’s not true, that these Keynesian economic theories can work, that everything will be okay.
I might be ignorant next to all those Keynesian economists, but I’m not accepting their conclusions. I don’t like the ideas that Keynes’ fevered intellectual contemporaries concocted. I disdain the cultural and sociological flotsam they’ve left behind.
And I’m sure as hell not letting my money see what this last gasp of modern thinking can ruin.
A lengthy-but-helpful article from Smart Money about what Obama is looking to do. I liked this passage from the introduction:
Obama doesn’t have the overwhelming public support FDR enjoyed or the arm-twisting savvy of a Lyndon Johnson. And the entitlement programs that those big-government presidents enacted may tie the new president’s hands. Federal spending now accounts for almost 20 percent of U.S. economic activity—compared with about 7 percent when FDR took office—in large part due to Social Security and Medicare. Roosevelt nearly doubled the federal budget in his first term to launch public-works programs and unemployment benefits, but Obama has less room to maneuver, explains Babson College history professor James Hoopes; a similar expansion of federal debt today “would have terrible consequences in terms of cramping other economic activity or boosting inflation.”
The Left claimed FDR ended the Depression. The Right claimed WWII ended it. Neither claim ever made sense to me. If government spending can't end a Depression, like the anti-FDRs claimed, how could government spending during a war end it?
It can't. One heavy-hitter is finally taking on the Left and Right on this issue. Check out the profile of Robert Higgs at EconTalk. Pay close attention to the linked articles from 1992 and 1997, which have been updated in his book, Depression, War, and Cold War.
My preferred explanation for what ended the Great Depression: The removal of economic controls after WWII, combined with a devastated Europe that needed our goods.
The Wall Street Journal goes cheap: How to save money and get a real return on your money.