Niall Ferguson: Keynes can’t help us now
This link takes you to the full article by Niall Ferguson. Here is a quote:
I heard almost no criticism of the $819-billion stimulus package making its way through Congress. The general assumption seemed to be that practically any kind of government expenditure would be beneficial — and the bigger the resulting deficit the better.
There is something desperate about the way economists are clinging to their dog-eared copies of Keynes’ “General Theory.” Uneasily aware that their discipline almost entirely failed to anticipate the current crisis, they seem to be regressing to macroeconomic childhood, clutching the Keynesian “multiplier effect” — that holds that a dollar spent by the government begets more than a dollar’s worth of additional economic output — like an old teddy bear.
Ferguson is worth reading, not because he is an economist, but because he is a financial historian. Totally absent from the discussion about the current spending legislation is evidence that massive government spending has stimulated economic growth in the past – anywhere – in any political system.
Some people trot out FDR and the New Deal as a shining example but the facts are that FDR’s massive spending (for the time) did not make a dent in unemployment or productive economic growth in 8 years. His spending did get FDR and Democrats reelected for a few decades. Why should we assume that today’s Democrats are any better motivated?
Related Posts
RSS
