Keynesian exuberance for the powers of stimulating demand or the 'consumer' has been in vogue since the 1930s. It is sheer nonsense which is taught in every school across the globe. Keynesian economics is little more than intellectual pablum used by those in power or by a technocratic and largely illiterate elite to increase their power; enhance government; print money and otherwise destroy normal economic relationships. Keynes' theory, so believed by professors is in practice a disaster.
Keynes was a left wing wall flower and a member of the deranged Bloomsbury group of inter-World War British pacifists. He was an arrogant theorist who truly believed in the magical elixir of large government and in the technocratic dream of controlling billions of personal, business and economic decisions, to programmatically construct a perfect world order. Keynes gave intellect and jargon filled cover and rationale to politicians and demagogues who would cite his book, 'The General Theory of Employment, Interest and Money', to justify state interventionism.
According to this theory which has failed in practice every time it has been tried, governments can stimulate an economy through granting consumers, workers and businesses sums of borrowed money. This is termed a 'stimulus'. This debt or current deficit financing stimulus, is then paid back or retired, when the economy strengthened by consumer spending and business investment, produces a surplus of tax revenues. The stimulus is needed, so argued Keynes, to overcome business cycles, downturns and unexpected events which would decrease jobs, increase unemployment and impact state revenues. By macro and micro-managing economic and production processes, the state, so thought Keynes, would avoid cyclical variations and ensure that the lowest level of unemployment could be maintained. Government power was thus indispensable to full employment and income equality.
There are many problems with such a counter-rational plan to economic management. None of Keynes' core assumptions make sense when they are analysed either separately or together. Business cycles have historically been caused by governments, and they are usually a response to government policies to increase the size of the state through trade barriers, higher taxation, more spending, more regulation and programs of fear and compliance. The Great Depression, the 70s Stagflation and the current financial crisis are all obvious examples of this fact. Government causing economic malaise would appear to mean that government programs are not the solutions required to either get out of an economic downturn, nor to prevent future derailments from taking place.
Tags: Economics, Free Markets
