Keynes is dead ... in Europe!
With news breaking earlier this week that the UK is cutting 500,000 government jobs, I wanted to write a follow-up post to the piece I wrote earlier this week on how Keynesian economic policies have failed in the United States and Japan.
Fortunately, as I was reading Jonah Goldberg's G-File Friday, I realized he'd written what I wanted to convey (and in a much more humorous manner).
Join me in celebrating the death of Keynesian economics, brought to us by ... Europe.
But While We're on the Topic of Pains in the Krugman
I finally read Steve Spruiell's excellent magazine piece on Paul Krugman. One passage in particular caught my eye:Krugman's claim that the stimulus should have been bigger is consistent with his view that for every macroeconomic problem there is a correct answer that it is within the power of one man to calculate. Not only is such a claim unfalsifiable, but our experience with fiscal stimulus indicates that this particular form of voodoo economics simply steals demand from the future and leaves us worse off in the long run. Krugman urges us to ignore that history: He argues that real fiscal stimulus has been tried only once in recent memory, when massive government borrowing during World War II pulled America out of the Depression. But there are many competing explanations for the post-war boom -- too many to allow us to gamble our prosperity on a World War II-sized stimulus on the chance that the Keynesian view is right this time.This raises a number of points, gripes, grievances, and, well, the dead. Not literally, of course. But not quite figuratively either. Let me take another lithium pill and start again. It raises the issue of John Maynard Keynes, who is dead, literally, and apparently figuratively in Europe. So says the New York Times, which ran an intellectual obit for Keynesianism just this week.
This is more devastating to Krugman & Co. than I think anyone really appreciates.
First of all, liberals like Krugman routinely argue that the Europeans are smarter than us. Not smarter than Krugman per se, because according to Krugman no one is smarter than Krugman. Even imagining such a thing is like asking if God can make a boulder so heavy he can't lift it, which itself is problematic for the obvious reason that Krugman resents the suggestion he isn't God. But liberals generally love to press their noses up against the glass of the social-democratic candy store that is Europe. Oh, the deliciously high taxes! The mouth-wateringly rich vacation times! The succulently egalitarian socialized medicine. The subsidized cheese that smells like urine and tastes like you wish it could be. The state-funded black-and-white movies with no discernible narrative that make insecure people feel smart for understanding and twisted people feel normal by being sexually aroused at all the right parts.
Well, suddenly Europe's breaking up with us, and not over some cowboy war in the Middle East for "democracy" or American "national security" (please note: those are sarcastic air-quotes). Europe is saying they disagree with the New York Times op-ed page! Cognitive dissonance like this might just make MSNBC watchers explode like mice when subjected to music by the Ramones.
But it's not the best part. Krugman, Brad DeLong, and other voluptuaries of Keynes don't merely insist they are right. They insist that people who disagree with them are incredibly stupid or dishonest or both. Suddenly, the smarty-pants Europeans these guys always used as exhibit A in their case for spending money like a New Jersey Turnpike official on crack are testifying for the Tea Partiers. How inconvenient!
The next time some Krugman-worshipping yutz tells you how stupid you are about for opposing another kabillion-dollar boondoggle, you can just say, "Hey, hold on a second. I'm just agreeing with the French, the Germans, and the British. Why are you so provincial in your American exceptionalism?"
Didn't I tell you Goldberg is awesome? Now do yourself a favor and sign up for his weekly Goldberg File e-mail.