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Keynesian Economics: The Brief and Unfortunate History of a Moribund Theory

Economists frequently complain that, unlike other sciences, society's management of its scarce resources allows no opportunity for realistic experimentation. The image of ambitious legislators, endowed with greater amounts of political acumen than economic expertise, donning lab coats and safety goggles, and reaching for the test tubes of government intervention ought to incite animosity in the American public. Frustrations aside, hopefully the results of the tube labeled "Keynesian Economics" will finally bury the erratic and inconsistent theories of deficit spending, public works, and central economic planning once and for all. Hopefully.

But exactly how many generations of Americans will be exposed to the toxicity of these particular experiments before Scientist Sam finally chucks them in the wastebasket? Historically, the advice of John Maynard Keynes has been less economic panacea than medical malpractice. Keynes denounced neoclassical economic models by denying the ability of competitive markets to maximize a system's employment. By 1939, a decade of adherence to Keynesian suggestions and unbridled government spending had left 17% of Americans unemployed. George Will notes that "America's greatest industrial collapse occurred in 1937, eight years into the great depression and nearly five years into the New Deal." 

In fact, most experts now agree that New Deal policies actually delayed economic recovery. The cause of the failures of deficit spending as a macroeconomic remedy can be found in the concept of Ricardian equivalence, which posits that investments made despite a budget deficit delay an inevitable tax increase, or, more simply, identifies the choice of taxing entities as "tax now" and "tax later". Consumers realize that a budget deficit in excess of one trillion dollars is ultimately unsustainable and perceive (accurately) the ephemeral nature of temporary tax relief. Hence, the greatest immediate stimulative effect would perhaps be achieved by cuts in government spending- positively altering taxation expectations of potential consumers. 

Upon the application Keynes' formula to America's current economic crisis, Princeton economist Alan Binder estimated that the Ameriphobic British proponent of eugenics (Our pal Jonathan in case you were wondering) would demand an economic stimulus in the amount of $650 billion. Nearly two hundred billion less than the actual legislation drafted and passed (exclusively) by House Democrats entails. If the overzealous Washington scientists do not have the common sense to abstain from an historically unsuccessful policy experiment which places an almost unbearable tax burden on future generations, perhaps they will have the decency to take note of the results.

Why the Stimulus Package Won't Work

Upon watching the news, I discovered that the $825 billion Stimulus Package passed. Every Democrat voted for the bill, but, to my dismay, it appeared no Republican voted for it. With that, I could only see the inevitable failure of the bill, as so much money doesn't seem to actually stimulate anything (and if it does, I would really like to hear such insane logic).

Here is just a few things that I do not see stimulating the economy: giving millions of dollars towards more free contraceptives, NASA being paid to conduct tests on climate change, rehabilitating the National mall, switching old cars with more fuel-efficient cars, and the list goes on and on.

Quite frankly, I believe Vice-President Joe Biden put it better than I could, "If you notice, roughly 40 percent of this entire package is tax cuts." What this means is that the other 60 percent is nothing but more and more and more government spending on worthless projects that would be better left for the private sector to undergo as they please. The hard-earned taxpayers' money has been amounted to nothing but mere confetti that the government throws up in the air to amuse everyone. Problem is, this time it's not so amusing.

Introduction to the Justice of Liberty

It is the purpose of this blog to advocate the political idealogy of classical liberalism and modern libertarianism. Because Logic and empirical evidence both indicate that free markets, limited government and the omission of excessive authority not only allow for the optimization of human creation, but also constitute the only morally acceptable political structures, we intend to proliferate the philosophy behind the modern libertarian movement and present truthfully and objectively the ongoing evidence of the virtue and efficacy of the concepts of freedom and peace upon which the party is based.

Perhaps the only greater threat to American freedom today than a continuously expanding government is the ignorance and indifference of of the constituency that passively allows the violation of their constitutional rights. Because Goethe's insight "None are more hopelessly enslaved than those who falsely believe they are free" rings true in today's America, it is also the goal of this blog to educate a politically active but largely mislead public of the abuses of power for which our current government is responsible, and galvanize an idealogical revolution which revivifies and extolls the ideals of a younger, more innocent America. Thank you and enjoy.