John Maynard Keynes, the GOP's latest whipping boy

[mike r]

http://www.washingtonpost.com/wp-dyn/content/article/2010/09/10/AR2010091003754.html

John Maynard Keynes, the GOP's latest whipping boy
By Dana Milbank

"In the long run we are all dead," the great 20th-century economist John Maynard Keynes once stipulated. As usual, Keynes was right, and in this case it's probably for the better: Keynes didn't live to see the Republicans of 2010 portray him as some sort of Marxist revolutionary.

"The president will use the Labor Day holiday as the launching pad for yet another government stimulus effort, another play called from the same failed Keynesian playbook," declared Rep. Eric Cantor (Va.), the No. 2 Republican in the House. "The point is that the Obama Keynesian-on-steroids has not worked," Sen. John McCain (Ariz.) announced on Fox News. Rep. Paul Ryan (Wis.) determined that "the Keynesian experiment, which was more spending, has failed to produce jobs."

These men get their economic firepower from conservative think tanks such as the Cato Institute (which writes of "Barack Obama's Keynesian Mistake") and from business leaders such as Intel's Paul Otellini ("their experiment in Keynesian economics not working"). Together, they've managed to turn the Keynesian notion of economic "stimulus" into such a dirty word that President Obama and his aides are afraid to let it escape their lips. What's with the hate for Maynard?

Perhaps these Republicans don't realize that some of their tax-cut proposals are as "Keynesian" as Obama's program. There's a fierce dispute about how best to respond to the economic crisis -- Tax cuts? Deficit spending? Monetary intervention? -- but the argument is largely premised on the Keynesian view that government should somehow boost demand in a recession. Or perhaps, more ominously, these Republicans know exactly what they are saying when they reject Keynesian intervention: that the government should do nothing to help the millions out of work or to rebuild confidence in the economy...

[metapunditedgy]

1. I've been hearing right-wingers criticizing Keynes for a while now. I just ignore it,

because the right-wing economics talking points are so crazy, it's like debating with a fairy tale.

[Chan790]

2. You mean like the RW talking point that Keynes doesn't understand Say's law...

and that's why Keynesian economics will never work?

Nevermind that they worked wonderfully for almost 50 years; most of the idiots I hear repeating that crap cannot answer this simple question:

What is Say's Law?

:shrug:

“Supply creates its own Demand.”

If they understood that, they'd understand that they're on the wrong side though.

Say’s Law has various interpretations. The long-run version is that there cannot be overproduction of goods in general for a very long time because those who produce the goods, by their act of producing, produce the purchasing power to buy other goods...Certainly the long-run version is correct. Given enough time, supply does create its own demand. There can be no long-run glut of goods.

http://www.econlib.org/library/Enc/bios/Say.html

The problem, as Keynes pointed out, is it's simply not true in the short term.

Money is not a commodity. The nature of debt does not change with the economy and credit/commodity bubbles (which have certainly existed and caused numerous recessions and depressions) frequently cause a short-term glut of goods. More that only the short-term matters because as Keynes pointed out. "In the long-run, we're all dead." (I'd have posted a lovely quote and/or article to demonstrate this but it's impossible to find a summary of it that doesn't extensively cite RW economists like Hayek and von Mises misrepresenting Keynes's POV to make their own arguments stronger.)