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Chris
12-20-2016, 08:23 AM
"We are all Keynesians now" Milton Friedman quipped when Nixon embraced Keynesian economics.

Even Trump Is a Keynesian (https://www.bloomberg.com/view/articles/2016-11-18/even-trump-is-a-keynesian)


...First, some background. During the Great Depression, John Maynard Keynes suggested that government spending would boost the economy, by increasing aggregate demand. In a recession, there are unused resources -- empty offices, idle factories and unemployed people sitting around at home. This obviously means an economy is producing less than it could; if someone just took the unemployed people and put them in the empty offices, output would go up.

For Keynes, that someone was the government. Handing out money, whether through tax rebates or (preferably) infrastructure projects, would prompt people to spend that money, which would prompt other people to spend the money in turn, creating a virtuous cycle. Spend enough government cash, and you could put all of society’s unused resources to work, ending a recession. This was the theory of fiscal stimulus.

<skip Kennedy's adoption of Keynesian economics, and Nixon's, and its death in the 80s, buried 25 years, Reagan's adoption, Clinton's...>

...Now, Donald Trump is amping up the Keynesianism. Although the numbers are fuzzy, he consistently promises large tax cuts and a lot more infrastructure spending. Though the economy isn’t in a recession, Trump seems to be betting that Keynesian policy will keep the economy -- and his popularity -- buoyant.

The result is clear: No matter how many models they wrote down and how many triumphant declarations of victory they made, the anti-Keynesians -- Lucas, Sargent and the many that followed them -- never convinced many leaders. U.S. presidents all still believe that government spending and tax rebates boost real economic output. They believe it so strongly that they’re willing to run big deficits and spend their own political capital. Only in Europe, where some countries briefly tried austerity during the Great Recession, did anti-Keynesian ideas seem to have some purchase -- and even there, policy shifted back to Keynesianism when austerity caused more harm than good.

...

Newpublius
12-20-2016, 08:41 AM
"We are all Keynesians now" Milton Friedman quipped when Nixon embraced Keynesian economics.

Even Trump Is a Keynesian (https://www.bloomberg.com/view/articles/2016-11-18/even-trump-is-a-keynesian)

The biggest problem with economics as a school od thought is that it impels its disciples to want to assume the role of the economy's proverbial Wizard of Oz, to tweak the economy to perform better. I, myself, fall into this trap knowing I should know better. The economy is NOT an engineering project.

Chris
12-20-2016, 08:52 AM
"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." Friedrich August von Hayek

But even Hayek advised governments.


Arnold Kling, Specialization and Trade, devotes a chapter denouncing the mechanical or engineering metaphor many economists believe in.

nathanbforrest45
12-20-2016, 11:22 AM
I misread the title and thought you were trying to claim Trump was actually from Kenya!!

Captain Obvious
12-20-2016, 08:44 PM
I misread the title and thought you were trying to claim Trump was actually from Kenya!!

He was born in the backseat of a backhoe on a drillsite owned by Texaco there.

:biglaugh: