Peter Boettke argues that "Keynesianism cannot work to solve our current problems because Keynesianism is responsible for our current problems", bringing Buchanan and Wagner into the discussion of Samuelson's confused op-ed yesterday.
It's true, Boettke is just pointing us to Buchanan and Wagner and while I'm very familiar with their argument I've never read the book. Perhaps I should read the book before asking questions, but I don't think I'll be particularly surprised by anything - so I don't think it's outrageous to pose a few questions to Boettke about the logic of this post first.
1. First, why is running deficits "the problem"? Boettke doesn't explain this at all and I'm not sure what his argument is. It's crucial for people who think this to actually make an argument rather than just presuming it's obvious, beause most economists don't think it's obvious (although most of the public probably thinks it is).
2. I would have said that Medicare is the only real budget problem we face in this country. The only one. Some people throw in Social Security - my understanding from people who have been on the trust fund's board is that that is a relatively small problem with an easy fix. Some people would throw in our tax policy - but that can change very quickly and easily too. It strikes me as reasonable to say that for the United States, the only problem we have associated with the public debt is Medicare. Bringing this back to Boettke, what could our Medicare problems possibly have to do with Keynesianism? I don't know because he doesn't say, and Buchanan and Wagner don't talk about Medicare at all (based on a word search of the html version of the book).
3. How exactly did Keynesianism cause our problems? Again - the argument is unclear to me. I guess it's clearer if you assume "the problem" is simply the fact that we run deficits persistently when we didn't used to. But that brings us back to #1. Why is that a problem? Everyone who thinks it's a problem seems to think it's self-evident. Everyone who doesn't think it's a problem is left scratching our heads as to what the argument is.
Alert readers may argue Keynes was not a "fiscalist", rendering Boettke's whole post moot. I'm not quite sure about this tactic. Keynes wanted to put the deficits in a capital budget, but he wasn't against "loan expenditures". I think the Keyes/Lerner split is overblown - overblown by Keynes himself no less than anyone else. Certainly Keynesians are comfortable with deficits, and that's the point.
For the Fourth of July
3 hours ago