(HT Russ Roberts) What do you think?
He writes: "The reaction to the May employment report has been depressingly
predictable: Republicans have been gleefully proclaiming that President
Obama’s fiscal stimulus didn’t work. Many people who commented on my post about the political impact of the job figures parroted the same line, arguing that the lacklustre economy demonstrates Keynesianism is a bust.
Having spent much of the past three years reading and writing about
this subject, I wonder whether it is even worth engaging with these
arguments. The aversion to government spending, and government activity
generally, which animates many Americans isn’t actually based on
economics, or logic: it is an emotionally driven belief system, founded
upon a cockeyed view of American history and buttressed by a variety of
I can definitely sympathize with this, but clearly because I maintain this blog the way I do, I think the stakes are high enough that its worth engaging. The other reason is that while there are frustrating skeptics out there, there are good, reasonable ones too.
I liked this point by Cassidy as well: "The real policy debate isn’t about Keynesianism versus the free market,
it is about magnitudes and techniques: How much stimulus is necessary?
And how should it be divided between government spending and tax cuts?" And we could throw in "how should it be divided between fiscal and monetary policy?".
Those are the really interesting questions, not this false choice between Keynesianism and free markets. This is another big reason why Keynesians hate talking to a lot of the skeptics. "Debating Keynesianism" to them means accusing Keynesians of not advocating, not trusting, or not understanding the market.
Put yourself in our shoes. What if I harangued Bob Murphy every day for being an Austrian and not understanding the importance of markets. He'd get pretty tired of it and he'd feel justified in thinking I'm a little ignorant of what he thinks.
Now, there is room for legitimate disagreement. They often think that government and markets are more or less a contradiction. We don't (like I've said before - I'm not a libertarian because I don't think it's strong enough on liberty). That's obviously why these discussions of markets occur. Hashing that out is valuable. But you really need that understanding of the source of the disagreement, otherwise you end up telling Keynesians they don't like markets and Keynesians end up thinking you're a cooky ideologue.
Crowding In and the Paradox of Thrift
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