Sunday, July 21, 2013

Bipartisan renunciation of fiscal discipline...

The work of economist John Maynard Keynes inspires both ridicule and respect. Ridicule, generally, from those who consider themselves "conservative", and respect, generally, from those who call themselves "progressive". As you may have gathered I am no fan (to say the least) of Keynesianism. And, frankly, I find closet Keynesians (those who tout free markets then lobby for intervention) to be a despicable bunch. Therefore, I must say that in this regard it's the (pardon me) "conservative" politician (and pundit) who irks me to no end. At least "progressive" politicians (and pundits)---save for the fact that they call themselves "progressive"---are, generally, true to their platform.

I know that many of you are committed Republicans. And while you may not appreciate this message, it's critical that you get it (although I suspect that many of you already do). At its core---when it comes to economics---there is very little that distinguishes your party from its opponent. In his book The Great Deformation (a fascinating exposé, although not entirely without [in my strong opinion] disputable assertions) David Stockman makes the point beautifully. Here he perfectly nails a fundamental problem with Keynesianism:
Indeed, suffocation of the free market in totally mobilized political struggle is the ultimate evil of the Keynesian predicate. It causes every tick of the unemployment rate and every tenth of the GDP report to trigger waves of political praise, blame, and maneuver. The resulting nonstop partisan sound bites about how “our” plans would make the outcomes better and how “their” policies have made them worse continuously reinforce the presumption in favor of more state action to bolster the economy.

And here he nails today's "conservative" politician:
The GOP renunciation of fiscal discipline is thus Keynesian, not fact based. In order to compete with the Democrats it has gone into the state-sponsored growth business. Republicans now effectively concede that prosperity cannot be left to the comings and goings of producers, consumers, and investors on the free market; it must be constantly dialed up through the machinery of the IRS. So Washington has become thoroughly bipartisan in its relentless pursuit of schemes for the state to fix the private economy—a modus operandi which guarantees the bankruptcy of the former and the failure of the latter.

In that last sentence I think Stockman is being a bit too generous on behalf of the politician and a bit too dire with regard to the future. I'd say it this way: "Washington has virtually forever been managed by actors in pursuit of schemes to fix elections by taking whatever measures they deem necessary to goose the private economy --- a modus operandi which risks bankruptcy of the former, although I'd never count out the latter."

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