More Keynesian than Keynes

Paul Krugman's 2012 book End this Depression Now accomplished one of its stated objectives; I found it to be very accessible---anyone looking to understand Keynesianism (although there's really not all that much to it) will find it to be an enlightening read. And I totally share his suspicion (times a hundred) of politicians. Although he seems to believe that the right is disproportionately more (if not exclusively) prone to pander. Of course there he's dead (and dangerously) wrong---the qualities inherent in those who seek national office are universal---and, among pundits, only the most partisan would suggest otherwise. Oh, and I remain unconvinced that a nation can borrow and spend its way to prosperity.

Krugman is an avowed Keynesian, I get that, although I'd say he's of the modern variety. The more I study Keynes, the more I wonder if Keynes himself would be nearly as Keynesian as today's Keynesian. His friend Frederic Hayek had his doubts (from Hayek's Personal Recollections of Keynes [from Sudha R. Shenoy's 1972 collection A Tiger by the Tail]):

I had asked him whether he was not getting alarmed about the use to which some of his disciples were putting his theories. His reply was that these theories had been greatly needed in the 1930s, but if these theories should ever become harmful, I could be assured that he would quickly bring about a change in public opinion. What I blame him for is that he had called such a tract for the times the General Theory.

The fact that Keynes was at all open to the possibility that his theories might become harmful made him less of a Keynesian than Krugman.

The thing about Keynes is that economics was not really his thing. Not that he wasn't a student---clearly, the writings of Thomas Malthus influenced him greatly---it's just that Keynes, per Hayek, had many things on his mind:

He was so many-sided that for his estimate as a man it seemed almost irrelevant that one thought his economics to be both false and dangerous. If one considers how small a share of his time and energy he gave to economics, his influence on economics and the fact that he will be remembered chiefly as an economist is both miraculous and tragic. He would be remembered as a great man by all who knew him even if he had never written on economics.

The thing about Krugman is that economics really is his thing. But, sadly, he holds a deep passion for politics. I mean he named his blog The Conscience of a Liberal. He's kinda like the left's Rush Limbaugh. How sad it is that the independent and the nonpartisan can must dismiss as partisan hackery so much of what this Nobel laureate has to say.

One place however where Krugman does go bipartisan is, alas, a most pernicious place; protectionism. In chapter 12 he echoes, among many others in both camps, Mitt Romney:

There are other fronts on which policy could and should move, notably foreign trade: it's long past time to take a tougher line on China and other currency manipulators, and sanction them as necessary.

So the champion of the American downtrodden would impose sanctions onto those countries that allegedly go to great lengths to provide low-income U.S. consumers with affordable goods? Apparently so. In fact he'd attack from both ends: Just a few pages earlier he endorses a list of aggressive measures Princeton professor Ben Bernanke advised Japan to undertake back in 2000---measures he'd like Chairman Ben Bernanke to pursue today---including the following:

Intervening in the foreign exchange market to push the value of your currency down, strengthening the export sector.

So, we should crack down on currency manipulators (hitting the U.S. consumer) while manipulating our own currency lower (ditto)---insert multiple ?'s here.

Any resort to protectionism exposes either a profound ignorance of basic economics or an egregious attempt to win the approval of a select group. Maybe both for Romney, but when we're talking about a polished political pundit (an economist no less), we have to assume the latter.

All that criticism aside, if you're looking for an easy, at times entertaining, read on how today's Keynesian views the world, pick up a copy of End This Depression Now. Then please read one of the very best (truly nonpartisan) books of the 20th century on basic economics, Henry Hazlitt's Economics in One Lesson. Or if all you're after are honest economic insights, just skip to the latter.