Newsweek, February 16, 2009:
In January of 2009, the unemployment rate was 7.9 percent.
In January of 2011, we pondered “The Death of Keynes?” in a blog post that rounded up the following quotes:
“Random thought of the day: what if Lord Keynes was right . . . but only in 1932,” Megan McCardle wrote this past summer.
At Ricochet, Peter Robinson writes that we’re witnessing the endgame for Keynesianism:
Steve Forbes, arguing in the current issue of Forbes that Keynesianism is now coming under a final, and mortal, intellectual assault:
[G]overnment efforts to “temper” the “ups and downs” of business cycles will be regarded as preposterous and hubristic. We’ll no longer have the spectacle of a Larry Summers, President Obama’s outgoing Director of the White House National Economic Council and Assistant to the President for Economic Policy, overtly declaring the Keynesian axiom that if consumers don’t spend on a scale satisfactory to such economic commissars as himself then the government must seize their assets and spend them for them.
The government, seizing our assets to do our spending for us. Really, that’s as pointed and accurate a one-sentence description of Keynes as I’ve ever come across. Beautiful.
Forbes writes that “There’s one big story this year that won’t garner headlines but will have a profound impact on our future: The edifice of post-Great Depression economics is coming under an ultimately mortal intellectual assault.”
Is he right? I’d like to think he is, in that it’s certainly longer overdue, but I can’t imagine governments giving up the power to tax and spend that Lord Keynes gave them 80 years ago willingly.
Flash-forward to today, as Stacy McCain spots an “Era of Super-Colossal Ever-Expanding Big Government is Over” moment from Sen. Dick Durbin (D-IL) and prefaces it by noting:
White House economic adviser Gene Sperling was all over the morning TV news shows today replaying his “shared sacrifice” broken record, while Democrat Sen. Dick Durbin mourned the death of Keynesianism:
The Republicans are killing Keynesian economics with their attempt to cut spending as the economy rebounds from a recession, Senate Majority Whip Dick Durbin (D-Ill.) said in a floor speech on Sunday.”I would say … that symbolically, that agreement is moving us to the point where we are having the final interment of John Maynard Keynes,” he said, referring to the British economist. “He normally died in 1946 but it appears we are going to put him to his final rest with this agreement.” . . .
Oh, if only it were so! Most sane people had thought Keynesianism died in the “stagflation” debacle of the 1970s, and yet for the past three years the ghost of Lord Keynes has haunted us again. Despite the discrediting of Keynes’s theories, liberals still believe in him and so, any time liberals wield decisive influence, we can expect to see the same disastrous deficit-spending policies pursued.
That is a neutral objective fact!
In July, the unemployment rate was 9.2 percent. From January of 2009 until January of this year, Democrats controlled the White House and both houses of Congress. This seems like a perfect crucible to have tested Keynesianism in the modern world; I’d say the result are definitely back from the lab. Additionally, they point out the cargo cult of New Deal Worship, as Jonah Goldberg noted last year:
Gleichschaltung is a German word (in case you couldn’t have guessed) borrowed from electrical engineering. It means “coordination.” The German National Socialists (Nazis) used the concept to get every institution to sing from the same hymnal. If a fraternity or business embraced Nazism, it could stay “independent.” If it rejected Nazism, it was crushed or bent to the state’s ideology. Meanwhile, every branch of government was charged with not merely doing its job but advancing the official state ideology.
Now, contemporary liberalism is not an evil ideology. Its intentions aren’t evil or even fruitfully comparable to Hitlerism. But there is a liberal Gleichschaltung all the same. Every institution must be on the same page. Every agency must advance the liberal agenda.
And this is where the Catch-22 catches. The dream of a nimble, focused, problem-solving government is undone by the reality of hyper–mission creep. When every institution is yoked to an overarching philosophy or mission, its actual purpose can become an afterthought. In 2005, volunteer firefighters from all over the country offered to help with Katrina’s aftermath. But FEMA sent many of them to Atlanta first to undergo diversity and sexual-harassment training (which most already had).
Such examples are everywhere. What is political correctness other than the gears of the liberal Gleichschaltung? The financial crisis was worsened because Fannie Mae and Freddie Mac became tools for liberal social engineering. Let’s not even mention public schools.
The White House is determined to be a great friend (i.e., servant) to the unions, so everything from the stimulus to the automaker buyout to the Gulf spill must first pass union muster. Remember those vital, “shovel-ready” weatherization jobs the stimulus was supposed to pay for? The Labor Department delayed them for nearly a year while trying to figure out how to comply with pro-union “prevailing wage” rules for each of more than 3,000 counties.
Liberalism has become a cargo cult to the New Deal, but many of the achievements of the New Deal would be impossible now. Just try to get a Hoover Dam built today.
QED, the unintentionally hilarious recent MSNBC ad.
So when is the era of Big Keynesianism finally over?