Keynesian economics is a failure.
No matter where’s it’s been tried, it’s been a flop.
So why, whenever there’s a downturn, do politicians resuscitate the idea that bigger government will “stimulate” the economy?
I’ve tried to answer that question.
Keynesian economics is the perpetual motion machine of the left. You build a model that assumes government spending is good for the economy and you assume that there are zero costs when the government diverts money from the private sector. …politicians love Keynesian theory because it tells them that their vice is a virtue. They’re not buying votes with other people’s money, they’re “stimulating” the economy!
I think there’s a lot of truth in that excerpt, but Sheldon Richman, writing forReason, offers a more complete analysis. He starts by identifying the quandary.
You can’t watch a news program without hearing pundits analyze economic conditions in orthodox Keynesian terms, even if they don’t realize that’s what they’re doing. …What accounts for this staying power?
He then gives his answer, which is the same as mine.
I’d have said it’s because Keynesianism gives intellectual cover for what politicians would want to do anyway: borrow, spend, and create money. They did these things before Lord Keynes published his The General Theory of Employment, Interest, and Money in 1936, and they wanted to continue doing those things even when trouble came of it.