Obituary: Keynesian Economics, R.I.P.
Keynesian Economics, aged 77, died peacefully today after a prolonged illness and complications associated with the Great Recession. Born in the 1930′s of British parentage, it rose to preeminence as the dominant macroeconomic theory. It is survived by well-intentioned, but misguided, older economists and politicians who have difficulty facing statistical evidence and commonsense. It leaves a legacy of massive public indebtedness, unsustainable entitlement programs, and slowly growing and sometimes bankrupt economies.
In the 1960′s, its short-run orientation was embraced warmly by U.S. politicans of all persuasions. Its disregard for anything other than the short run was succinctly summed up by its motto, “In the long run, we’re all dead.” In it last years, it provided the justification for the American Recovery and Reinvestment Act of 2009 that undertook bizarre public policies that failed basic benefit-cost assessments: “Cash for Clunkers” that destoyed perfectly usable automobiles, construction of airports in the middle of nowhere (but close to congressmen’s home towns), installation of high-speed rail systems that traversed sparsely settled parts of the country, often without passengers, 5 mph faster than the trains they replaced, and subsidies to wasteful companies that eventually went bankrupt. The Act did not return the economy to full employment as promised but did boost the country’s national debt and helped to lower its credit rating.
Keynesian deficit stimulus spending made the United States, once the greatest and wealthiest country in the world, dependent on foreign lenders. The taxes needed to fund its bloated government spending and service its national debt discouraged the private sector and crowded-out private entrepreneurship. Its national debt will burden future generations and slow economic growth for years to come.
After 77 years, the long run had arrived for Keynesian Economics. Internment is in Potter’s Field.
segunda-feira, junho 03, 2013
Keynesian Economics, R.I.P.
Keynesian Economics, R.I.P.: