Keynesians believe that the economy is a far simpler institution than it really is — Keynesianism is no product of the Scottish Enlightenment.
In my latest column appearing in the Pittsburgh Tribune-Review, I make a case for the creative and coordinative powers of free markets, including the case that economic recovery does not require fiscal stimulus. Here are my concluding paragraphs:
But economics and history tell us that our inability to foresee and
predict — or even to imagine — how recovery will come in the absence
of conscious government stimulus is no reason to conclude that recovery
requires conscious government stimulus.
Yet, despite all of our experience with the marvels of free markets,
the case for the massive government stimulus plans rests chiefly on
people's fear that this time the market will fail.
coordination challenges successfully met by market forces? I can think
of no good reason other than the fear that oozes from biased
imaginations. Despite experience that should teach us differently, we
can imagine market failure much more easily than we can imagine just
how markets will succeed.
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Don – why this constant assertion that "Keynesians believe that the economy is a far simpler institution than it really is"? I'm perplexed!
Why not just say "the economy is not a simple institution and here's what I think is wrong with the stimulus"?
Keynes didn't work miracles and there's been a lot of good revision of his specific solutions since then… but I think overall Keynes presented a more nuanced picture of the economy than the one he received from his predecessors – not a less nuanced one.
Why can't you live with arguing that Keynes was wrong – why the constant insistence that he was a simpleton?
Daniel,
I never said that Keynes was a simpleton; I do not believe that he was a simpleton.
I have said, and believe, that Keynes's understanding of the market economy (if not of individual human motivations) was quite simplistic — or, at least, far more simplistic than the understanding held by the likes of Menger, Wicksteed, Wicksell, Cannan, Knight, Hayek, and Alchian.
Perhaps I extrapolated too much. Simplistic is as valid as simpleton for my purposes, so if you like "simplistic" better, use that.
Some would argue that Hayek – while insightful – was devoid of nuance, caveat, or qualification. I wouldn't say that because I'm not too familiar with Hayek's work – but I've heard it asserted.
Your post here strikes me as the same kind of assertion. Why build up Keynes to be this arch-enemy? I know you probably don't think you are – but it comes across that way.
If you really truly think:
"the case for the massive government stimulus plans rests chiefly on people's fear that this time the market will fail."
Then you really aren't listening to Keynes or the Keynesians. MAYBE it's an apt description of Barney Frank or someone like that. If it is – mention him in your opening line, not Keynes.
mmmm….Barney Frank outstrips my imagination.
Daniel,
While Don may not be simplistic, I find that typically the simpliest explanation is generally the most efficient to work with.
Keynes and his policies that FDR was persuaded to adopt was essentially taking wealth from the creators and distributing it via government spending on things government decided to spend on. Exactly like what we see today.
In its most simplistic form, Keynes advocated(s) massive theft, thus creating true victims, and then wasting that stolen money on projects decided by the thiefs, as a means of making the victims better off.
If I am not mistaken, Keynes also advocated that this policy be continued eternally as a means of ensuring people got up and went to work every day, not just as a solution to a temporary recession. Because, again I may be mistaken, Keynes thought that people who get too comfortable won't be as vigorous about getting up and producing every day, possibly reducing the total tax take of the government. Can't have that, doncha know.
I admit that I have only a smattering of knowledge of Keynes' theories, but that is basically (simplistically) what I remember of it.
If my memory serves me well, then in its most simplistic form, that is insane.
When I walk through an alley and am mugged, I am a victim, not a recipient of aid.
The thief is guilty of a crime. If the theif steals at the motivation and encouragement of a mentor then the mentor is also a thief.
FDR was the thief and Keynes was his mentor.
And, you ask Don why he comes down on Keynes even while recoginizing that Keynes did some good thinking in the field of math, I believe.
Do you think it is a good idea to never let people forget that a thief is a thief, particualrly when the thief never showed any signs of reforming? Simplistic enough for me.
BTW Don,
There is good news, at least locally. I found an organization that has professionally prepared materials, guidance, and presentation of the market, business, and the value of delayed gratification, an organization which is getting into schools at the Kindergarten level all the way up to K-12 and teaching lessons in the classroom about the very things we hold most near and dear.
This organization encourages folks like me to participate, and to share our own experiences and thoughts as we teach. I sat down with the local head on Tuesday, received a briefing and introduction to their materials and methods, and will be voluntarily teaching a full day session at a middle school for problem kids, in May.
I will find out if it is a national organization because if it is, others who hold free markets and free minds to be of the utmost value to humanity, might also be interested in teaching as well.
Just to make sure I was campatible to their goals when I met with the local head of the organization I held nothing back about my background and beliefs. I told her I was passionate about it. I told her there was no way I could go face to face with any one and teach anything remotely resembling socialism. She just smiled and said, "Welcome aboard."
If we who believe in free markets and free minds ever want to reverse the tide of socialism that is swamping us, this is one of the best ways I know of. Plant the seeds of knowledge so that at least the kids know enough to ask questions, if nothing else.
Some would argue that Hayek – while insightful – was devoid of nuance, caveat, or qualification. I wouldn't say that because I'm not too familiar with Hayek's work – but I've heard it asserted.
We are familiar with that assertion. It is often made with reference to some mystical "invisible hand" that we free marketers believe will guide us all to perfection.
Apparently we are too simplistic in our belief that a market spontaneously orders itself because some sort of top down planning is required to make it all work.
Even though we also claim that the market is far too complex to be adequately comprehended by "managers".
Mark Levin read your article on his radio show Friday. Excellent!
Very well said Don. I like your example especially because some idiot I work with seems to believe that our reliance on oil and the automobile is the result of a conspiracy directed by Henry Ford and good old Rockefeller and only the government will make us break from the "addiction" and bring us to green Nirvana.