John Winston sends to me, by e-mail, the following passage from this May 1958 speech by William F. Buckley; it’s spot-on in light of the rise in the mid-20th-century of two myths together run amok, one being aggregationist thinking getting out of control; the second being a rampant acceptance of man-in-the-street-like mistaken identification of money with real wealth – a myth, really, that only economists whose cleverness far outstripped their wisdom could have promulgated as a serious proposition – a proposition that some economists are again trying to resurrect (without, apparently, feeling obliged even as much to address Nobel-Prize-winning works that expose the myth for what it is: nonsense):
Halfway through the second term of Franklin Roosevelt, the New Deal braintrusters began to worry about mounting popular concern over the national debt. In those days the size of the national debt was on everyone’s mind. Indeed, Franklin Roosevelt had talked himself into office, in 1932, in part by promising to hack away at a debt which, even under the frugal Mr. Hoover, the people tended to think of as grown to menacing size. Mr. Roosevelt’s wisemen worried deeply about the mounting tension . . . And then, suddenly, the academic community came to the rescue. Economists across the length and breadth of the land were electrified by a theory of debt introduced in England by John Maynard Keynes. The politicians wrung their hands in gratitude. Depicting the intoxicating political consequences of Lord Keynes’s discovery, the wry cartoonist of the Washington Times Herald drew a memorable picture. In the center, sitting on a throne in front of a maypole, was a jubilant FDR, cigarette tilted up almost vertically, a grin on his face that stretched from ear to ear. Dancing about him in a circle, hands clasped together, their faces glowing with ecstasy, the braintrusters, vested in academic robes, sang the magical incantation, the great discovery of Lord Keynes: “We owe it to ourselves.”
With five talismanic words, the planners had disposed of the problem of deficit spending. Anyone thenceforward who worried about an increase in the national debt was just plain ignorant of the central insight of modern economics: What do we care how much we–the government–owe so long as we owe it to ourselves? On with the spending. Tax and tax, spend and spend, elect and elect . . .