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A Huge Negative Externality

Here’s a letter to the Washington Post:

Robert Samuelson highlights a significant danger of Keynesian economics – namely, it lends a patina of scientific legitimacy to the “political bias … to favor short-term stimulus (by lowering taxes and raising spending), which is popular, and to ignore long-term deficits (by cutting spending and raising taxes)” (“Bye-bye Keynes?” Dec. 19).

This danger should have been perceived from the get-go.  Keynes himself was famously obsessed with affecting government policy.  So he focused his brilliant intellect on the short-run rather than on the long-run; on the seen rather than on the unseen; on the superficial rather than on the foundational; on what is politically expedient today rather than on what is economically sound tomorrow.

As Elizabeth and Harry Johnson note about Keynes, “One could argue indeed that in a certain sense all of his writing was journalism of one order or another – from his plan for a state bank for India, quickly put together for a Royal Commission’s report, to A Treatise on Money and The General Theory which, though presented as academic works, sought to produce instant cures for pressing economic ills.  He wrote for the present moment….”*

How regrettable.

Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030

* Elizabeth S. Johnson and Harry G. Johnson, The Shadow of Keynes (Chicago: University of Chicago Press, 1978), p. 31.