Thursday, August 25, 2011

John Maynard Keynes was a Crackpot, Self-Promoting Propagandist

Was John Maynard Keynes a crackpot, self-promoting propagandist? The president of the John Locke Foundation seems to think so:

RALEIGH – President Obama is reportedly about to recommend yet another round of government stimulus and “job creation” gimmicks. He means well, I suppose, but seems hopelessly lost in the fantasies of John Maynard Keynes and other crackpot economists.

“Crackpot?” did you say? How can Keynes, the founder of 20th century macroeconomics, be considered a crackpot?

Easy. He advocated the economic equivalent of the following principles:

• Water runs uphill.

• Plants don’t need light to engage in photosynthesis.

• Gravity makes objects fall away from each other.

Only a crackpot scientist would try to make you believe these things. Similarly Keynes tried to make people believe that transferring money from one pocket to another made you wealthier, that destroying productive capacity of the economy made it healthier, and that lowering price of labor and other goods would not result in a higher demand for those goods.

Keynes was a clever propagandist. But his principles have not survived the test of time. As Harvard economist Robert Barro argued in yesterday’s Wall Street Journal, the notion that governments can stimulate the economy through multiplier effects – magically turning a dollar of revenue into two or more dollars of output – is not only nonsensical but empirically false. There is “zero evidence,” Barro wrote, “that deficit-financed transfers raise GDP and employment – not to mention evidence for a multiplier of two.”

To read the rest of the article click the following link:


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