I picked this up at Andrew Bolt which reminds me why I tend not to read the papers any more. The article is quite accurate and important – Living standards in decline as real wage growth stagnates. The problem is that we are never told why it is, and I suspect it’s because most economists cannot work it out since they are all Keynesians.
Nothing about the deadness of our economies worldwide has surprised me since I wrote on The Dangerous Return to Keynesian Economics back at the start of 2009. You can either find the explanation for how badly our economies have gone since the stimulus in John Stuart Mill’s Principles first published in 1848, or my own Free Market Economics, for which the third edition is coming out in June. Where else you can find a modern classical critique of Keynesian theory I could not tell you since I don’t think any other such book exists.
MAGICAL THINKING UPDATE: This article came up in conversation this morning, by Peter Martin in The Age: The Dark Side of Harry Potter could transfer to our world. It begins:
John Maynard Keynes is one of the most important people who ever lived. His conviction that governments should spend up when things turn down saved lives and probably saved capitalism.
Aside from the fact that The General Theory was published well after the Great Depression had ended in 1933 and therefore could not have saved capitalism, Keynesian economics has blighted lives endlessly across the world from the time the book was published in 1936, since for those economies that did not begin as market economies, the belief that public spending will create growth has led to a fantastic reduction in living standards wherever such demand-side policies have been applied. Same again although in a somewhat milder form where market-based systems had already been established. If you think Keynesian theory has any answers to our economic problems you are more into magical thinking than even Harry Potter himself.