Keynesian economics wrecks economies

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.

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10 Responses to Keynesian economics wrecks economies

  1. stackja

    “If all the economists in this country were laid end to end, they would never reach a conclusion.”

  2. Bruce of Newcastle

    It’s a hard thing to disentangle Keynesianism from progressive (sic) socialism.
    The flood of red and green tape from the progressive nannies alone acts as a humungous dead hand on the economy, as any small or large business person can tell you.
    The Keynesian crud is just the cherry on top of the whole stinking cake.

    I suspect the main problem with Keynesianism is what it does to government finances. Which then cause tax rises due to pollies having to pay the interest bills on government debt. Keynes advocated paying it all back during the good times, but for some odd reason that never seems to happen and we voters get stuck with the interest bill.

  3. John constantine

    The economy that matters, their crony insider socialist paradise is going great guns.
    As their millionaire socialists of their ABC boasted until focus groups objected “We are just so wealthy as a country”.

    Multi-million dollar mansions and European travel every year for all well connected crony socialists.
    The outside prole economy is about to be de industrialised and de westernised, but that is the price of progressiveness.

  4. Habib

    Stop the presses, Age idiot lurves Keynes. Next scoop, politicians are malfeasant, borderline criminal cretins with acute personality disorders.

  5. Habib

    “If all the economists in this country were laid end to end, they would never reach a conclusion. it’d be an ideal venue for a monster truck rally. FIFY.

  6. David Brewer

    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.

    I suppose it is not “modern classical” but I found plenty of relevant critique of post-2008 policies in this: https://admin.fee.org/files/doclib/interventionismaneconomicanalysis.pdf

    especially the section on “Inflation and Credit Expansion” and “Unprofitable Public Works and Subsidies”.

    Mises’ 1941 effort also has the benefit of detailing the many other forms of interventionism not necessarily being tried at the moment but that will no doubt turn up again like a bad penny one day.

  7. LOVO 1

    MMT and Prof. BILL Mitchell can assuage all your worries on the economy.

  8. gbees

    Government spending out of control, no accountability, public service average wage higher than private sector, public service wage increases exceeding those of private sector. Private sector taxpayers pays for all of this plus all other spending. It needs to be fixed but to use a green slime slogan, me thinks we are past ‘the tipping point’. The country is stuffed. It’s just a question of how stuffed.

  9. Nicholas (Unlicensed Joker) Gray

    We need a T-shirt with ‘to Hayek with Keynes!’ on it.
    As well as one with “No, I’m not Mr. Universe, but don’t feel too bad- everyone makes that mistake!”

  10. Tator

    There had to be one MMT quoting muppet surface, they are becoming like cockroaches on many blogs quoting Bill Mitchell. The Mises Institute webpage skewers MMT properly if they cared to look at it. I wonder what damage Steve Kates would do to a MMT trolls self esteem. Or even Doomlord and Co. I am sure there is a PHD waiting for someone to properly disprove MMT as a valid theory, over to the various professors of economics for that one.

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