There ought to be a Hall of Fame for Overrated People. One of the first to be so honored would have to be John Maynard Keynes, a pseudo-economist whose message that it was up to government to regulate “the economy” by maintaining just the right amount of “aggregate demand” came along at precisely the moment when politicians, having wrecked our economy, were looking desperately for a policy that would be popular and give the impression they were doing something.
In today’s Wall Street Journal, Peter Ferrara writes about the failure of Keynesian thinking and policy — specifically Obama’s “stimulus.”
Keynesians remain blind to a crucial fact: the unemployment they say government must get rid of through increased spending is the result of government meddling with the economy, especially cheap money policies that lead to bad investments. The housing bubble is a perfect illustration. Increasing “aggregate demand” isn’t the solution to unemployment and it doesn’t stimulate production. If it did, then inflation-wracked places like Zimbabwe would be havens of prosperity.
Big government advocates are desperate to defend the Keynesian approach because it keeps people thinking that we need politicians and their appointed experts to fine tune the economy. They can’t “fine tune” it. All they can do is impede the most efficient use of resources.
