"Practical men, who
believe themselves to be quite exempt from any intellectual influences,
are usually slaves of some defunct economist."
Lord Keynes is the father of Keynesian economics. His solution to virtually every national economic malady was to throw money at it. In his quote above, he seems to unwittingly be referring to himself. His most vocal disciple in today’s economic world is Paul Krugman, a PhD in Economics with a Nobel Prize to his credit and seen regularly on the Sunday morning talk shows.
The following scenario is paraphrased with permission of the author, an astute friend of mine. Krugman and the rest of the "stimulus acolytes" have rendered the Keynesian stimulus hypothesis virtually unscientific. Every time it is tried, if the economy gets better, they claim it worked. Every time it is tried and the economy fails to get better, they claim it wasn't big enough. Under the Krugman Stimulus Paradigm, Keynesian stimulus can never be proven to fail. They inevitably will come back ex post facto to proclaim, "If it had only been bigger, it would have worked like we said it would."
This is analogous to a snake oil salesman proclaiming that his secret formula will cure cancer. Trials are arranged to test it, doses are administered to people known to be suffering cancer, and at the end of the first year, some of the subjects are dead, and the rest still have cancer. The snake oil salesman defends the result thusly: "The elixir would have worked, if only we had given a larger dose."
Double doses are then
administered and a year later, a few more are dead, the rest still have
cancer. Dr. Krugman once more proclaims: "The dose was
insufficient for the severity of the cancers these patients had; we did
not realize how sick they were. If we quadruple the dose, they will surely
The experiment with our automotive bailouts is likewise suspect. I propose that No Business Is Too Large To Fail. We have the freedom to fail as well as to succeed. Had General Motors filed for straight bankruptcy, does anyone think that Cadillacs and Chevrolets would cease to be built? Balderdash! General Motors would have restructured, been able to renegotiate its unsustainably generous union contracts and benefits to match other industries, and not have been saddled with a large part of its company being union-owned.
Another option would have been for an outside company to purchase GM along with all of its considerable assets and name recognition. An infusion of private money into this company would have been preferable to using public tax money to shore up a private company; thereby making the government chose winners and losers.
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