Monday, February 09, 2009

Keynesianism in Practice

Keynesian vs. Supply Siders can be a purely technical debate about substitution effects from issuing government debt, or multiplier estimates. But fundamentally, someone who want the government to spend more is a Keynesian.

The recenty Fiscal Stimulus bills is a pork-laden spending bill, designed to build and perpetuate a patronage system. Listen to Obama's response to such a criticism:

Speaking to a House Democratic retreat on Thursday night, Mr. Obama took on those critics. "So then you get the argument, well, this is not a stimulus bill, this is a spending bill. What do you think a stimulus is? (Laughter and applause.) That's the whole point. No, seriously. (Laughter.) That's the point. (Applause.)"

Well, that's the Democratic president, speaking in front of Democrats. I think it is not a caricature to say that for Democrats, all government spending is stimulus.

1 comment:

Barbar said...

Presumably there is some additional context here, which is that Obama and his economic advisors think that the economy is in some kind of pathological shrinking state, and hence in need of stimulus.

Of course maybe there is no such thing as a pathological state, unemployment is never involuntary, and what we have here is an overextended economy in transition heading toward its right size. The Democrats are just taking advantage of the crisis atmosphere to pass spending bills they wouldn't otherwise be able to get through.

It's a bit unfortunate that the "science" of economics can't settle this matter, isn't it?