October 28, 2011
Keynesianism is a cult – further proof; and why Keynesians should be jailed
Here are a few extracts from Russ Roberts:
the post-WW II test of Keynesianism that Keynesianism totally failed–a 60% drop in government spending when the war ended that was followed not by the worst depression in American history but by good times, did not cause Keynesians to give up their faith. They explained it away. Remember, this was not an ex post debate. It was an ex ante debate. Paul Samuelson, a very very smart man, made a prediction. His prediction was not just inaccurate. It was wildly inaccurate. He was not alone. Many people at the time made such predictions that were wildly inaccurate. But this did not shake their faith in their worldview, at least publicly. They had ex post explanations for their ex ante inaccuracy.
the massive spending on infrastructure by the Japanese government in recent times has not created prosperity there. But that stops no one here from advocating for more infrastructure spending on stimulus grounds. Nor has the apparent failure of the Obama stimulus spending changed anyone’s minds.
my challenge to Paul Krugman and Brad DeLong and Matt Yglesias and Daniel Kuehn and others who didn’t like my claims about ideology and truth-seeking is this: what evidence could you imagine that would dissuade you from supporting massive government spending?
You might think the answer would be: if a $4 trillion spending program didn’t work, then I’d renounce Keynesianism. But do you really think that would do it? Paul Samuelson didn’t renounce Keynesianism after the reduction in WW II spending failed to create a depression. He became it’s biggest advocate. The failure of the Obama stimulus to do what the CBO and others said it would do has been easily explained away–it was too small, the situation was worse than we thought, it was poorly designed, it’s different when financial markets are broken, and so on.
This makes eminent sense if you read this blog post and why some things have to be intuited as being correct (e.g. liberty).
This also confirms what I wrote about the TOTAL LACK OF ACCOUNTABILITY of macroecnomists. They get their predictions wrong, REPEATEDLY, but no one holds them to account.
In my view, Keynesians who have destroyed public wealth should be jailed. That's the level of accountability we need. You make predictions which destroy public wealth in the trillions, then you go to jail and cool your heels.
I'd like to see people like Alan Greenspan, Ben Bernanke, and Krugman behind bars.