…but only in theory?
I’m wondering if rather than being tried and found wanting, Keynesianism hasn’t been found impossible and left untried. Whether the amount of stimulus needed to jolt the economy back to trend isn’t simply too large to pass political muster. It’s hard to see a situation short of total war where that kind of money could be authorized or spent in the requisite period of time.
That’s why Krugman wants the space-alien invasion. Works, but only in theory, is how Marxism works, too.
At the end of the day, the problem is that the Stimulus was spent on non productive activities that have no positive long term benefit to the economy. Solar panels for high schools, 50,000 new government employees, investments in manufacturing that can’t compete with China, high speed rail an idea of two centuries ago, none of these actually stimulate the economy.
This is vastly different than the WWII spending, which was to build military hardware that allowed private investment and sometimes direct government investment to open mines, build factories, build tens of thousands of airplanes, millions of vehicles, trillions of bullets….
After our victory in the ware those same factories, mines, and infrastructure helped to rebuild the rest of the world’s shattered industrial infrastructure.
The stimulus would have had a net positive effect had it been invested in truly new technology for energy (a manhattan project to finally fund fusion the way it should be funded, space infrastructure development the way it should be funded, a vast upgrade of our national electrical and internet infrastructure. These things would have truly stimulated the economy because they would lead to further economic activity. We pissed a trillion dollars down a rat hole with the Obama stimulus and Paul Krugman is an idiot who deserves to be teaching math to seven year olds.
I think it was even worse than that, Dennis. A great deal of the money was given to states so they could maintain their bloated public sector payroll for another year. While lip service was given to infrastructure, there were protests by the usual suspects that infrastructure spending would go to too many men (especially evil white men) instead of women.
People often bring up the Manhattan Project or the Apollo program when they advocate government involvement in developing new architecture. However, neither of those programs, while ultimately successful in meeting their short term goals, are examples of sustainable projects. In both cases, money was spent hand over fist to meet the objective. The unofficial motto during Apollo was to “waste anything but time.” The result was that shortly after the goal was met, the program was closed and the equipment trashed.
What often is called stimulus is really just payoffs to political constituencies and cronies, who in turn can be counted on to donate generously to future campaigns and to take care of the politicians after they leave “public service.” I do believe that government spending has a multiplier effect. Unfortunately, it is less than 1.
The other point is that Keynsianism is impossible to implement because it requires less government spending during boom times. Had the putative Keynsians actually done that, and eliminated the national debt, they could have borrowed much vaster sums for the stimulus. That it worked out this way demonstrates that even on its own terms, by its own proponents, Keynsianism is not a policy that works in the real world.
How many times does Keynesian spending using BORROWED money have to fail before people admit it does not work?
Or is spending other people’s money so much fun that liberal government just can’t help itself?