Re: Britain can’t afford to fall for the charms of the fal...

[Guest guest]

That's the main problem with Keynesian economics: they are seductive, especially to politicians.

Keynes basically says there need be no limit to government spending because government spending equals prosperity. Indeed, Keynes' only warning was that too much government spending could cause runaway prosperity. Politicians love this because spending equals power. The more they can spend the more people they can have in their debt. The modern welfare state is a fine example of this since politicians can create endless programs to create captive classes of voters. Simply put, they get people hooked on the programs and then tell them "you have to keep me in office because that guy wants to take away your free stuff."

The way around all this is simply to ask "where does the money come from?"

Wealth is created by productive enterprise whether making things people want or providing services they want. That's it. Anything else is just printing money. That is, however, what government loves to do because they need money to keep spending because spending equals power. If people asked where the money for all of these programs came from and the answer is either "debt" or "printing" then it likely should not be done. People should ask if instead of printing money to hand out if cutting taxes and spending might not stimulate employment thus taking people off the dole and becoming productive and thus adding to the economy rather than taking away from it? Odds are that yes, that will be the case.

Politicians don't want to hear that though and neither to many of the people. Thus Keynes remains popular and we are going to pay a price for that drunkard's fraud.

Krugman's message is seductive, but it's also unrealistic. If only the solutions to our plight were as simple as he thinks.