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    The Ignorant Non-Keynesian

    That’s me, walking a mile to the office in a charcoal gray topcoat in 5-degree Michigan weather, hat on my head, iPod headphones in my ears, my brows furrowed. More likely than not, I’m listening to a podcast about economics.

    Peter Schiff got me started with his weekly podcast. I then started to download Lew Rockwell podcasts. That wasn’t enough, so I looked for more and found perhaps the best podcast in cyberspace: EconTalk by the Hayekian Russ Roberts. It’s an hour of Austrian/Chicago School economics every week.

    But in early January, as I tramped through sub-zero streets, I listened to an interview with a Keynesian, Peter Fazzari. He made the case for a governmental spending spree to stimulate the economy, something that makes Schiff and the Austrians (and me) cringe.

    And I cringed even more when I realized that Fazzari made good points. I found myself halfway buying into the things he said. I had a handful of objections, but overall, I was impressed. Fazzari also noted that almost all economists agreed with him on this point . . . which Roberts acknowledged, and which Schiff had acknowledged a few weeks earlier on a podcast.

    So, the Keynesian Fazzari makes sense and pretty much all the economists in America agree with him. Who am I to disagree? My economics knowledge is ridiculously inadequate to discuss such ideas with the professionals, much less to dispute with them.

    Everyone calls this “The Information Age,” but I prefer to call it “The Bleeding Information Age.”

    Information bleeds from everywhere: a hundred million websites; hundreds of thousands of new books every year; 10,000 newspapers; network television; cable television; AM, FM, and satellite radio. . . . podcasts. The signal trait of the Information Age, one commentator has pointed out, is that the data endlessly proliferates.

    We can’t possibly absorb it all, and the stuff we read or hear could be inaccurate.

    And here’s the exacerbating rub: We’re unworthy information processors.

    Not only can a person not absorb all the facts, but no person can master metaphysics, the mysteries of science, world history, and the myriad of other disciplines—economics—that he would need in order to process the enormous volume of facts effectively. We have limits on time (Aristotle realized this 2000 years before Hayek and Keynes came along) and ability.

    Yet we need to act, to make decisions, to move forward in some fashion, so we need authorities we can trust and guide us. Americans’ favorite authority is democracy. In America, majority vote isn’t just for politics. Americans trust it across the cultural, sociological, and economic spectrum.

    So when a landslide majority vote of the economists say we need a massive governmental spending spree to end this level 5 recession, people nod.

    But I’m not nodding.

    Here’s the thing. All those economists are Keynesians. They agree because they subscribe to Keynesian policies that are fundamentally flawed. We could discuss the Keynesian oddities—deficits are good, consumer spending (not production) is king—but I don’t need to get into it.

    Because I know this: I don’t like the intellectual milieu from which Keynes sprung and its progeny that have saddled higher learning for the past 30 years.

    Our universities are awash in theories and wrongheaded assumptions that were formulated in the first half of the twentieth century: Kinsey on sexuality, Picasso on art, Mead on anthropology, Freud on sex-obsessed psychiatry, Cage on music, Woolf on literature, Justice Douglas on law.

    Keynes is cut from the same fabric as those thinkers. They had serious personal issues that bled into their novel theories. “Connaturality” is how Thomas Aquinas may have explained it: flawed moral lives create flawed thinking.

    I won’t go into Keynes’ personal life, but suffice it to say, it wasn’t stellar. And regardless, we know he came up with his novel theories at the same time that all those other novel theories came out. Even if we don’t know the reasons the first half of the twentieth century created so much wrongheadedness that became higher-learning gospel in the second half of the twentieth century, we ought at least to distrust those novel theories.

    We’ve seen those wrongheaded theories wreck the family fabric, turn Hollywood into a cesspool, give us modern art, warp First Amendment jurisprudence. It’s not farfetched to say those theories have gnarled all areas of the American landscape. The only thing they haven’t wrecked yet is the economy.

    But of course the evidence that they’ve wrecked that, too, is in the process of getting revealed. Everyone sees it and knows about it, but they await the Obama economic team to show them it’s not true, that these Keynesian economic theories can work, that everything will be okay.

    I might be ignorant next to all those Keynesian economists, but I’m not accepting their conclusions. I don’t like the ideas that Keynes’ fevered intellectual contemporaries concocted. I disdain the cultural and sociological flotsam they’ve left behind.

    And I’m sure as hell not letting my money see what this last gasp of modern thinking can ruin.

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    9 Responses to “The Ignorant Non-Keynesian”

    1. Belinda Says:

      I think that this post is brilliant, and so are you.

    2. Tim J. Says:

      I know nothing at all about economics, period. But the idea that you can build an economy on moving money around, rather than producing stuff, just seems all wrong intuitively.

      Money is supposed to represent “stuff”, isn’t it? So that we can more readily trade our stuff for other stuff? If we lack the capacity to make the actual stuff that the money represents, the money becomes worthless… doesn’t it?

    3. Eric Says:

      Belinda: Your compliment isn’t warranted (my wife will confirm that!), but thank you.

      Tim: Yes. That’s one thing that’s particularly troubling about this massive spending spree. We’re going to create money to do it, but there’s not actual stuff being produced to absorb the inflation. China inflates their money supply all the time, but they’re cranking out the goods to absorb it. We’re not.

    4. Tim J. Says:

      I have to say, that’s quite a good photo. Dreary and full of warmth and humanity at the same time. It would be good inspiration for a painting, methinks.

    5. Eric M Says:

      Tim, I agree with your comment about just moving money around. I’ve never studied economics, but stock market always struck me as some sort of game. I never understood how you could see such swings based on seemingly inconsequential factors. I think the price of oil in the last couple of years is an example of that. It’s all speculation as far as I can tell. Some elites play the game, and we’re stuck with the results.

      Great post, Eric!

    6. Steve Massey Says:

      One advantage of the “bailout” is that it is a grand test for Keynesianism. If it fails to help the economy, surely Keynes is finally dead for real.

    7. The Western Confucian Says:

      Excellent post!

      Not to disagree with the Angelic Doctor, but there are some thinkers I admire with “flawed moral lives,” and others I dispise with flawless moral lives. For me it is enough that what you call “the Keynesian oddities — deficits are good, consumer spending (not production) is king —” fly in the face of common sense and traditional wisdom (just as did the ideas of the Kinseys, Picassos, Meads, Freuds, Cages, Woolfs, and Douglases) to reject them outright as flawed.

    8. Herman Says:

      In the former German Democratc Republic, people had a nice rhyme:
      “Wir reissen auf und bauen nieder,
      so haben wir Arbeit immer wieder.”
      (We are tearing up und building down,
      that’s how we have employment always again.)
      That’ Keynesianism in short.

    9. The Daily Eudemon Says:

      […] the economists are saying “bailout” and “spend” and “print.” But the investment people don’t seem so sure. Excerpt: We never thought we would ever buy […]

     

     

    Enter Amazon here, buy something, and get me a kickback.


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