Saturday, 1 November 2008

"Salvationist zeal" too blinding for rational thought? [updated]

KeynesMagician The Herald has more than one journalist utterly ignorant of the basics of his trade -- ie., knowing something of the subject on which he writes.  Take this paragraph from young Matthew Dearnaley for example ripped from this morning's rag:

    Transport is a beneficiary this election season of a salvationist zeal for infrastructure spending to maintain the country's money-go-round against global economic contractions.
"We're all Keynesians now," was one National MP's quip to an Auckland regional councillor seeking a commitment to rail electrification from the party of free enterprise.
The reference was to a growing acceptance across the political spectrum of a need for Governments to be more interventionist in tough times, in line with American economist John Maynard Keynes' pump-priming prescription for recovery from the Great Depression and subsequent world war.

How many errors in just one short piece of writing!

It is not "salvationist zeal" that motivates the promises to borrow for a government spend-up, a giant bureaucratically run consumption binge, but just a nasty combination of political log-rolling and economic ignorance. 

And it will only prove destructive: all that spending has to be financed from somewhere and, since the programmes for "salvationist zeal" promise tax cuts with spending increases, 'somewhere' means either the Reserve Bank printing money, or else borrowing from the capital markets to make up the gap -- in either case, depleting the pool of real savings and bidding resources away from genuine productive activity.  So much, so stupid.

"We're all Keynesians now," quips the National Party moron, apparently unaware -- as is the braindead reporter -- that the ghost of Keynes has for decades ruled us from the grave.  "It is extraordinary," says economist Frank Shostak, "to suggest that Keynes's ideas are now coming back to save the world.

"Keynesian ideas have never left the rooms of government and central-bank decision makers. The essence of the thinking of the most influential economists was and still is Keynesian. So various stimulus packages that are now introduced are a continuation of the same Keynesian policies we have been subjected to for many decades. The present economic crisis is the outcome of the large dose of Keynesianism we have been given over many decades."

"...a need for Governments to be more interventionist in tough times"?  But it's precisely at such times when producers need certainty, not governments who meddle with the rules.  Has the "political spectrum" across whom this acceptance is apparently growing never heard of "regime uncertainty," one of the key reasons the Great Depression continued so damned long?

And National is "a party of free enterprise"?  When exactly did that happen?  For goodness' sake, has Mr Dearnaley ever actually read the National Party manifesto? (And have any National Party MPs ever read the 'principles' section?)

It's clear in any case Mr Dearnaley has never read any history, or any Keynes, else he would know the Keynesian prescription delayed recovery from the depression in those countries (such as America) that applied it. He would know that "pump-priming" is simply another word for inflating the money supply -- ie., decreasing the purchasing power of money -- and if that could make countries rich Zimbabawe would now be fabulously wealthy.  And he would know that far from being an American economist, John Maynard Keynes was "born to the purple": he was precisely the kind of bossy, overweening, born-to-rule aristocratic Englishman who deservedly give the idea of a 'ruling class' a bad name.

Would it be too much to ask that Mr Dearnelay and his colleagues actually do their job, which involves not just reporting on politicians' errors but pointing them out -- all the while not making egregious errors of their own.

And in answer to the implicit question: Do We Need More Keynes Now?  No, we sure as hell don't.  One century of the economic charlatan was more than enough, thank you.

UPDATE: Or as Russ Robert advises politicians in the Wall Street Journal: Russ Roberts has a new piece in the Wall Street Journal, Don't Just Do Something. Stand There.  [Hat top Anti Dismal]

1 comment:

  1. Toilet cleaners have more brains than journalists like Mr Dearnelay. I think that idiot like Mr Dearnelay should swap jobs with the Herald's toilet cleaners.


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