Thursday, 26 March 2020

"While Keynesianism remains a favourite policy prescription for politicians eager to appear as salvific heroes in times of need, it is untenable as a serious idea to stimulate anything except our national debt." #QotD



"In light of [its] numerous historical blunders, it is a wonder anyone takes Keynesian fiscal policy seriously anymore. Yet policymakers and politicians remain wedded to the model, as the current fury to rush through spending packages attests.... We must not be fooled into believing that [humanitarian] relief serves as economic 'stimulus'....
    "Keynesian policy fails for the simple reason that it targets the wrong problem. Production drives economic growth and creates an equal flow of demand. Demand is thus the consequence of production, not the other way around.
    "Successfully growing an economy, then, requires targeting production, not aggregate demand. Indeed, trying to grow the economy by targeting demand rather than production is like trying to grow a flower by watering its petals instead of its roots....
    "Regrettably, though, widespread unfamiliarity with the historical record combined with confusion about the workings of the economy has allowed Keynesian fiscal policy to enjoy an undeserved renaissance in recent years. While it remains a favourite policy prescription for politicians eager to appear as salvific heroes in times of need, it is untenable as a serious idea to stimulate anything except our national debt."
~ David Weinberg, from his op-ed 'Why Economic ‘Stimulus’ Only Makes The Economy Worse'



[Hat tip Steven Kates. Cartoons from Daniel J. Mitchell's posts 'Disentangling Keynesian Fiscal Policy' and 'More Evidence against Big-Spending Keynesian Economics']
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