Standard Keynesian remedies for downturns -- spend more and tax less -- presume the willingness of bond markets to finance the resulting deficits at reasonable interest rates. If markets refuse, Keynesian policies won't work.
I like the author's approach, in that instead of the long standing debate about whether or not Keynes' ideas were right or wrong, he points out the obvious - which is that it hardly matters since there's no money to be had to continue the experiment.
Frankly, looking at this point - "in the mid-1930s, governments in most wealthy nations were relatively small and their debts modest. Deficit spending and pump priming were plausible responses to economic slumps" - one could easily conclude that this is the natural effect of dosing willing politicians with all the Keynesian self justification they could ever hope for to meddle, as if they were gods, in the affairs of their subjects (OK, still technically citizenry) via legislative coercion sold as do-gooderism.
But as Keynesian C. Romer points out in regards to those Keynesian approaches to economic stimulus, "estimating the effect is "incredibly hard." "
So, we should just trust all those genius economists and the politicians who use their work to do what's best ...
Samuelson writes: "Were Keynes alive now, he would almost certainly acknowledge the limits of Keynesian policies." I wonder if, after almost 100 years of experimentation, Keynes wouldn't just say "It seemed like a good idea at the time."
I like the author's approach, in that instead of the long standing debate about whether or not Keynes' ideas were right or wrong, he points out the obvious - which is that it hardly matters since there's no money to be had to continue the experiment.
Frankly, looking at this point - "in the mid-1930s, governments in most wealthy nations were relatively small and their debts modest. Deficit spending and pump priming were plausible responses to economic slumps" - one could easily conclude that this is the natural effect of dosing willing politicians with all the Keynesian self justification they could ever hope for to meddle, as if they were gods, in the affairs of their subjects (OK, still technically citizenry) via legislative coercion sold as do-gooderism.
But as Keynesian C. Romer points out in regards to those Keynesian approaches to economic stimulus, "estimating the effect is "incredibly hard." "
So, we should just trust all those genius economists and the politicians who use their work to do what's best ...
Samuelson writes: "Were Keynes alive now, he would almost certainly acknowledge the limits of Keynesian policies." I wonder if, after almost 100 years of experimentation, Keynes wouldn't just say "It seemed like a good idea at the time."
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