Conservatives vs. the Keynesian Purists

Conservatives vs. the Keynesian Purists


ARTICLE QUOTE REGARDING KEYNESIANS:

"They have an inherent lack of faith in the private sector and by extension the American people."

Comment from American Thinker:
Pescator Today 08:17 AM
The basic problem with Keynesian economics is what a previous article in the AT described as the phenomenon of Ceteris Paribus. Roughly translated this means: all else being equal. Keynes and his followers developed a formula for the GNP which contains government spending. Thus, if the GNP falls (as in a recession in the business cycle), this can be negated by increased government spending. The problem is that everything else is NOT being equal. The act of increased government spending alters other facets of the economy. The first thing that is altered is the money supply (the increased government spending is done with borrowed money). This adds to inflation. The second thing that is altered is that spending of money (the Keynesian stimulus) is taken away from the Market. That is to say, it is no longer the Market but the government that determines how the money is spent. One can guarantee that the choice of beaurocrats is not what the Market needs. The misallocation of resources will slow the economy. We have seen this in the Great Depression and we are seeing it now with the Obama regime. Lots of Americans lack the knowledge of how the economy works. The citizen who remarked that Obama would provide her with money from "his stash" was greeted with indulgent smiles from the Media. 'How charming' was their reaction. In reality, alarm bells should have been ringing.