We are all Keynesians now

January 31, 2009 in Economics,Politics,Quotes

NPR has an interesting article titled "Obama Gives Keynes His First Real-World Test."  I'm not convinced that's entirely accurate, it appears to be missing an appropriate disclaimer -- Keynesian economics played a large role in the New Deal (though, the article suggests, not enough of one).  Richard Nixon (yes, him again) famously declared in 1972 "We are all Keynesians now."

The article begins, "John Maynard Keynes is an unlikely hero for our time." Maybe so. His policies lost favor with the rise of conservatism in the late 1970's.  The article quotes economists remembering how Keynes was ridiculed in their classes.  Personally, I remember learning about "Keynesian economics - with caveats" -- it wasn't so much that his policies didn't work, per se, it was that no one knew for sure and no one was willing to try.

Enter the Recession of 2008, a grand laboratory for Keynesian policies.  The article calculates that Keynes would have recommended roughly $650B of government spending to offset reduced economic productions (based on a $1 trillion shortfall and, I assume, some accounting for the relatively low velocity of money).  Not surprisingly, Obama's stimulus plan is coming in at $819B at last count.

One thing I was unaware of is that Keynes was a massive anti-semite, anti-women, anti-American [essentially, anti-anyone who didn't go to Cambridge] who sat on the British Eugenics Council.  Another NPR article ("Some Problems with Keynes") remarks

Keynes had this idea that Jews had brought the idea of longing for immortality to Pagan Europe. He saw that longing as positive but felt that many Jews distorted it into a longing for money. He thought that the Jews influenced the rest of Europe to love money too much and that had ruined much of European civilization. Keynes believed that by 2020, European civilization would have gotten past its Jewish-inspired love of money and would focus on other things....

One Jewish correspondent pointed out to Keynes that Jews don't actually spend a lot of time thinking about immortality. That's more of a Christian thing. Keynes just ignored that

And a paper entitled "The Immoral Moral Scientist. John Maynard Keynes."  [pdf link] by Nina Paulovicova at the University of Alberta is an excellent compilation of Keynes' moral failings.  Upon meeting Albert Einstein, Keynes wrote:

He is a naughty Jew boy covered with ink –that kind of Jew – the kind which has its head above water, the sweet, tender imps who have not sublimated immortality into compound interest. He was the nicest, and the only talented person I saw in all Berlin.... Yet if I lived there, I felt I might turn anti-Semite. For the poor Prussian is too slow and heavy on his legs for the other kind of Jews, the ones who are not imps but serving devils, with small horns, pitch forks, and oily tails. It is not agreeable to see civilization so under the ugly thumbs of its impure Jews who have all the money and the power and brains.

About women, he wrote:

I seem to hate every movement of their [women’s] minds. The minds of men, even when they are ugly and stupid, never appear to me so repellent.

Keynes embodies a character rarely heard these days: "fiscal liberal, social conservative." I have to wonder, were he not such a champion of the left, would this disgraceful side of his character be more widely disseminated? Imagine the reaction if Milton Friedman, Donald Regan or James Baker had similar quotes attributed to them.

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