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September 29, 2011 / 74

Robert Reich Sounds Off

In an article today in the Guardian (UK) Mr Robert Reich sounded off about the depression we find ourselves in. As a dedicated Keynesian, and apparently also a staunch Socialist, he proposed the usual nostrums of MORE GOVERNMENT SPENDING and higher taxes on the “rich”. (Re: the effect of increasing tax rates for upper income people – see “Hauser’s Law“)

What is it about Keynesians that prevents them from exercising even a modicum of intelligence and sense? Why is it that somewhere between reading Mr JM Keynes’ theories and the noise they make espousing them, there is no side trip through logic and the realization that Mr JMK left something out?

What he left out is that since governments do not, CAN NOT produce wealth, in order for the government to be the “purchaser of last resort” it must first take that wealth that it would spend AWAY from those who DO produce it – ie the businesses and workers and citizens of the nation. And once the government does so, those from whom it took the wealth cannot spend it by and for themselves.

So following Mr Reich’s prescription yields only a transfer of the power to decide what that wealth will be spent on from the people who formerly had it, to the government – BUT NOT ONE PENNY OF INCREASED SPENDING!!!

And by taking the wealth away from the citizens, there is no opportunity for them to save that wealth – thus creating a capital pool from which industry can borrow for the creation of jobs and markets. So since that capital is not available for wealth generation,  increased government spending leads only to DECREASED total spending and increased misery.

Thus we have the end product of Mr Reich’s advice being nothing less than an expansion of the difficulties that the government used to justify the theft of the worker’s wealth, and if permitted for long enough, the destruction of the nation’s economy and the nation’s future. Unfortunately it would also seem that Keynesians are incapable of learning. So the people like Mr Reich keep prescribing the same old economic poison for the nation.

Keynes and his theories have been discredited.

Don’t you think it’s about time to Give Keynesianism up as a bad idea that never worked, and never will? Or if you can’t bring yourself to do that – perhaps you could resolve to give Keynes up for Lent? And if all Keynesians were to do so, perhaps by the end of the Lenten season the rest of us could have the recovery underway.

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