NPR's Crude Trashing of John Maynard Keynes

There's nothing that ticks me off more than economists who pretend that their black art is actually a science. Just because they use math, mainstream economists think we will believe that their equations describe the real world of resources and people that makes up the economy. These wizards who in actuality are nothing but casino managers, are especially concerned that we might switch allegiance to a different brand - communism, or just as bad - Keynesianism!

Last night NPR aired a totally unbalanced piece on John Maynard Keynes that proved beyond all doubt that Republicans and Wall Streeters can't come anywhere near a scientific or even an intellectual argument challenging the man's ideas, so they are left with attacking his personality. NPR commentators Adam Davidson and Alex Blumberg charged that Keynes was an elitist, anti-semite, bohemian pottymouth. Why no mention of his homosexuality? Probably because the gay lobby is too powerful and easily riled. Unlike gays, bohemians still don't get any respect. And the anti-semite accusation? Remember, we are talking the 1930s here. You could tar almost any prominent person in that age with all sorts of prejudices that no polite member of society would admit to today. Does that mean that our current economic leading lights are free of all moral taint? Please, don't make us laugh. It hurts too much.

So, after nearly five minutes of simmering in Adam Davidson's ad hominem stew, did we taste any actual refutation of the Keynesian idea that government spending can help revive a stalled economy? No. After admitting that government spending worked pretty well to get us out of the depression and build the post WWII economy, one commentator said that government spending failed to revive a slowing economy in the 1970s. Therefore, Keynesianism has been discredited.

That's it. That one statement was the entire argument against government spending. That and the goofy assertion that "government consumes wealth" and "only the private sector can create wealth."

These two points reveal the two big failures of mainstream economic theory. First, the economic slowdown in the 1970s had much more to do with the rapid rise in energy costs than with government investment. And second, if, as Jimmy Carter wanted, government had spent lavishly on renewable energy, mass transit and energy efficiency, can you imagine how much better off we would be today? Infrastructure is wealth, and only government can create it.

Despite comparing economists to Einstein, as this NPR piece does, mainstream economic theorists are incapable of understanding the real world of physical resources, especially the reality that there are limits to those resources. In their model, the economy is like a carburetor. If it starts to falter, you tinker with the airflow, that is, monetary policy. There's no possibility in your mind that the fuel could run out. You can't admit that the whole machine might be obsolete and it's time to build a new one because there's no way for private industry to accomplish that feat.

Economists hate government, because in a rational economy, there would be no room at the top for the free-for-all gambling casino that makes their class rich. In their eyes, it is the casino that actually generates the wealth because it draws in the money and money is like the air in the carburetor. So when the Fed opened the throttle wide last fall with zero percent interest rates and it failed to stop the stall, then what? Why is it Keynes who is being discredited now?

When their machine models fail, economists will invoke the Invisible Hand. You can model the economy as a machine or you can model it as a body. If it is a body, then private enterprise is the many hands reaching out to grab resources. The hands don't want to be governed, but in a body, the head needs to get involved or the hands will eventually get the body into big trouble. That's what Keynesianism is, in a nutshell - using your head. And that's not science, it's just common sense.

Comments

[WildGunman]

Good grief. This is a pop-culture piece. Everything they mentioned about Keynes is 100% true. They brought it up to add color to the piece, not to trash his ideas.

Is he one of the greatest economists of the 20th century? Yes. Was he also a bizarre, hugely promiscuous, sex monger? Yes. They are hardly mutually exclusive. Karl Marx once sold his only pair of pants to buy some cigars and stayed indoors for a week until Engels sent him some money. He was also completely wrong in his theory of social determinism. And, oh year, he also invented the idea of capital and capital stocks, completely revolutionizing economic theory forever.

And frankly, you're just wrong. Keynesianism is not about "common sense." Saying that reveals how ignorant most people are about Macro. Old school Keynsianism is about matching theories to observational data. There's a good reason it broke down in the 70s. It's because it's wrong. The complete misunderstanding of the Phillips Curve should convince anyone of that.

Does that mean that there isn't a place for Neo-Keynsianism? I don't know. Maybe. But people need to stop making bold claims about "common sense." I don't have all the answers, but I know good and well when other people don't.

[weird]

That's a strange interpretation of that piece. I'm pretty sure the producers intended it to be pro-Keynesian. The fact that they interviewed some anti-Keynesians too does not mean that they were in agreement with their points of view. Ira Glass does not exactly have the reputation of a right-wing crusader for neo-classical economics.

Also, what is the basis of this distinction between "economics" and "Keynesianism"? Was Keynes himself not an economist? Is Alan Blinder not an economist? We're talking about two different schools of thought within the field of economics, not a challenge to the field as such.

[Chuck Willer]

Kelpie, your NPR comments appear to be spot on.

Keynes' was part of the Bloombury Group but from my read of his biography I believe it helped him see through the mist of classical economics.

Keynes' father urged him to go into mathematics since that appeared his strongest study. His dissertation (1921) was on probability and uncertainty. Because Keynes' was quite adept at mathematics he understood its limits.

Keynes never studied economics having taken but one class under Marshall. He learned economics through personal study, discussions with leading economists, and at his job at Treasury.

NPR pap about Keynes reflects that they likely lack the expertise to seriously address his economic works.

Few economists today have read Keynes and the post-Keynesian theory that they have learned was stripped of its main insights (how a capitalist economy operates through institutional processes of finance under uncertainty) after WWII by Hicks, Samuelson, and others.

[Anna in PDX]

Hi Kelpie!

I saw Paul Krugman last night at the Schnitzer, and he is about the most unapologetic Keynesian I have ever heard, particularly in this day and age. I hope that a transcript is made available at some point. It was sponsored by the World Affairs Council - OR.