In the Long-Run, Keynes the Man is Dead…

(Don Boudreaux)

… but we the living are saddled with his baneful consequences.

Here’s a letter to the Washington Post:

Editor:

Robert Samuelson is correct that today’s paroxysm of deficit spending is made calamitous by the preceding six decades of Congressional budgetary irresponsibility (“The debt reckoning has finally arrived,” April 13). He’s correct also that much blame for this irresponsibility lies at the feet of academic economists, especially John Maynard Keynes.

Offering theoretical justification for deficit spending during recessions, Keynes – ignoring political realities – was oblivious to the fact that he and his apostles thereby gave to politicians academic cover to reject long-standing norms of fiscal prudence. The present result, as Mr. Samuelson writes, is fiscal chaos.

But Mr. Samuelson errs by failing to note that not all academic economists are to blame. An unpopular few warned that Keynesianism would unleash budgetary debauchery. Foremost among these dissenting economists is the late Nobel laureate James Buchanan and my colleague Richard Wagner. In their prescient 1977 book, Democracy in Deficit: The Political Legacy of Lord Keynes, Buchanan and Wagner – observing the intellectual and ethical sea-change caused by Keynes – lamented the typical economist’s failure “to predict the results of the eclipse of the old rules for fiscal responsibility.” They then asked dolefully: “Once democratically elected politicians, and behind them their constituents in the voting public, were finally convinced that budget balance carried little or no normative weight, what was there left to restrain the ever-present spending pressures?”*

Sincerely,

Donald J. Boudreaux

Professor of Economics

and

Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center

George Mason University

Fairfax, VA 22030

* James M. Buchanan and Richard E. Wagner, Democracy in Deficit: The Political Legacy of Lord Keynes (New York: Academic Press, 1977), page 50.