Keynesian Economics Finally Discredited?

Dave Price, writing at Dean's World, opines

Tim Cavanaugh has a devastating cite from just-retired Obama economic adviser Christina Romer:

The generally precise Romer spells out the difference for us: Using this approach, the estimated multiplier for monetary policy is 0.823 and the estimated multiplier for fiscal policy is -0.233.

You don’t say. Gee, that would have been nice to know a few trillion dollars ago.

Democrat Party water-carriers like Paul Krugman love Keynesian economics, with its assumed large fiscal multiplier, because it meshes so perfectly with leftism’s general preferences: more government, bigger government, more public-sector employees, higher pay for those employees — and, naturally, higher taxes to go with all that. Their continued insistence we need to spend (and tax!) more, more, more even as unemployment goes higher and deficits mushroomm is growing ever less credible with each additional “unexpected” signal of economic failure.

If there’s one positive to come out of the Great Recession, it should be the end of Keynesian economics as a serious policy choice. The notion you can grow the economy via North Korea-style command economics should have been long-dead even before Romer’s 1992 paper, but Obama’s miserable failure may finally drive a stake through this productivity-sucking, economy-killing meme.

Let me put this simply — and contradict a too-widely-held assumption of macroeconomics:

THERE IS NO SUCH THING AS AGGREGATE DEMAND. . . .

Keynesian economics, coupled with our modern welfare state, has been a disaster. And if the only thing that comes out of this "Great Recssion" is the discrediting of Keynesian economic theory, than it will be a postive thing indeed.

On a related note, if you missed it, you can read Paul Krugman's defense of his beloved Keynsianism and his attack ad hominem attacks on Paul Ryan for articulating a conservative economic plan here.

And on another related note, do see this exceptional short video explaining the fallacy of the Broken Window Theory - a theory related directly to Keynesianism as well as, more generally, the Democrat's seemingly innate desire to tax and spend.



(H/T American Digest