Keynesian Doublespeak
Guinevere Nell /
A year ago, President Obama warned the American people that the financial crisis was dire and required a whole new approach to government spending. Obama argued that the government must help America spend its way out of the recession, and his economists, using Keynesian multipliers, argued the “stimulus” would keep unemployment below 8.2 percent (PDF).
Conservatives were skeptical, and pointed out that many of the government jobs would take a year or more to materialize, but Obama replied that we must be patient and keep spending. Conservatives pointed out that many of the stimulus projects were wasteful, and pork-ridden, but the consistent response from supporters of the President’s plan was that any stimulus is better than no stimulus. The economist behind the administration’s theory of stimulus pending, the late John Maynard Keynes, argued that any spending is better than no spending, famously saying that the government could bury money and let people dig it up and this would be superior to not spending at all. Obama supporter and Nobel laureate Paul Krugman has publicly endorsed this position. (more…)