America’s Keynesian horror show
I go to Singapore to teach every six months, which is always instructive. On this occasion, I discovered something I didn’t know and would never have guessed – that the growth rate in GDP over the most recent period had eased to a more accommodating 16.9%. It has, I admit, come down from the highest growth rate ever, but still you can get by with doubling national income every four or five years. These are growth rates so outlandish they have almost no logical meaning in economies so very different from Singapore’s.
These trips are also different because when I am there I rely in part on the International Herald Tribune for my news, which means I am relying in part on The New York Times, not something I often do. So what I also learned on this trip was that the destruction of the American economy and the jobs market has been so intense that even those who love the American President are forced now and then to draw attention to it.
On this occasion, amongst the columns from the usual gang of commentators, there was one by Bob Herbert. Under the title, “The Horror Show”, he began his column with these words:
“The employment situation in the United States is much worse than even the dismal numbers from last week’s jobless report would indicate.”
And there is no doubt they were dismal. Undoubtedly, as with the rest of the crew at the NYT, the reason for accurate reporting for a change is to help the Obama Administration sell its second stimulus package, something the rest of the country, exhibiting common sense, is reluctant to support. In his column, Herbert wrote:
“At some point we Americans are going to have to claw our way out of this denial. With 14.6 million people officially jobless, and 5.9 million who have stopped looking but say they want a job, and 8.5 million who are working part time but would like to work full time, you end up with nearly 30 million Americans who cannot find the work they want and desperately need….”
“…[T]here are now 3.4 million fewer private sector jobs in the U.S. than there were a decade ago.”
Given that, you would think that they might start to work out that Keynesianism is actually poison rather than a stimulus to faster growth and more jobs. But as Samuelson accurately observed, once something gets into the textbooks, it is almost impossible to get it out again.
Keynesian economics is the instruction manual for our economic elites which they use to trash the economy believing they are doing good. It is too much to hope they will eventually work out that leaving things to the market is an infinitely better way to proceed. But at least they might finally recognize that public spending on worthless projects is not the way to get an economy to grow.
You don’t have to be Einstein to recognise that insanity is doing the same thing over and over but expecting a different result, although as it happens it was Einstein who said it first. But if they really do apply a second stimulus in the US, with all the evidence of failure right before their eyes, in what other way would you describe such decisions or the people who made them?