Beginning with the very first policy-oriented post on this blog, I’ve been criticizing Keynesian economics, usually with lots of cheering and support from the GOP. Indeed, more than 98 percent of Republicans in the House and Senate voted against Obama’s so-called stimulus.
They understood – or at least seemed to understand – that you don’t create jobs by diverting money from the private sector so it can be spent by politicians in Washington.
And they have the satisfaction of seeing history justify their votes. Unemployment rose after the faux stimulus was enacted and the joblessness rate has stayed above 8 percent.
But some Republicans are now sounding like born-again Keynesians. They object to the automatic budget savings – known as sequestration – that are scheduled to take effect next year, and they are warning that less government spending means fewer jobs. Here’s a small sampling of their statements.
- Cong. Rob Bishop of Utah claims a sequester will “destroy jobs.”
- Sen. Roger Wicker of Mississippi asserts that “up to 1 million jobs are at risk.”
- Gov. Bob McDonnell of Virginia says that sequestration is “putting hundreds of thousands of jobs in my state at risk.”
I would have no objection to these lawmakers arguing against a sequester if they based their concerns on national security, even if I think those concerns are exaggerated.
And I would understand if they objected to a sequester because defense is disproportionately impacted (the Pentagon accounts for only about one-fourth of the budget, yet it absorbs one-half of the sequester).
And I wouldn’t even complain if they claimed that a sequester is painful because of short-term economic dislocation and transition costs. Heck, I even said that might be a legitimate excuse when Mitt Romney said something that sounded suspiciously Keynesian.
But it doesn’t seem like those caveats apply.
Let’s close with some good news and bad news. The good news is that I don’t actually think any of the anti-sequestration lawmakers are genuine Keynesians.
The bad news is that they are genuine politicians, so they think there is nothing wrong with using the coercive power of government to take as much from the rest of the country as possible and redistribute those resources to their states or districts.
They may vaguely understand that big government undermines economic performance, but that’s a secondary concern. They’re main goal is buying votes with other people’s money.
P.S. You can peruse some good cartoons about Keynesian economics by clicking here, here, here, and here.
In fairness to McDonnell, he says jobs will be lost “in my state”. Government does have the power to move jobs around. Taxes levied across the US to pay for spending at the Pentagon will indeed lead to more jobs in Virginia.
[...] Republican Keynesians come out of the woodwork to oppose sequestration — Dan Mitchell [...]
Hello my friend, you are right on with this article, politicians on both sides of the aisle refuse to come clean and admit they would prefer that the current insanity of political insanity to continue. I believe America is doomed to total failure in the next few years mainly because the majority of Americans choose to remain ignorant of the real realities of America today.
Reblogged this on insipidbanality and commented:
I don’t know. They may be victims of sound bite politics. Sequestration is a useful tool. The current plan will require restructuring throughout manufacturing.
I did not realize there was a question of the government’s ability to inject jobs into the economy by using its purchasing power. Keynesian Economics gets this part right.
The biggest problem is that there is no end to it, and where it is spent is politically motivated. This has become an addiction where interest rates are held artificially low for an excruciatingly long time. To make matters worse, the spending is not coming from reserves, but from borrowing and printing money, which is leveraging the future to provide for the present.
The longer it is goes on, the harsher the eventual and inevitable fallout will become. So like any addiction, the question is how to remove it from the system.
1) Cold Turkey with a swift and painful blow, allowing the recovery to happen sooner, but with potential relapse due to the “pain” involved?
2) Slowly weaning off of it gradually, but with the potential that a milder level may just become the new normal and only revert the effects until another episode of binging occurs?
I don’t think many have what it takes to do follow path #1. I’m hoping that #2 can be implemented and followed down to a level where the government is a mere shadow of the leviathan it currently is.
I’m not a fan of the entire 12 step program, but there are many analogies to be made and the first step is just getting the government to admit it has an addiction. The debt ceiling debate was the first intervention, but from the reactions of both Republicans and Democrats, not everyone is convinced.
[...] Read More By Dan Mitchell. [...]
Rob Bishop is the one who’s whining like a baby that the Pork Rocket from Utah a.k.a. “Liberty” was not chosen by NASA. Worse, he’s threatening to use the power of Congress to punish NASA for doing what’s right for taxpayers. I knew he was a slimy pokrster before you exposed him. He is not a Keynesian at all, he’s a corrupt pork-barrel politician pretending to be a Republican.
The problem for them is, they agreed to sequestration, knowing that it could kill jobs in the short term, and now they are against it because it may kill jobs in the short term.
Get off the fence RINO’s! Either you’re for a bright future for your grand kids, or you’re for Obama’s vision of a USSA.
You can’t have it both ways.
[...] have been using Keynesian arguments to oppose budget [...]
[...] very much akin to the pro-defense Republicans who use Keynesian arguments about jobs when promoting a larger defense [...]