Yesterday, I started Thomas Sowell’s Economic Facts and Fallacies, underlining many passages, including this one:
. . . the zero-sum fallacy had kept millions of very poor people needlessly mired in poverty for generations before such notions were abandoned. That is an enormously high price to pay for an unsubstantiated assumption. Fallacies can have huge impacts.
Emphasis added. In the margin, I wrote, “Obama’s ‘stimulus’: was there evidence it would work — where have similar programs tried & succeeded?” Yes, we read economists explaining how the president’s plan was supposed to work, but they derived their explanations from Keynesian theory and not marketplace experience. They reached their conclusions on unsubstantiated assumptions. And we’re paying an enormously high price for that.
It does seem that Democrats and left-of-center pundits, not to mention intellectuals, make their cases on faith, er, theory rather than experience. A few hours after reading Sowell, I caught something on Instapundit which helped confirm that hypothesis:
JIM TYNEN: “Here’s what interests me: why do the journalists and professors so fervently believe in things they cannot possibly verify on their own? . . . Journalists who are not scientists, or professors who are not climate scientists, identify with the Knowledge Class.”
Tynen adds that “journalists and others on the low rungs of the Knowledge class defend the dogma. And of course this also goes for the dogma of Keynes, and multiculturalism, and much else.” Emphasis added.
Last Thursday, a blogger at Ace of Spades quoted White House flack Josh Earnest’s contention that the president’s American Jobs Act is “the only plan before Congress that independent analysts confirm would create jobs right away“. And just who are those independent analysts, Josh? And did they show how the president’s plan was similar to other government programs which led to job creation or did they base their conclusions on economic theory?
It seems sometimes that so much of liberal theory is just that, theory, based not on how the world works, but on how some very smart people believe it works.
Not any evidence from the Great Depression. Hoover and Roosevelt alike tried government-spending, Obama-style “stimulus” – and gave America 12 years of the highest unemployment it has known.
It’s astonishing, how left-liberal historians and teachers have brainwashed generations of people to think that the nation’s worst episode of long-term unemployment is somehow evidence -in favor- of Keynesian / “stimulus” theories.
“Oh but government spending saved us from the Depression, ILC” – Nuh-uh. The record shows roughly that the the more “stimulus” they applied (beginning again with Hoover’s spending and deficit increases), the more unemployment dragged on… and on… and on.
Um, no. What saved the US from the Great Depression was Hitler touching off a world war, people in the United States accepting a voluntary redistribution tax (war bonds, anyone), the entire industrial capability of continental Europe and Japan being destroyed (and put into hock to the United States for decades) and the Soviet Union sealing off its economies.
The Obama Party and Keynes somehow transmuted the fact that one of the outcomes of those was massive government spending into the belief that massive government spending created the postwar boom and fixed the Great Depression — sort of like the old belief that, since rainy areas had lots of trees and dry areas didn’t, that you could make dry areas rainy by planting trees.
The zero-sum theory still keeps millions mired in poverty and provides the impetus for much of the class warfare exploited by progressive politicians. If a Wall Street trader makes millions in bonuses, good for them. A private company has decided that that’s what their services are worth. Another’s income makes no difference whatsoever in my ability to earn, nor does it ‘take away’ from my future earnings. The only entity reaching into my pocket is government, a fact all too slowly dawning on the OWS crowd.
The simplest way to solve the problem in government would be this: any and all accounting, financial, revenue recognition, underwriting, or other regulations and rules passed by either Congress or the executive branch also apply to government.
The Obama Party would be driven completely out of existence at that point.
Dan, you might enjoy this article by Gregory Mankiw, a conservative economist who is not completely hostile to Keynes, but who is skeptical of Obama’s version of stimulus.
http://nationalaffairs.com/publications/detail/crisis-economics
Some of the information is out of date (we do now know that things were in fact much worse than preliminary data indicated in early 2009), but it’s a sober and clear-eyed analysis of attempts to measure the effect of fiscal policy, including a comparison of spending increases and tax cuts.
ND30… you also forget that during the 1950’s, there was no EPA, no EEOC, no FDA, no Civil Rights Division of the Department of Justice, no Department of Transportation, No Department of Energy, No Medicare, No Medicaid, no Endangered Species Act, no Sarbanes-Oxley, no Dodd-Frank, no Federal Energy Regulatory Commission …
In short, much of the bureaucratic apparatus created to hinder economic development and suck the lifeblood out of the economy had yet to be created.