Friday, July 22, 2011

Keynesians Neglect The Public's Lost Confidence In Government Spending

From PileusBlog, "Long live the revolution" by Sven Wilson:
In a world where government is relatively small and constrained, attempting to run counter-cyclical policy has little consequence (it doesn’t do much good, but doesn’t do much damage, either). But what Keynesianism completely neglect is the crisis in confidence that is occurring as citizens see their government spiraling out of control–spending vast amounts of money on stimulus, creating huge new entitlement programs, and saddling markets with an ever increasing amount of regulation. In the Keynesian world, government is unconstrained; markets fail but government can’t fail. In the Keynesian world, people don’t worry about what government is going to spend the next year and the year after that. All they care about is the present.

But in the real world, people are terrified, with just cause, about the ability of government to meet the rapidly growing pile of obligations on its balance sheets. We know that when those obligations get paid, we (and our children) are the ones that will have to pay them. And we see a federal government that seems so completely unconstrained by constitutional limits or by reason, always willing to make promises it can’t keep, always willing to pass new productivity-killing regulations, always willing to see new ways to creep further into our lives.

In short, the continued health of the economy depends on constrained government and economic freedom.
Read the entire blog post here.

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