Just Because It Is in the Wall Street Journal…

does­n’t mean it makes sense.

The link is to an arti­cle titled Four Rea­sons Key­ne­sians Keep Get­ting It Wrong.

Well, some­one is wrong four times.

1) big increas­es in spend­ing and gov­ern­ment deficits raise the prospect of future tax increases.

Actu­al­ly, anoth­er good dose of stim­u­lus would prob­a­bly push the econ­o­my into real growth. The most pow­er­ful way to dimin­ish the deficit (and lessen the need for tax increas­es) is to grow the economy.

2) most of the gov­ern­ment spend­ing pro­grams redis­trib­ute income from work­ers to the unemployed.

In the first place, I seri­ous­ly doubt this is true. Or rather, I am cer­tain that the per­cent­age of the fed­er­al bud­get that goes to the unem­ployed is actu­al­ly rather small.* It may be pos­si­ble to define “spend­ing pro­grams” in such a way that “most” of them redis­trib­ute income from work­ers to the unem­ployed, but there is some game play­ing going on there.

In the sec­ond place, mon­ey to the unem­ployed is mon­ey that gets spent, and fast. Tax cuts for the wealthy do not get spent. They get saved.

3) Key­ne­sian mod­els total­ly ignore the neg­a­tive effects of the stream of cost­ly new reg­u­la­tions that pour out of the Oba­ma bureaucracy.

Assum­ing it is true that the stream of cost­ly new reg­u­la­tions are hav­ing sig­nif­i­cant neg­a­tive effects on the econ­o­my (and I’m not con­vinced it is true**), this does not in any way mean that Kenye­sian poli­cies do not work.

4) U.S. fis­cal and mon­e­tary poli­cies are main­ly direct­ed at get­ting a near-term result.

Well, yes and no. They should be aimed as much as pos­si­ble at a near term result. But it is not true that the pos­i­tive effects (the jobs) dis­ap­pear as soon as the stim­u­lus ends. One only has to look at the last stim­u­lus. Over two mil­lion jobs were cre­at­ed while those stim­u­lus dol­lars were being spent. Now that those dol­lars have run out (or are down to a trick­le), the jobs have not disappeared.

I think there was a time when the Wall Street Jour­nal was not just a pro­pa­gan­da organ for the con­ser­v­a­tive right. But today it is owned by Rupert Murdoch.

*

Safe­ty net pro­grams: About 14 per­cent of the fed­er­al bud­get in 2010, or $496 bil­lion, went to sup­port pro­grams that pro­vide aid (oth­er than health insur­ance or Social Secu­ri­ty ben­e­fits) to indi­vid­u­als and fam­i­lies fac­ing hardship.

These pro­grams include: the refund­able por­tion of the earned-income and child tax cred­its, which assist low- and mod­er­ate-income work­ing fam­i­lies through the tax code; pro­grams that pro­vide cash pay­ments to eli­gi­ble indi­vid­u­als or house­holds, includ­ing Sup­ple­men­tal Secu­ri­ty Income for the elder­ly or dis­abled poor and unem­ploy­ment insur­ance; var­i­ous forms of in-kind assis­tance for low-income fam­i­lies and indi­vid­u­als, includ­ing food stamps, school meals, low-income hous­ing assis­tance, child-care assis­tance, and assis­tance in meet­ing home ener­gy bills; and var­i­ous oth­er pro­grams such as those that aid abused and neglect­ed children.

Note that much of that 14% is not going to the unemployed.

** If reg­u­la­tions are caus­ing so many dif­fi­cul­ties, why are equip­ment and soft­ware invest­ments out­pac­ing pre­vi­ous recov­er­ies. Why do only 13% of small busi­ness own­ers say that reg­u­la­tions are the biggest prob­lem they face. Also, remem­ber that when a study says that a giv­en reg­u­la­tion is going to cost a giv­en sum of mon­ey, that mon­ey is still cir­cu­lat­ing in the econ­o­my and it like­ly results in jobs. Final­ly, to not have the reg­u­la­tions is to accept that eco­nom­ic growth is more impor­tant than a clean envi­ron­ment and work­er and pub­lic pro­tec­tions. Note that lack of envi­ron­men­tal pro­tec­tion is like­ly to lead to tax increas­es at a lat­er date to pay for the clean up.

Hat tip: Alt­house

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