The Keynesian debate promoted by such writers as Krugman, Delong, Thoma, Smith, and Stiglitz is misleading. Human beings are well aware that spending can increase demand, and that demand will improve the economy. The problem is, that we’re also aware of the externalities that are caused by that spending: the increase in government interference in our lives, the expansion of government’s size, the corruption created by the use of the funds, the use of the funds to support one’s opposition, the destruction of our savings, and the near prohibition on the institution of saving.

These negative consequences all support the secondary Keynesian objectives: the strong and increasingly egalitarian state. So Keynesians promote spending as much because of it’s externalities as for its impact on the economy. Just as we oppose those externalities because we desire freedom from an oppressive state, even if we must pay a high cost for doing so.

The germans resent supporting the greeks, italians and spanish just as much as americans resent supporting their liberal leaning underclasses. And while it may be true that the scale of our economy allows us to print money, that is not to say that each of us could not be more free, more prosperous, more secure and more competitive, as smaller collections of states rather than a continental federation of states oppressed by the coasts.

The Keynesian arguments are convincing on first blush. But they are only convincing because in their simplicity they ignore the true costs of government spending – the externalities that come from empowering the state: it is not debt alone that we face. It’s the destruction of meritocracy and the submission to the state.

The germans and the americans are right to oppose it.

 

One Response to Stiglitz Joins In On Keynesian Spending In Order To Expand The Oppressive State

  1. nazgulnarsil says:

    Trying to nudge or force consumers to spend at the optimal rate doesn’t work very well when there is no known method for determining what the optimal rate is.

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