Paul Krugman's Blog: Conservatives have always hated Keynes

[LadySusan]

I'm just wondering if anyone will actually read this because it's the weekend and how can Economics possibly compete with the Lego hotel post?

But here is Krugman's blog post:

Conservatives and Keynes

Tony Yates asks, “Why can’t we all get along?” Lamenting another really bad, obviously political defense of austerity, he declares that, "it’s disappointing that the debate has become a left-right thing. I don’t see why it should".

But the debate over business-cycle economics has always been a left-right thing. Specifically, the right has always been deeply hostile to the notion that expansionary fiscal policy can ever be helpful or austerity harmful; most of the time it has been hostile to expansionary monetary policy too (in the long view, Friedman-type monetarism was an aberration; Hayek-type liquidationism is much more the norm). So the politicization of the macro debate isn’t some happenstance, it evidently has deep roots.

Oh, and some of us have been discussing those roots in articles and blog posts for years now. We’ve noted that after World War II there was a concerted, disgraceful effort by conservatives and business interests to prevent the teaching of Keynesian economics in the universities, an effort that succeeded in killing the first real Keynesian textbook. Samuelson, luckily, managed to get past that barrier — and many were the complaints. William Buckley’s God and Man at Yale was a diatribe against atheism (or the failure to include religious indoctrination, which to him was the same thing) and collectivism — by which he mainly meant teaching Keynesian macroeconomics.

What’s it all about, then? The best stories seem to involve ulterior political motives. Keynesian economics, if true, would mean that governments don’t have to be deeply concerned about business confidence, and don’t have to respond to recessions by slashing social programs. Therefore it must not be true, and must be opposed. As I put it in the linked post,

"So one way to see the drive for austerity is as an application of a sort of reverse Hippocratic oath: “First, do nothing to mitigate harm”. For the people must suffer if neoliberal reforms are to prosper."

If you think I’m being too flip, too conspiracy-minded, or both, OK — but what’s your explanation? For conservative hostility to Keynes is not an intellectual fad of the moment. It has absolutely consistent for generations, and is clearly very deep-seated.

[Kattey]

I read this, but admit I didn't really understand it because I'm not highly educated.

[Cicero]

This could otherwise be titled Liberals have always hated Friedman and the Chicago School.

It's basically the back and forth of economic thought of the later half of the 20th century. Both sides have their merits and both sides have their Nobel Prizes for economics, so it's not something that is just going to go away.

ETA: My parents are in town so I can't really get into this now but I'll come back if it's around later.

[msmerymac]

Well duh? As long as Republicans are obsessed with no new taxes and/or as low of a tax rate as possible and tax cuts for businesses, Keynes isn't going to be all that popular. His theories are in favor of very low interest rates during recessions and downturns and government stimulus. Except... that's been going on for the vast majority of the last century, not just in the most recent recession.

Keynesian economics kind of goes against the argument that poor people are poor because of their own decisions, or that government should be run like a business, and therefore "unprofitable" aspects should be cut.

[LadySusan]

Yay replies!

I only have a slight understanding of this stuff too.  But economics is important and I want to learn more.  I think I understand a goodly amount of Keynes, a little bit of Friedman and very little of Hayek.

I don't completely understand why there is a Keynes=Progressive and Friedman=Conservative dichotomy.  It seems more complex than that.  Friedman was a proponent of free-market capitalism but he was also a proponent of welfare for people making below a minimum amount.

[Cicero]

May 23, 2015 17:42:42 GMT -5 LadySusan said:

]
I don't completely understand why there is a Keynes=Progressive and Friedman=Conservative dichotomy.  It seems more complex than that.  Friedman was a proponent of free-market capitalism but he was also a proponent of welfare for people making below a minimum amount.

FWIW Friedman was a huge libratarian so it doesn't necessarily come from like political opinions.

I think the tendency to gravitate towards one or the other depending upon political persuasion has a lot to do with how both would say you should deal with a recession. Keynes is basically spend your way out of it while Friedman is far more worried about the way you're managing the money supply. If you are a fiscal conservative you already have issues with spending money we don't have so its not a huge leap to look into something else.

[esdreturns]

I don't post over here, but I saw this and just had to comment. I have a Master's degree in Economics so I love stuff like this. My reply to this is sort of on the "well duh" side in that this argument between the two sides has been going on for a long time. Both sides have their pros and cons and I've always found them fascinating. Thanks for posting this!