Thanks for nothing, Mr. Keynes
Posted by ampontan on Friday, May 25, 2012
THE Wall Street Journal has a brief editorial with that title (sort of), emphasizing once again that the experience of Japan should put to rest forever the idea that it is worthwhile for a government to apply the theories of John Maynard Keynes:
But since the 1980s bubble burst, Japan has been closest to a sustainable upturn only when Prime Minister Junichiro Koizumi pursued genuine structural reforms. With his successors backtracking from that agenda, Tokyo is back to its old spend-and-spend ways and all it has to show for it is another debt downgrade.
The world’s formerly second-largest economy stands as a rebuke to those who argue Keynesian sprees help unleash private-sector-led growth down the road. Japan is a long way down that newly built, and rebuilt and rebuilt-again road and, as the latest quarter shows again, the country is still waiting for the private growth to materialize.
Finally, a recognition in the English-language media of the Koizumi contribution, albeit a fleeting one. If the stars align in a once-in-a-millennium phenomenon similar to that which resulted in the eclipse earlier this week, the upcoming meeting of the rehabilitated Ozawa Ichiro with Prime Minister Noda might also be of some assistance. Rumor has it that Mr. Ozawa will agree to accept the Noda tax increase plans on the condition of sharp cutbacks in government spending. There is no word, however, as to what constitutes “sharp”, whether Mr. Noda would be amenable, whether he could convince the rest of the party to go along if he were, or whether any cuts would be vitiated by the famed Japanese bureaucratic rhetoric. That’s why a once in a millennium alignment is required.
The highest hurdle among the potential obstacles might be the prime minister. Noda Yoshihiko has self-identified as a Third Wayer, and has actually said there are times that “equality” (as in equality of economic outcomes) has to be given priority to liberty.
Such is the fascisto-progressive mindset, though Mr. Noda’s is just a slightly more concentrated mix than the diluted variety practiced by the LDP over the years. (The arrogance masquerading as fairness required to even make that claim, and to assume that one is a member of the elite who knows the unknowable and is capable of exercising the authority to decide when, how, and to what extent that equality should be compelled, is stupefying, but not atypical.)
Speaking of the fascisto-progressive mindset brings us back to Keynes. Jeffrey Tucker on the Mises Economics Blog quotes the man himself:
As he wrote in the 1936 foreword to the German edition of The General Theory: “Nevertheless the theory of output as a whole, which is what the following book purports to provide, is much more easily adapted to the conditions of a totalitarian state, than is the theory of production and distribution of a given output produced under conditions of free competition and a lance measure of laissez-faire.”
Mr. Tucker comments:
I can easily imagine his dispassionately narrating events in a Gulag, justifying every horror with a pseudo-scientific rationale made up on the spot.
Well of course. Keynes was one of the directors of the British Eugenics Society from 1937 to 1944, a period that overlaps the rule of some other eugenicists on the European continent. He later said that eugenics was ”the most important, significant and, I would add, genuine branch of sociology which exists.”
The politics, sociology, and economics behind this are all of a piece. Don Boudreaux at Cafe Hayek quotes David Malpass explaining the governing idea behind Friederich Hayek’s The Road to Serfdom:
Contrary to much misunderstanding, Hayek never argued that the slightest deviation from laissez-faire capitalism launches a society on an unstoppable march toward tyranny. Instead, he reasoned that tyranny is the inevitable result of government policies aimed at preventing market competition from ever threatening anyone’s economic prospects. As long as voters demand that government protect them from all downsides of economic change, governments can oblige them only by shutting down, one after another, all avenues for economic change. Competition; entrepreneurship; innovation; consumer sovereignty; workers’ freedom to change or to quit their jobs; even changes in demographics. Government must obliterate these and all other sources of change if no one is to be exposed to the risk of losing a job or of having her wages or benefits cut.
There’s no excuse for prolonging the miserable charade any longer. A century, give or take a decade, is long enough. Japan is an example of the least worst that can happen.
N.B.: WSJ articles have a tendency to disappear quickly behind a paywall. Click quick!