John Howard’s Keynesian approach to the budget of spending up big has prompted one devotee to defend the great pump-primer’s place in history.
The Financial review, like other financial journals, opened their pages to sneering mediocrities who told us all about how badly Keynes had got it wrong.
In contrast, those great thinkers Adam Smith and Hayek, had predicted exactly the unparalleled boom that freedom, de-regulation, competition etc etc would bring.
Most of the pundits and certainly none of the pollies (except probably the Kemp brothers) had ever read any of the three.
Yet now most of the media, world finance departments, pollies and so on are reminding us that Keynes may be dead but is not forgotten.
For the very few crikey subscribers who aren’t familiar with Keynes’ work he got two big things right. The first, realising that reparations payments after World War One would have a disastrous economic impact. The second, realising that when times are tough pump-priming through government spending adds to aggregate demand and gets things moving again.
In the meantime he got a few other things pretty right too like crafting the post-war international monetary arrangements which served the world moderately well in the long two decade post war boom.
The let it rip, anti-socialist proselytisers (listen to the WA Liberal Ian Campbell on any economic subject for a hilarious caricature of this position) spent much of the 1970s onwards arguing that this demand management system was not only wrong but plain dangerous.
Now, of course, all of them are Keynesians in practice if not in protestation.
One of the reasons the Australian economy is burbling along as well at is simply that Howard has spent, spent and spent. George W. is now following in the same footsteps.
Arguably what made the Great Depression so deep was that most governments did exactly the opposite save, save, save, cut, cut, cut. Keynes advocated an alternative approach but in the UK only Oswald Mosley took him seriously and nobody took Mosley seriously (except for lots of rich, attractive young women). In Australia Red Ted Theodore and Jack Lang had an inkling in the same direction . But then nobody except Frank Packer took Ted seriously and those who took Jack seriously did him in a forerunner of November 11 1975.
Keynes also made the profound observation that continually cutting interest rates as a means of stimulation in downturns could be like “pushing on a string” an observation successive Japanese governments have found to be spot on and the US Federal Reserve may also find to be a tad pertinent in the near future.
It is highly unlikely that any of the pundits and pollies are going to rip off their Adam Smith Society ties. That’s about as likely as them actually reading Smith and discovering his devastatingly accurate criticisms of how business tries to reduce competition and defraud the public.
But it would be nice if some other Keynesian contributions found their way into your average conservative’s political mindset.
After all he was devoted to education and made millions through investments for his Cambridge College’s endowment fund.
A youthful Bloomsbury bugger he ended up married very happily to a Russian ballerina and was passionate about the arts from theatre and ballet to the visual arts. (Please note: Before we get more emails about whether crikey is homophobic or not the term “Bloomsbury bugger” was invented by one of them so presumably is acceptable to use.)
Anyway, in general you could describe him as tolerant, intelligent, cultured, gifted, a far-sighted investor, and massively influential around the globe – just the sort of role model Libs like Ross Lightfoot, Ian Campbell and Michael Kroger are sure to want to emulate in the years ahead.
Far-sighted in another way too, according to the US publishers of the third volume of Robert Skildesky biography of Keynes. Published in the UK under the title “Fighting for Britain 1937-1946”, the book’s title has been changed in the US to “Fighting for Freedom”. Obviously a very early convert to the fight against Mr Bin Laden!
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