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For Heaven’s sake, calm down and pour yourself a stiff drink.

I know…I know…that John Maynard Keynes is the father of Quantitative Easing, or government effectively printing money to supposedly stimulate economic growth. I know that as he debates the immortal FA Hayek in the two brilliant, modern rap-videos, Lord Keynes enters the room to diabolical thunderclaps. I even know that his ever-gentlemanly opponent, Ludwig von Mises, lovingly pasted a newspaper clipping on Keynes’ homosexuality into the back of the Austrian’s own copy of Keynes’ “General Theory” (now in the Mises Library at Hillsdale College).

“Etceteraah, etceteraah, etceteraah,” as the King of Siam tells Anna in the musical.

But according to my old friend and mentor, the British free-market economist John Burton, Keynes thought that what we today call QE should be only done modestly and reluctantly in times of great crisis and – get this – that it was jolly unthinkable, my good man, that government should ever consume more than 25 percent of a nation’s annual productivity. In rich countries, most governments now gobble up close to one-half and often more.

As Bertie Wooster might say, “Fancy that, old fruit!”

Keynes advocated what now would be called limited government and modest tinkering, the effectiveness of which we non-economists may not judge easily except that limited tinkering might only cause limited damage. But his descendants go berserk.

Today’s self-described Keynesians do stuff that would have their namesake fumbling for the barf-bag. Their trillions of bucks of alleged stimulus, time and again, generate no growth apart from those temporary jobs paid by government funny-money, which only last until the rubber check loses its snap and politicians need to sign another. If the old fellow made it up to Heaven, I’m sure that one can hear the upchucking from several clouds away.

In terms of ignoring one’s teacher, it is as if Karl Marx proposed food-stamps and his followers gave us Stalin. In terms of degree, it is as if Lord Keynes advocated a restorative gin after work, but his acolytes slosh the stuff over their morning cornflakes. In terms of Neo-Keynesian sense and sensibility, if it is fine to get intimate with your spouse, it is even better to make whoopee with your spouse, with the neighbours, their parked cars, their household pets, the mailman, the pizza-delivery guy and every mailbox, tree and trashcan on your street.

Poor Keynes gets misrepresented by his proponents perhaps because at the bottom of government’s enormous, costly and posh golf-bag there are only two items, the bomb and the check-book. Governments can blow you to smithereens or they can spend you to death. This is a metaphor. They can use force to bomb you, assassinate you, torture you, jail you, fine you or fondle your daughter at the airport: they can use (your) money to buy your vote, bribe you, strengthen your competitors until you are destroyed, hire officials to regulate and hector you into madness and insolvency or bankrupt you by buying off others. But there are no woods and no irons in the government golf-bag: the bomb and the check-book are it.

Bombing deferred for now, the US Government is still deploying the check-book on the Palestinians, with Congress cutting off food supplies to the hungry for their audacity to request UN recognition (getting anything meaningful from the UN is a bit like hiring a eunuch as your marriage-counsellor, but leave that go).

In Libya, a country that will still sell its oil no matter who is in charge because they cannot drink the stuff, Western governments told their caddies to reach into the golf-bags and hand them bombs. Next they will ask for the check-books because that’s all they have left.

neo-keynesianIn America, citizens may object to getting the Afghanistan and Iraq and Libya treatment. The voters of Omaha and Phoenix and Boston may not like being carpet-bombed, especially in an election year. So ‘Tiger Woods’ Obama and his caddie, Ben Bernanke, have only one club left to get around the course, namely the public check-book, and approaching the 17th green they are already shooting way over par in this four-year presidential tournament.

In Britain how different it isn’t. President Barak gave what Britons call a barracking to Prime Minister David Cameron over his sniffy refusal to join America’s fiscal cocktail party. Cameron and his money-man, Chancellor George Osborne, insisted on supposedly massive cuts that, um, only stem the growth of already-outrageous government spending: they won’t drink any more than the current (burp) three bottles of scotch a day.

Britain’s bureaucrats, welfare scroungers, media vultures and limousine-liberals made such a ruckus that now Cameron has caved in and the UK is going for a two-fer, a fiscal version of happy-hour. In addition to their central bank printing new trillions in funny money, the British government will buy additional billions’ worth of stock in small and medium-sized businesses that have trouble getting loans from banks. No fooling.

This won’t increase government debt, Chancellor “Stillborn” hiccoughs, because – hey, guys – government will own stock in all those small businesses so it won’t look like debt on the balance sheets. Boris Yeltsin was never drunk enough, nor Leonid Brezhnev so communist, to think up a corker like this. It is as if John Belushi left Animal House for a job at the Fed.

The logic is fascinating: bankers cannot or will not lend money to many small businesses, in part because bankers are afraid of the risk while politicians are so busy sloshing money everywhere, government inflation gnaws at purchasing power, and worldwide consumers cease spending and trouser their pay-checks fearing the worst.

So bureaucrats – the guys busy not collecting the garbage, not alleviating poverty, making trains miss their timetables, burning mail that they are too lazy to deliver and launching military debacles around the world – will make the loans instead of bankers who have studied this stuff for years and who have a big financial incentive to get it right. As P. J. O’Rourke once said, this is like giving your dog a credit card.

Whatever panel oversees this government lending process, however nominally private-sector, it will be controlled by government pencil-pushers who only know how to kill or spend. So spend they will, in spades. Signs will proclaim, “Gotta pulse? Getta loan!” Had you unmarried daughters with the self-restraint of these new government lenders, they would all come home pregnant – every nine months. Meanwhile, your pension and your life-savings will be worth less every day.

Some long-gone buckskinner comic told a story of a lost man and his dog starving in the American wilderness. He cuts off his dog’s tail, cooks it, eats the meat and hurls the bones to man’s best friend. The storyteller explained that the master, and at the cost of some pain the grateful dog, got hot meals but the dog wondered where the knife would strike next. This is another metaphor: government is the lost man and you are Rover.

The moral may be to buy gold if you wish but fit a padlock on your underpants. And stop blaming Keynes for the Keynesians: he only wanted a little snorterino of the bad stuff while his followers are utterly stinko and gagging for more.

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6 replies to this post
  1. Stephen,
    Everything pertaining to the "public square," of course is a metaphor. The problem is, we tend to make metaphors into policy without understanding the meaning of the metaphor. Keynes may not have intended his metaphor to get us where we have got, but that's because he had a peculiar lens (homosexuality) through which he saw everything from children to governments.
    I said to my students several years ago that the Brits apparently believed the doggerel: (I'm struggling to remember here)
    In Washington, Lord Halifax,
    Remarked to good Lord Keynes,
    They have all the moneybags,
    But we have all the brains.
    My reply, based on Keynses wife, was (her response to her "husband's" puffery),
    In London-Town, Lady Keynes,
    Said to a friend so dear,
    The Americans have all the manly men,
    And we have all the queers.
    I like Chesterton's economics better than, What?

  2. John, three thoughts in addition to thanks also for the merry rhymes. (1) I wonder how influential is one's sexual orientation (haetero or homo): a top-line US diplomat friend, whom I later learnt bats for the other team, is a most ethical and thoughtful conservo-libertarian and together we three would disagree on little. But the homosexual business makes no sense to me, really.

    (2) Brits are generally better at dealing with foreign lands than Yanks are, but not so much better as they suppose. Three centuries of live-in (as opppose to US commuter) empire helps, and also their smaller size reduces the temptation to insularity. Brits settle happily abroad, even avoiding expat enclaves, in ways that Aussies and Yanks do not.

    3) While Keynes' disconnect with reality may have been influenced by coming of age in an Oxbridge homosexual demimonde (HomIntern), Wm of Occam would find a simpler answer. UK private schools were built to crank out safe administrators, and the boisterous upper-class brats at school swiftly became self-assured public officials running vast areas of empire at tender ages. Scholars were an unwelcome by-product, as opposed to 'sound chaps' good at sports who understood duty. I saw the tail-end in the 1970s, and what they were was cocksure: even blithering idiots (a small minority) would order every one (apart from superiors) around like regimental sergeant-majors on a parade ground. This gives a callow young person an immense advantage, especially starting out. Since every leader among Keynes' generation came through that boarding-school mill, added to at Oxbridge no doubt, there I think lies both the disconnect and the arrogance. His being very bright probably also helped to plug his ears.

    This certainty is mostly gone in England, although our upper-class 'public school boys' still develop leadership early. But gone are my university days when some elderly 'county' lady would pour me a cup of tea and ask, with tortured vowels, 'So Mr Masty, do you think that America has made any contribution to culture?' (I soon gave up arguing and took to answering, with equal acidity, 'well, they say that our Negroes produce good dance music.'

  3. You are of course right, Steve, that one's sexual "orientation" (gosh, isn't that a horrible word?) or particular lusts may or may not have any effect on how one acts amongst others. I know some good Christian homosexuals, both male and female. They try to live good lives, and confess their sins. There are, however, people whose lusts drive their lives–John F. Kennedy comes to mind–and they imperil us all. We are at a stage in the disintegration of our culture where homosexuals have made their choices too often into an ideology, and I think that Lord Keynes was one of the self-starters. Unlike his Brit buddies he never went commie, but I'm not sure he didn't do more damage than Maclean, et. al.
    It's interesting that you got the elderly English lady treatment–I thought all these years that it was the middle aged faculty wife treatment. Generally they said to me, "So, John, how did a country mouse ever make it into the truly intellectual life?" It took me about fifteen years to say, "Well, my pal Hank Aaron gave me a couple of good recommendations. He had a good swing, you know."

  4. John, I use the phrase 'sexual orientation' for lack of anything better to mind. i doubt it's a sexual preference because i grew up attracted to ladies and was never asked to choose. same in reverse, I am told, among homosexuals. this seems consistent with Pope Benedict, who separates attraction from a sinful act: if you are homosexual and can keep a lid on it, you are welcome into the priesthood, he says, but if you cannot withstand temptation then find another vocation. as for a born condition being ideologised into a fashion and a mass-movement you could not be more correct! Brits have been so 'conditioned' on this by state, media and the chattering classes that I fear it may become mandatory.

  5. Hello!

    I wonder if it´s OK to use the picture on this side for a TV program – its in a interview about economy history and they are mention John Maynard Keynes in the interview so it would be nice to use it.

    Is the picture free to use? Dose anyone know the name of the photographer?
    Need to know before tuesday morning, otherwise I won´t use it.

    thank you!

    Best regards,

    Anette Gunnarsson

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