Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. – John Maynard Keynes, 1936
John Maynard Keynes was the most influential economist of the first half of the 20th century. He is correctly associated with the policy of increased government spending and deficits to combat economic downturns. Keynes is the economic icon of the Obama administration, which uses his multiplier to justify its huge stimulus programs and soaring deficits.
Keynes would be irritated to know that I count him among the “defunct economists” whom he disparaged.
The appeal of Keynesian economics is its simple logic. If government spending for goods and services is part of GDP, then any increase in government spending must raise GDP.
As President Obama explained in a town hall meeting on Feb. 8, 2009:
Republicans say this is not a stimulus bill but a spending bill. What do you think a stimulus is? That’s the whole point. (Laughter from the crowd).