Monday, December 19, 2011

The Debate over Keynes and Government Spending

One of the key differences today is over whether government stimulus is the way to reverse high unemployment, and the great suffering that goes with it.

Nixon once said "We are all Keynesians now," but since the rise of "supply side" economics Republicans have had a strong anti-Keynesian stream. While consistency has never been politicians' strong suit, the rejection of Keynes has been a reason to dismiss Obama's stimulus as useless, and to combat any efforts at stimulus.

This is a critical issue, because a key divide now is over whether we go for austerity—cutting government spending—or increasing spending through government.

Unfortunately reporters in the mainstream press won't touch this issue, on the question of where the truth lies. But it is raging in op-eds. Here Washington Post columnist Robert Samuelson attacks Keynes, and in response Paul Krugman and Dean Baker issue lacerating replies. It will be interesting to see if the mainstream press reports on the debate.

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