Who cares if Keynes was right or wrong?

Posted in Society at 15:04 by RjZ

I almost never read anything this particular bit of business spam piles in my inbox, but the title intrigued me. A religious guy, talking about product, design and the economy says “I blame religion?” Had to check that out. His point, it turns out, is that we have to do something more than just throw money at the economic problems we’re facing. I would argue that nobody said that was all we would do, it’s just the first thing the government is doing.

My big question isn’t the faith that things we’ll get better, but the denial that economic crisis we’re facing is just a bubble bursting. People generally assume this crisis isn’t natural, painful, fluctuation, but rather something that needs to be fixed to get us back where we were. Meanwhile future generations will suffer taxation without representation. It’s great for me; I’ll get the benefit of an administration trying to fix this economic downturn at the expense of the future. But what if efficacy of Keynesian economics isn’t really the question, but rather that there is nothing to fix at all?

Isn’t it possible that, despite the gnashing of teeth, inflamed house prices and unsupportably cheap credit were never really sustainable and that, once yet another bubble burst, we’re being returned to where we belong in the first place? Many will suggest that this could be avoided with sufficient regulation. Perhaps, but it’s just as likely the bubble would have burst somewhere else instead. After all, that’s essentially how things looked in Japan a decade earlier. We learned from their failures and didn’t make those mistakes; we made new ones of our own.

I didn’t buy a house I couldn’t afford, and I will basically be screwed when it’s value drops 15% like houses are doing around the nation. But we’re not even sure if all of the stimulus package efforts will even have the intended results although it’s certain future generations will pay and pay for it.

An option that no one seems willing to discuss is that we shouldn’t necessarily be doing much at all about this crash. If it’s real and normal for our capitalist system to suffer some variation, then we’ll have to accept that ups and downs are painful for some, and sometimes for many. Is the correct strategy to try to avoid these ups and downs? The only sure result from this plan is that we reward individual success but to socialize failure and mismanagement.

So many complain about government gridlock that it’s not surprising that government only feels effective when it’s doing something: right or wrong. Should we be surprised that no one will stand up and admit that maybe this really was just a burst bubble?

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