Wednesday, October 13, 2010

The neo-Keynesians don't get it

It is not just that neo-Keynesians have been debating the phenomenon of aggregate demand and the economy as a large statist whole that can be 'stimulated' in some fashion.  Or that, given the possibility that the government allows banks to print money and therefore have a new and dangerously explosive tool to affect inflation and other unknown externalities.  Or that leveraging both ideas very obviously tends to preserve the status quo, especially the banks.

No, most people do not even consider these basic economic tenets.  But while economists debate the utility of these tools, varying widely on how to use them even as they rack up taxpayer debt which wedges the economy into an ever tighter position, they have not considered the most important reason that most citizens are enraged by those policies.

They are not fair.  The people want a government that does not live beyond its means.  They do not want 'managed inflation.'  They do not want 40% of the citizenry receiving government assistance because the nation lives in some feudal version of managed debtor's prison.  They wish to live in a world of sound fiscal policy, where they can sleep at night.

The people may not be aware that Medicare and Medicaid and Social security are not set up at all like their life insurance contracts.  All they know is that they paid into the 'program.'  They may not realize the moral hazard created by funding a Ponzi scheme which is inherently dependent on continuous entry of more suckers, that there is no 'fund,' or bond portfolio producing any kind of return on trillions of dollars of contributions.  They do understand though, that after 50 years of contributions, those 'programs' should be comfortably rich.  And they should be.

The people may not understand the politicization of the military, where somewhere between 30-50% of the dollars are very arguably wasted in any number of economically unsound projects or politicized strategies.  But they do expect that their sons and daughters are taken care of, and that the hierarchy should be able to be depended on to accomplish intelligent and strategic management.

What the people do understand, with ever growing alarm, is that government bureaucrats and politicians have for years now mishandled their fiscal duties, despite the assurances of the press and the educated class.

Sure the people want to take care of the very sick and disabled and poor.  But the people know very clearly that we can do that without annual inflation (all products go down in price except government), and without bankrupting the country.  The people do not want to live in a nation where redistribution is the Golden Rule.

The people want a fair system that upholds the rule of law.  They want to live in a place where the rich and famous take their lumps like everyone else.  Those are not just the rules of a free market.  They are the rules of a just society.  And those rules are symbiotic.

The people do not care if neo-Keynesian economics works or not.  Because even if it does work, it isn't fair.

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