Throw Keynesianism in History’s Dustbin
The Keynesian school of economics relies on subjective assumptions of which activities count towards output capacity: things that increase GDP. Road building? Yes. Tickling your children? No.
Why should others accept such assumptions?
It is more realistic to acknowledge that 100% of every person’s day is used at full capacity. A person can only increase plum or road production by decreasing free-time production.
Time a person spends growing plums is time he does not spend growing apples or inventing more delicious plum dishes. Time a person spends building roads is time he does not spend satisfying the emotional needs of his domestic partner.
How does the Keynesian decide the value of another person’s production of free time?
Society does not build roads when the demand curve at which people are willing to pay for roads — the amount of production and deferred consumption people will exchange for roads — does not intersect with the supply curve at which people are willing to produce roads — the amount of time building roads a person is willing to spend before consuming something.
In other words, one or both of the potential road buyer with income and savings and the potential road supplier with wants and needs decide that they would rather take their alternatives; the alternative may be writing software or watching TV or anything else.
If someone really wants a road he can pay more for it. If someone really wants to build a road he can produce it for a cheaper price. Neither option requires government intervention.
Keynes’ call for government intervention changes nothing to address people’s subjective needs and wants. It simply takes decisions out of the hands of the producers and consumers. When a buyer and seller cannot come to an agreement on their own, Keynes asks government to either confiscate the savings and income of the buyer or take away alternative activities available to the seller. The former resembles robbery; the latter resembles slavery.
Keynesian economics is popular because it provides justification for road builders to force society to pay more for their roads than they want. It also provides justification for road consumers to force society to subsidize their use. In other words, it provides philosophical justification for private gain and social loss. Another name for this philosophy is fascism.
Not only is this immoral, the subsidies misallocate resources. Those misallocated resources pile up and eventually turn into crashes like we are presently experiencing.
In contrast to the Austrian school, Keynesianism says nothing of how bubbles start because its philosophy encourages government to create them.
Keynesianism does say what to do once a credit collapse begins — lower taxes and increase government spending. The problem? Its answers do not work. Keynesianism failed during the Great Depression and has failed for twenty years in Japan.
The Keynesian school is the enemy of freedom, a disgrace to economics and a stain on humanity.
Throw Keynesianism into the dust bin of history where it belongs!