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John Maynard Keynes
Happy Birthday, Mr. Keynes!
Today, June the 5th, in 1883, John Maynard Keynes is born in Sussex. He grows to be a professorial man with a round face, thin hair, a mouth as big as Carly Simon's, eclectic interests, and a towering reputation as a political economist. He develops a theory of macroeconomics that makes him a leading intellectual figure of the twentieth century. It calls for deficit spending by government during recessions, offset by surpluses during boom times, to smooth out the upsies and downsies of capitalist economies.
Keynes dies in 1946 before his ideas gain general acceptance, but just before. His grows to be the dominant western position following WWII. To be frank, that is because it provides respectable cover for politicians who want to spend more than they have. They conveniently forget the second part of it and keep spending during the good years, too, which by the seventies discredits the entire scheme. Critics including Friedrich Hayek and Milton Friedman supplant Keynes as the brighter stars of political economics and philosophy. Their ideas are far less permissive and so do not gain popularity among the political classes.
Not everyone forgets his work, though. The institutionalist John Kenneth Galbraith never lets go of it. Neither does today's American economist cum partisan pundit Paul Krugman. In 2008, the Bush administration's last major act plunges back into Keynesianism in a big way with TARP. The Europeans follow suit. A few months later the newly sworn in Obama administration takes it a quantum level further with Porkulus. The results, universally disappointing and perhaps damaging, have quickly thrown Keynes's views back into disrepute, though Krugman and the ruling parties of the western world still talk them up once again for political reasons rather than economic ones, their arguments built on the fallacy of argumentum ad ignorantium.
The question of the effectiveness of Keynes's ideas remains unanswered. It may be they would work had government the discipline to pay off its debt when times are good to make up for its prodigality when they are not, but by now it is perfectly clear that is not going to happen. It may on the other hand be that the theory itself would fail even were it ever implemented. We do not know, and we never will. It never has been tried and by now the one conclusion we can reach is that it never will be.