On the Mises Daily, Joseph Salerno explains how a reduction in GDP can be positive for the productive.
As far as I am concerned, Keynesian economic theory was developed to justify what socialist/fascist governments wanted to do, which was to grow and gain more power. It is a foundational principle of big, intrusive government. Without the quantitative arguments of Keynes, statists would have to rely on qualitative, greater-good, human interest anecdotes to further their curtailment of individual liberties and property rights. By including government spending in GDP calculations, the statists can point to how much more prosperous everyone is in a socialist world.
If we reduce government spending by cutting back on defense, welfare, the DEA, the ATF, grants to climate change researchers, funding bogus green energy companies, and buying MRAP vehicles for Mayberry, we'll have a recession. We might also balance the budget without raising taxes too much, but the Krugmans of the world will be screaming that "austerity" is killing the economy. Government employees -- i.e., women and minorities, will be hit hardest.
So, "for the children", we have to keep adding to the debt those children will have to pay.
Can they ever hope to repay the debt? Default doesn't seem to be an option for the USA, so I suspect the politicians will resort to inflation and defraud their creditors in the process.
ReplyDeleteHowever, that's assuming rational economics. Does that even exist any more?
No, I don't think it does exist. There aren't enough people willing to think it through until it's too late -- which it probably is now.
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