Posts Tagged ‘John Maynard Keynes’
February 21st, 2012 at 7:49 pm
Mitt Romney, Crypto-Keynesian
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Mitt Romney has at least one thing in common with every other member of the Republican presidential field: his worst enemy is Mitt Romney.

At a speech in Shelby Township, Michigan earlier today Romney’s answer to a question about the Simpson-Bowles fiscal commision ended up in this intellectual cul-de-sac:

If you just cut, if all you’re thinking about doing is cutting spending, as you cut spending you’ll slow down the economy. So you have to, at the same time, create pro-growth tax policies.

Romney, of course, is correct about the broader question of tax policy, but his understanding of public spending makes him sound like a logical candidate to succeed Timothy Geithner as President Obama’s Secretary of the Treasury.

Federal spending doesn’t generate economic growth — all it does is repurpose money from the private sector. In some cases where government is performing essential functions, such as law enforcement or national defense, that’s a necessary sacrifice. In virtually all others — from green energy boondoggles to stimulus giveaways — it’s a net drain on the economy. And, as Milton Friedman would remind Romney, the rate of spending is the effective rate of taxation.

Over the past few weeks, a wide variety of conservative pundits have counseled Romney to more aggressively address his “authenticity” problem, showing the public a little more of his true personality. But as today’s little slip-up reveals, the only candidate less palatable to conservatives than the phony Romney is his authentic counterpart.

November 9th, 2011 at 2:15 pm
Obama’s Yuletide Gift to the Nation? A Christmas Tree Tax
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Four years ago at this time, we were all being told about the unrivaled intelligence of both candidate Barack Obama and his presidential campaign. Now, as the One prepares to launch his reelection campaign in earnest, we see how far the mighty have fallen. From Fox News:

The Obama administration has imposed a 15-cent tax on Christmas trees in order to pay for a new board tasked with promoting the Christmas tree industry.

There are still about eight weeks left in the year, but the odds are pretty good that this is the single dumbest sentence you will read about American politics this year. Even John Maynard Keynes deep into the eggnog would have a hard time working out the economic rationale of taxing an industry in order to finance a campaign promoting that same industry. And is there an epidemic lack of public awareness about Christmas trees in America? (Side note: are the PC police okay with calling them “Christmas trees” as long as we’re taxing them?)

More than anything else, this is just incredibly amateurish politics. With the flood of public workers who have come to D.C. during the Obama years, you’d think there’d be at least one political apointee with the savvy necessary to point out that a president presiding over a prolonged economic downturn (including 9 percent unemployment) may not want to make his contribution to the holidays a tax on the foundational symbol of the season. I suspect the principle may not sink in until next Christmas, when the president’s stocking is stuffed with a first-class ticket back to Chicago.

UPDATE: ABC News is now reporting that the administration is “going to delay implementation and revisit this action” in light of the uproar. It’s hard to know whether to be thankful that media scrutiny could cause such a swift retreat or depressed that it had to get this far down the road before the White House realized there was a problem.

May 20th, 2011 at 1:12 pm
Why a European “Must” Run the IMF

In an email regarding yesterday’s post, reader Eric Coykendall sent this helpful article from Foreign Policy explaining why a European traditionally heads the International Monetary Fund (IMF): a so-called “gentlemen’s agreement” brokered by economist John Maynard Keynes.

The origins of the gentlemen’s agreement date back to shortly after the Bretton Woods conference in 1944, which established both the IMF and World Bank. According to Miles Kahler’s history, Leadership Selection in the Major Multilaterals, Bretton Woods architect John Maynard Keynes had assumed that his main collaborator at the conference, Treasury Department official Harry Dexter White, would run the IMF. U.S. President Harry Truman also supported White’s choice. However, Treasury Secretary Frederick Vinson, with strong backing from Wall Street, argued that an American should run the World Bank — Washington Post publisher Eugene Meyer got that job in 1946 — and that it wouldn’t be proper for the United States to run both of the world’s major financial institutions. White’s possible communist sympathies — he’s widely suspected today of having been a Soviet agent — may also have played a role in the decision. In the end, Belgium’s Camille Gutt was eventually appointed to run the IMF.

In the wake of scandal engulfing the recently resigned Dominique Strauss-Kahn from France, developing nations like Brazil and South Africa are pushing for a non-European to manage the world’s leading investment/bailout bank.  In the article sent by Coykendall,  FP makes this keen observation about the European double-standard likely to decide the outcome.

The question of nationality is sure to come up again if Strauss-Kahn steps down, but Europeans will not be eager to part with the position. Some, such as German government spokesman Christoph Steegmans, argue that owing to the IMF’s critical role in stemming Europe’s current financial crisis, the managing director should be someone who is familiar with “Europe’s particularities, the currency questions and also the political circumstances here.” Strangely, when the IMF was primarily giving loans to countries in Africa and Latin America, local knowledge didn’t seem to be quite as much of a factor.