Posts Tagged ‘Keynesianism’
April 19th, 2012 at 12:45 pm
In Sweden, Better Living Through Resisting Keynesianism
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The entire continent of Europe may seem most useful these days as an object lesson in how not to conduct public finance, but as a fascinating new piece in the UK’s The Spectator makes clear, Sweden provides at least one unlikely exception. While the rest of the world was clamoring for Keynesian stimulus measures in the immediate aftermath of the global financial crisis, Sweden was following the lead of Anders Borg, its libertarian-leaning Finance Minister. As a result, the country took a drastically different path — one that’s now paying dividends:

While most countries in Europe borrowed massively, Borg did not. Since becoming Sweden’s finance minister, his mission has been to pare back government. His ‘stimulus’ was a permanent tax cut. To critics, this was fiscal lunacy — the so-called ‘punk tax cutting’ agenda. Borg, on the other hand, thought lunacy meant repeating the economics of the 1970s and expecting a different result.

Three years on, it’s pretty clear who was right. ‘Look at Spain, Portugal or the UK, whose governments were arguing for large temporary stimulus,’ he says. ‘Well, we can see that very little of the stimulus went to the economy. But they are stuck with the debt.’ Tax-cutting Sweden, by contrast, had the fastest growth in Europe last year, when it also celebrated the abolition of its deficit. The recovery started just in time for the 2010 Swedish election, in which the Conservatives were re-elected for the first time in history.

The good news: Sweden provides a success story that drives one more nail into Keynesianism’s coffin. The bad news: We’re living in an age where Scandinavia can muster more enthusiasm for free market economics than the U.S.

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.

December 12th, 2011 at 8:08 pm
Another Stimulus Boondoggle: $4.7 Billion in Broadband Spending Yields … Absolutely Nothing
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If you want to understand how comprehensively the Obama Administration has failed the nation, you need only begin with this point: as the president approaches the end of his first term, we’re still unearthing lurid details about his first major policy initiative, undertaken in his earliest days in office.

That plan, of course, was the $787 billion stimulus package that was supposed to kickstart economic growth (it didn’t) and keep unemployment under 8 percent (it’s never been that low in the nearly three years since the package was enacted).

Last week, I wrote about the case of a Maryland PR firm that got paid nearly a million dollars in stimulus money by the National Institutes of Health to promote how well the National Institutes of Health was spending stimulus money.

This week’s second verse of the same song is orders of magnitude worse; the dollar amount is in the billions and the outcome wasn’t just wasteful — it was non-existent. According to the Daily Caller:

As of the third quarter of 2011, no projects from the federal government’s Broadband Technology Opportunities Program (BTOP) — a technology stimulus program funded by the American Recovery and Reinvestment Act of 2009 (ARRA) — have been completed…

The funds awarded for BTOP totaled over $4 billion, and the average award was $6,217,509, according to

Three years. Over $4 Billion. Zero results. This project may not have stimulated any growth in the broadband sector, but it’s certainly going to keep some Republican opposition researchers employed.