Altes Elliott-Wellen-Forum - Keynes Rules From the Grave / mises.org-Artikel mC, engl.

Keynes Rules From the Grave / mises.org-Artikel mC, engl.

verfasst von - ELLI -, 24.01.2003, 15:25

--><div>
http://www.mises.org/fullstory.asp?control=1147
</div>
<div>
 
</div>
<div>
Keynes Rules From the Grave
</div>

 

by Llewellyn H. Rockwell, Jr.

[Posted January 24, 2003]

 [image] 

Personal consumption figures have topped any in history but
still no recovery:

[img][/img] 

While any non-socialist should cheer a tax cut—though if
government spends money, it has to come from somewhere—let's not pretend
that the Bush administration is driven by the desire to free the economy from
the taxman's shackles. If every dime saved by taxpayers were put into savings
accounts, the administration would consider its plan a failure. The idea is to
get people to spend ever more money. Perfunctory tax cuts are the type of
Keynesian policy Republicans like because it dovetails nicely with GOP slogans
about small government. 

The idea of eliminating taxes on dividends in particular is
designed to boost demand for the stocks that pay them (typically older
companies with more political connections). And where is the money that will
flow to stocks coming from? Most likely from investments that currently yield
interest payments—at least that's the theory. If the purpose were merely to
boost the business sector and eliminate double taxation, that could be
accomplished by a reduction of corporate taxes, an idea that was ruled out
early on. 

Another idea that made a brief appearance in late December
was to create a payroll tax holiday. The Democrats favored this idea because
it would benefit their constituents, but the Republicans rejected it out of
hand, proving once again that they have no general interest in making
government cheaper for average Americans. The idea was quickly dropped when
everyone realized the dangers associated with creating a precedent that would
allow people not to pay a tax. After all, if a tax holiday is good for the
economy, why not make it permanent? 

But will draining savings and boosting spending cure what
ails us? No, because the US economy is, in fact, not suffering from some
blight of insufficient aggregate demand. It is suffering from the
malinvestments of the previous boom, when the capital-goods sector expanded
disproportionately to what savings could justify, an imbalance brought about
by the Federal Reserve's loose money policies of the late nineties. 

But you won't read about this in the literature of the
Keynesians who still rule the roost in Washington. For further proof, look at
the headlong rush to extend unemployment benefits on into the future. This is
completely contrary to what economic reality should dictate. In a recession
with unemployment, wages need to fall in real terms. But an ironclad tenet of
Keynesian economics is that this must never be allowed to happen. By this one
error, the Great Depression in the US and Britain was prolonged by many years. 

There are several undeniable realities of a recessionary
environment. Wages tend to fall. Businesses tend to be liquidated. Resources
are withdrawn from investment and put into savings. Consumers spend less.
Stock prices fall. All of these tendencies may seem regrettable but they are
necessary to bring all sectors back into realistic balance with each other. It
can only do harm to fight these developments—via policies that promote debt
and gin up the business sector—as Japan has done for ten years and
Washington is doing again today. 

Even if the first stimulus held out the prospect for success,
Washington has worked for 18 months to cripple economic growth through
mind-boggling spending, aggressive protectionism, and attacks on the personal
liberty that undergirds free enterprise. The prospect of war and all it
entails is the Sword of Damocles threatening American prosperity (not an
additional spending boost, as the Bush administration seems to believe). All
this drains power and resources from the private to the public sector, the
last thing an economy in recession needs. 

Might the economy be in recovery mode had Washington not
engaged in these destructive acts? Perhaps. It is a general rule of public
policy that when government acts to fix a problem, it makes the targeted
problem worse and creates a few more in the process. 

By all means cut taxes! Anytime, anywhere! But one must also
cut spending if the goal is to reduce the overall burden of government (and
that is clearly not the goal). One must also be prepared for the possibility
that citizens will save this money, as they probably should, rather than spend
it. In the current DC hysteria, however, it is Keynesianism and not clear
economic thinking, that rules.

<div>
<hr align="left" width="33%" SIZE="1">
</div>

Llewellyn H. Rockwell, Jr. is president of the Mises
Institute in Auburn, Alabama, and editor of LewRockwell.com.
Send him MAIL,
and see his Mises.org Daily
Articles Archive.

Thread gesperrt

gesamter Thread:

Keynes Rules From the Grave / mises.org-Artikel mC, engl. - - ELLI -, 24.01.2003, 15:25