In a nutshell, Keynesian economic theory claims that a lack of consumer spending causes a downturn in the business cycle, which in turn causes people to lose their jobs and/or make less money and therefore spend less themselves, creating a vicious downward spiral of economic decline. The Keynesian prescription to remedy this downward spiral is to increase consumer spending by having the government increase deficit spending, artificially reduce interest rates, and otherwise print money out of thin air.

Keynesian mythology boils everything down to the "virtue" of spending. Financial prudence and saving are vices. What the money is spent on doesn't really matter either, as one "investment" is just as good as another. So whether the government "invests" in solar panels and "Bridges to Nowhere," an entrepreneur builds a factory, or you simply buy a hot dog … it's all the same. Because spending is all that matters.

Sound crazy? Am I making this up? John Maynard Keynes famously argued that if "the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coal mines which are then filled up to the surface with town rubbish, and leave it to private enterprise … to dig the notes up again … there need be no more unemployment." Today's most famous Keynesian prophet, Paul Krugman, argued just last year that scientists should "fake an alien threat … in order to get some fiscal stimulus."

Unfortunately, the global Ruling Class are doctrinaire Keynesians. It's what Romney learned at Harvard. It's also the basic assumption behind a statement like this:

If you just cut, if all you're thinking about doing is cutting spending, as you cut spending you'll slow down the economy. -- Willard "Mitt" Romney, Shelby Township, MI (February 21, 2012)

I warned you about Romney's Keynesian baggage last year. In November 2008, Romney's economic advisor (and text book hustler) Gregory Mankiw, wrote in the New York Times: "If you were going to turn to only one economist to understand the problems facing the economy, there is little doubt that the economist would be John Maynard Keynes," before going on to recommend "precisely the plan that the incoming Obama administration has in mind."

Romney himself declared in a December 2008 article for National Review Online, "this is surely the time for economic stimulus," before arguing that the "Fed should continue to expand the money supply" and "infrastructure projects should be a high priority." Talk about pure Keynes … Haven't we had enough of this crap already?

Unless you like the current Big Government/Big Debt status quo, there's nothing whatsoever to like about Mitt Romney (whose economic policies will mirror those of Obama in every way outside the accompanying cheap rhetoric). So, as Cato's Dan Mitchell asks: "What is it about Mitt Romney?"

The United States desperately needs smaller government, lower taxes, and less intervention, yet his comments and track record on issues such as the value-added tax, healthcare, Social Security reform, budget savings, ethanol subsidies, and the minimum wage leave a lot to be desired.

We can now add something else to the list. The former Massachusetts governor has come out of the closet as a Keynesian.

Leftwing pundits, on the other hand, believe they've found a kindred spirit. Paul Krugman confirms that Romney "is, in fact, a closet Keynesian." And Business Insider's pro-government/pro-interventionist writer Joe Weisenthal declares: "It's More Clear Than Ever That If Romney Loses, The Economy Is Going To Implode"

Back in April we made the argument that a Mitt Romney win would be better for the economy, based on fairly simple logic: A Mitt Romney victory would see higher government deficits, which is just what this struggling economy needs right now to regain full health.

If Obama wins, there's a good chance that we'll fly off the fiscal cliff, as the political gridlock will see spending cuts kick in, and perhaps even higher taxes.

Got that? A Romney presidency means "higher government deficits."

If Romney wins … Republicans will drop their opposition to government spending and deficits. That's because parties in power always support higher deficits and spending. It's just what they do.

We'd love to hear someone say with a straight face that Republicans, if given full power, would seriously stick to their principles of limiting government. Opposing deficits is strictly the purview of the opposition party.

Sad, but true.

So the Keynesian choice is Romney.

And as Matt Yglesias makes clear in his latest column for Slate, this choice is actually even more urgent.

[I]n the subtitle of his column: House Republicans just reneged on the debt-ceiling deal, making a default in 2013 almost inevitable.

Says Yglesias:

If Mitt Romney wins that may not be a problem, as he and congressional Republicans could just quickly lift the ceiling. But if Obama's still in office, we're looking at a potential disaster. Having won concessions by using the debt ceiling as leverage in the past, the GOP isn’t going to quietly go back to the old complain-and-agree approach. But there's no way Democrats can bargain with a party that’s so eager to wriggle out of the terms of deals.

So again, it's clear that if you want higher spending … Romney is the choice.

The progressive group Media Matters giddily reported back in September 2011 that, Romney's economic philosophy not only puts "some daylight between Romney and his party," but also matches that of The One™. David Axelrod has even promoted Romney's economic fallacies. He's a lost cause.

But but, but … We gotta beat Obama!

If you're simply getting more of the same damn thing, who exactly, are you really beating?

Mitt Romney Is Stuck Because He's Not A Pro-Growth Republican

Mitt Romney has been unable to win more than 25% of the Republican vote for the party's presidential nomination for more than a year. This is because the former Massachusetts governor is not a pro-growth Republican. Instead, his economic platform reflects a man who is devoutly Keynesian, and who, as president, would not be able to reinvigorate the U.S. economy.

Mitt Romney is a Keynesian cultist and Big Government statist. So if the unelectable Romney somehow manages to win, with your help, never forget … you'll only have yourself to blame.

The Keynesian Choice is Mitt Romney is a post from: The Classic Liberal Blog

What Jamie Dimon Doesn't Know Is Plain Scary

Medicare, Medicaid and USPS losses are orders of magnitude larger than JP Morgan Chase

A great example of the coming financial repression

200,000 Lose Unemployment Benefits This Week, Nearly Half From California

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Bundesbank Confirms German Gold Held By FED, BOE and Banque De France

Moody's downgrades credit of 26 Italian banks

Sovereign Debt Risk Rises as Spain Bank Woes Heighten Euro Alarm

Greece Exit, Euro-Zone Collapse, Spain and Portugal Will Follow Within 6 Months

Ideas are very important to the shaping of society. In fact, they are more powerful than bombings or armies or guns. And this is because ideas are capable of spreading without limit. They are behind all the choices we make. They can transform the world in a way that governments and armies cannot. Fighting for liberty with ideas makes more sense to me than fighting with guns or politics or political power. With ideas, we can make real change that lasts. -- Ron Paul

Did Ron Paul's Team Sell Out?

Jesse Benton to Politico: Paul feared convention mayhem … didn't like disrespect at recent events

Oklahoma GOP State Convention

Ron Paul delegate strategy is perfectly legitimate

Brief recap of the Libertarian National Convention

Ghost Voting in TN and Elsewhere

It's Not Just the Liberals Michele Bachmann Needs to Worry About

Chris Matthews Thinks Black Evangelicals Need to "Evolve"

Politics? No way!

Content with Caligula's Coin

Without free speech no search for truth is possible … no discovery of truth is useful … Better a thousandfold abuse of free speech than denial of free speech. The abuse dies in a day, but the denial slays the life of the people, and entombs the hope of the race. -- Charles Bradlaugh

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TSA, keeping us safe from Henry Kissinger

The Stench Will Find You

Cooperation between US spy agency and Google to remain a secret

Joint Military-Police Training in South Florida: "No Need to Panic!" Yet.

3 Reasons Obama Should End the Federal Crackdown on Medical Marijuana

"Lifestyle Rationing": denying medical care to those who make unhealthy lifestyle choices

They're Carpet-Bombing Chicago

What Are You Afraid Of if You Have Nothing to Hide?

How US Debt Risks Dollar Doomsday

In the long run even the most despotic governments with all their brutality and cruelty are no match for ideas. Eventually the ideology that has won the support of the majority will prevail and cut the ground from under the tyrants feet. Then the oppressed many will rise in rebellion and overthrow their masters. -- Ludwig von Mises

Famous last words

"Who is made safer by these warn­ing labels?"

OMG, Austerity!

Jobs programs never die

Krugman, Bank Regulation, and a Bit of History

Keeping Them Dishonest

If You Live In California Things Just Got A Whole Lot Worse

Guilt by Association

"As a general rule, progressives do not get worked up about property rights the way conservatives do. This is a mistake … "

Fewer Workers, More Welfare

During times of universal deceit, telling the truth becomes a revolutionary act. -- George Orwell

theCL Report (The Coming Financial Repression) is a post from: The Classic Liberal Blog

Fed Foe Ron Paul Breakfasts With Bernanke at Central Bank

Six Months Left… Can They Do It?

And the 'dumbest person of the week award' goes to…

Former Soviet Citizen Confronts OWS

Huge Majority of Americans Support Defense Cuts

Romney Takes Swipe at Ron Paul's Budget Blueprint

Dump the Statist Monkey Off Your Back

Government-Created Racism

Caught on Tape: Rampant Vote Fraud By Government Officials On House Floor

How long do politicians have to keep on promising heaven and delivering hell before people catch on, and stop getting swept away by rhetoric? -- Thomas Sowell

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Geraldo On TSA: 'I Got Manually Raped By A Guy,' '[He] Was Getting Off On It.'

Drone warfare: politically expedient and disturbingly inaccurate

Have we become desensitized to police brutality?

This Is How You Beat A Man To Death

Big Bad He-Man Cops

NJ state test requires 3rd graders to disclose their deepest secret

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Cop thwarts Al-Qaeda attack at Middle School Dance

As an organized political group, the Communists have done nothing to damage our society a fraction as much as what their enemies have done in the name of defending us against subversion. -- Murray Kempton

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David Stockman's Investing Model Is "Anything Bernanke Can't Destroy"

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Facebook Billionaire Flees America for Lower-Taxed Shores

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FHA New Foreclosures Jump as Modified Loans Default

Half of all wage earners made less than $26,364 in 2010, and the typical American wage is at its lowest level since 1999

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"How long will it be before the first giant US bank is nationalized?"

Have you noticed that what modest economic improvements we have seen occurred during the much-lamented "gridlock" in Washington? Nor is this unusual. If you check back through history, doing nothing has a far better track record than that of politicians intervening in the economy. -- Thomas Sowell

Forest People

Torture isn't fair game, and it isn't effective method

"Wait 'til Obama doesnt have to try anymore ... you're f**ked."

Why has the Obama administration so aggressively protected the financial industry from legal accountability?

Court Upholds Google-NSA Relationship Secrecy

The US schools with their own police

School Says “Jesus” Shirt is Hate Speech

The question of President Obama's draft card: Has evidence been destroyed?

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Frozen in the sands of time: Eerie Second World War RAF fighter plane discovered in the Sahara... 70 years after it crashed in the desert

Civilization, in fact, grows more and more maudlin and hysterical; especially under democracy it tends to degenerate into a mere combat of crazes; the whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by an endless series of hobgoblins, most of them imaginary. -- HL Mencken

theCL Report (Does The West Have A Future?) is a post from: The Classic Liberal Blog

The 99 and the 1

[Free Market, January 2012]

"We are the 99%!" This slogan of the Occupy Wall Street protesters has been called the most memorable quote of the past year. Those who rally to its cry do so in opposition to the villainous 1%.

For a handful of the protesters, being a member of the 1% means being a wealthy recipient of a government bailout, or some other form of corporate welfare. But for the economic egalitarians in their ranks, it simply means being too rich. They say the wealthiest 1% of the country are getting more than their fair share of the wealth in society, at the expense of the 99%.

Whatever one thinks of the current plight of the 99%, throughout almost all of history, things were much worse for the vast majority of the population. In precapitalist ages, the average member of the economic 99%, if lucky enough to survive infancy, was consigned to a life of back-breaking work and poverty, constantly on the verge of famine, disease, and death.

The only individuals who did not have such a wretched life were the "1%" of old. This economic 1% was virtually identical with the state. It was made up of the French kings, the English lords, the Roman senators, the Egyptian viziers, and the Sumerian temple priests. The members of this elite lived in Olympian splendor: servants at their beck and call, as much food as they could possibly want, spacious homes, an abundance of jewelry, and a tremendous amount of leisure time.

And of course, this lifestyle was borne on the backs of the masses. It was the 99% who produced the bread that stuffed the mouths of the 1%, who felled the trees to erect their mansions, and who mined the precious metals and stones to adorn their bodies.

Everything the Occupy Wall Street protesters say today about the 99% and the 1% was completely accurate then. Wealth in society was a pie of a certain fixed size. The bigger the slice of pie that the 1% took for themselves, the less was left over for the 99%. Every bit of luxury the 1% enjoyed was taken from resources that could have made some member of the 99% less miserable.

Why did the 99% of old put up with the 1% lording it over them? Why did they not rise up, and overthrow their masters? Were they simply cowed by the mailed fists and the flashing sabers?

No; as David Hume pointed out, since "those who are ruled" always vastly outnumber "those who rule," a regime's power can never be about brute strength alone. The ruled many must believe that the power of the ruling few is somehow good for them.

Perhaps the temple priests have convinced the people that the gods would be angry if the rulers were disobeyed: that the rains won't come, and the crops won't grow. Or maybe the populace believes that the rulers are responsible for the peace and order in society.

Not only do the 99% put up with the ruling 1%; they put them up on their lofty pedestals. The 99% give the 1% their power.

As Ludwig von Mises made clear, real power, what he called "ideological might," always lies in the support of public opinion. If public opinion were ever to turn on any regime, its days would be numbered.

Mises went even further to argue that public opinion not only determines who is in charge but the general character of the legal order, or as he put it, "whether there is freedom or bondage."

Ultimately the only kind of tyranny that can last is a tyrannical public opinion.

The struggle for freedom is ultimately not resistance to autocrats or oligarchs but resistance to the despotism of public opinion.[1]

If the 99% are oppressed, they are also ultimately their own oppressors, by dint of oppressive public opinion.

So that explains the political situation of the old order (and all orders, for that matter). What about the economic situation? Why did the "economic pie" so rarely get bigger?

One would think that over time, people would get more efficient at producing things, and so living standards would improve. Yet, for millennia, things hardly got better at all.

The roots of this economic state of affairs are to be found in the political order described above.

Again, throughout most of the history of civilization, the ruling 1% took for itself a huge portion of what the 99% produced. And if any private person ever accumulated enough wealth for it to be noticeable, some potentate would snatch that too. This is why buried treasure was all the rage wherever princes were particularly grasping.

With such rampant government confiscation, there was never enough incentive for large-scale capital accumulation. Without large-scale capital accumulation, there can be no mass production. And without mass production, there can be no great improvements in the lives of the masses.

And that is basically why the 99% had such shabby lives for almost all of history.

Then in the 18th and 19th centuries, something revolutionary happened. A group of philosophers started thinking very carefully about property, trade, prices, and production. These philosophers were called "economists."

From considering the economic laws they discovered, the economists concluded that society is much more productive if private property is more consistently respected. "Laissez faire et laissez passer," the economists said. Let people control as much of their property as completely as possible, and everybody will be more prosperous.

These economic philosophers, people like Richard Cantillon, Adam Smith, and J.B. Say, were theorists. They wrote brilliant, if sometimes turgid, books that changed the minds of communicators: individuals whom F.A. Hayek called "secondhand dealers of ideas."

These included professional communicators: writers, like Richard Cobden, and speakers, like John Bright. These writers and speakers wrote pamphlets and gave speeches that changed the minds of many thoughtful, if less eloquent, individuals, who might be called amateur communicators. And this thoughtful stratum, in turn, led their nonthoughtful fellows (who, in modern parlance might be called "sheeple") to change their positions on public affairs.

Through this process, public opinion shifted toward the belief that government should be as limited as possible, and property rights as sacrosanct as possible: toward a doctrine called "liberalism."

Again, the way society is organized ultimately depends on public opinion. So, since public opinion changed, policy changed too. Private capital became more secure. Trade restrictions were lifted. Business barriers were abolished. Private property reigned supreme as never before.

And the results were miraculous. As never before in history, the productive energies of humanity were unleashed. Items that were once reserved for the elite 1% were soon mass produced for the 99%. Amenities that did not even exist before were developed, first for small markets, but ultimately for the mass market.

The production of bare necessities soared. The population in the parts of the world touched by liberalism exploded. Marginal people who otherwise would have died found subsistence. People who otherwise would have lived on the edge of disaster found security. And those who otherwise would have been mired all their days in prosaic drudgery were able to lead lives of comfort and refinement.

In the new order there was still a 99% and a 1%. But the 99% of this period lived better than the 1% of times past. And the chief way to ascend to the 1% was to become a successful capitalist-entrepreneur: to strive to serve the 99% (the masses of consumers) better than one's competitors.

In the old order, most would-be one-percenters, in order to get ahead in life, would have had to apply their smarts and ambition to become conquerors, rulers, and government administrators, and in those roles to exploit the masses. In the new order, under what Mises called the "consumer sovereignty" of the market, their capabilities were turned toward providing for the masses of sovereign consumers.

The masters became servants: wealthy servants, but servants nonetheless.

The liberal ideological revolution had engendered an Industrial Revolution. And what Mises called the "Age of Liberalism" lasted from 1815 to 1914: a golden century in which mankind first got an inkling of what it was really capable of.

Tragically, the Age of Liberalism was ended by an ideological counterrevolution: a wave of statist thinking that is responsible for all the woes of the 20th century, as well as our present economic and geopolitical crises.

Now, the 99%, under the thrall of unsound ideas, are once again oppressing themselves. Thanks to the calamitous state of public opinion, the ranks of the 1% are once again increasingly being filled, not by capitalist-entrepreneurs serving the 99%, but by the state and its cronies exploiting and impoverishing the 99%. And the redistributionist remedies that the self-styled 99% clamor for would only accelerate this trend.

If our civilization is to be rescued — if the tide of public opinion is ever to turn again — it will be thanks to the sound ideas formulated by theorists like Mises and the scholars who work in his tradition. But that can only happen if those ideas are effectively disseminated by a new generation of communicators.

This is why the Mises Institute and Mises.org are so vital. It is also why this generation's amateur communicators — who spread the message of liberty through Facebook posts, YouTube videos, and the like — are also hugely important.

As Mises wrote,

The flowering of human society depends on two factors: the intellectual power of outstanding men to conceive sound social and economic theories, and the ability of these or other men to make these ideologies palatable to the majority.[2]

May sound ideas win the day, and may human society flower again.

Notes

[1] Ludwig von Mises, Theory and History, chapter 3.

[2] Mises, Human Action, chapter 37.

"The 99 and the 1" by Daniel James Sanchez is reprinted from Mises.org.

Daniel James Sanchez is editor of Mises.org and director of the Mises Academy. Friend him on Facebook. See Daniel James Sanchez's article archives.

Luisana Lopilato and the 99% is a post from: The Classic Liberal Blog

HOT: JPMorgan Reportedly Suffered $2 Billion Gross Trading Loss on Synthetic Positions

"China City"

Getting the Government's Permission to Work

Scary Numbers and Data

Europe and (Predictably) Failed Fiscal Stimulus

John Stossel on liberty and private enterprise

"The cost of raising a child from birth to age 17 has surged 25 percent over the last 10 years"

The Golden Rule Reinterpreted

Why Civilized People Buy Gold

The problem with politics isn't the money, it's the power. So long as politicians have the power to grant favors, exemptions, and business protection, people will find some way to subvert them -- if not with money now, then with promises to take care of them later. The only way we will clean up campaign financing is by taking power away from the politicians -- reducing the federal government to just the functions specified in the Constitution. -- Harry Browne

"We are gutless, worthless frauds with absolutely no core principles."

Obedience

"My question is, what's coming across her intelligence desk that she is making an out for herself?"

Romney Must Be Hearing Ron Paul's Footsteps

"DHS should have stepped in right then, and used that event to start the clampdown"

The long, long reach of Bradley Manning

Uncle Sam turns tricks (and stiffs sex workers)

1996 Republican National Convention Establishment Pushed Moderates and Liberals and Shut Out Conservatives: Will it Happen in 2012?

Stop Grading Obama's Foreign Policy on a Curve

Two words: Screw that.

I eagerly await the day when taxpayers can keep all the money they earn, and pro sports teams have to hold bake sales in order to finance stadium construction. -- Doug Newman

The Youngest Victim of Police Abuse

'Trekkie Traffic Stop'

USAF Drones May Conduct "Incidental" Domestic Surveillance

Lockdown in Downtown Chicago: The NATO Meeting

Uncle Sam the snooper

Terrorists Pose As Married Couple In An Attempt To Cross US Border

Cops Should Act Like Firemen in a Free Society

Snails. Got to preserve the snails.

Good grief: Now, it's pea personhood!

"What would you do if someday the government made it mandatory for everyone to receive an implantable microchip for identification purposes?"

To the extent that a society limits its government to policing functions which curb the individuals who engage in aggressive and criminal actions, and conducts its economic affairs on the basis of free and willing exchange, to that extent domestic peace prevails. When a society departs from this norm, its governing class begins, in effect, to make war upon the rest of the nation. A situation is created in which everyone is victimized by everyone else under the fiction of each living at the expense of all. -- Edmund A. Opitz

Why Twitter Is Amazing

Video: Bing (the search engine) mining your Facebook info

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Separation of Art And State

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Camouflage from Computer Vision

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We're told cars are wasteful. Wasteful of what? Oil did a lot of good sitting in the ground for millions of years. We're told cars should be replaced with mass transportation. But it's hard to reach the drive through window at McDonald's from a speeding train. And we're told cars cause pollution. A hundred years ago city streets were ankle deep in horse excrement. What kind of pollution do you want? Would you rather die of cancer at eighty or typhoid fever at nine? -- PJ O'Rourke

theCL Report (Uncle Sam the Snooper) is a post from: The Classic Liberal Blog