Why I don’t trust Keynesians
Apr. 24th, 2019 04:57 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
feotakahariI once had an economics teacher who talked about protectionism in Latin America. Local industries would claim that they couldn’t compete with international corporations, and they asked governments to set up tariffs or import limits or such. They would always say that they needed time to develop, after which the protections could be removed. But over and over, they would bribe and bargain their way into extending protections indefinitely so that they would never have to compete.
Could the local industries ever develop to the point where they could compete internationally? According to my teacher, that was the wrong question to ask. They never did compete internationally, so whether they could was irrelevant. The pattern of protectionism was what mattered.
(This teacher’s family rose out of poverty due to trade with the US, so she tended to be very pro-US trade in ways that clashed wildly with my other teachers.)
Keynesians say that a government can save during a surplus and spend during a deficit. But imagine a scenario where the government decides it has so much money, it must be in a surplus and need to save some. Does that seem like something that would actually happen? No matter how well the economy is doing, there’s always more to pay for than money to pay for it with. So if you think you can spend your way out of a deficit, then you’ll keep spending and spending and spending, and the question of “what to do during a surplus” doesn’t come up.
Could the local industries ever develop to the point where they could compete internationally? According to my teacher, that was the wrong question to ask. They never did compete internationally, so whether they could was irrelevant. The pattern of protectionism was what mattered.
(This teacher’s family rose out of poverty due to trade with the US, so she tended to be very pro-US trade in ways that clashed wildly with my other teachers.)
Keynesians say that a government can save during a surplus and spend during a deficit. But imagine a scenario where the government decides it has so much money, it must be in a surplus and need to save some. Does that seem like something that would actually happen? No matter how well the economy is doing, there’s always more to pay for than money to pay for it with. So if you think you can spend your way out of a deficit, then you’ll keep spending and spending and spending, and the question of “what to do during a surplus” doesn’t come up.
