Since the Stewart/Colbert rally (see picture at left) was supposed to be a parody of the Glenn Beck rally, and the Glenn Beck rally was supposed to be a parody of 1963’s March on Washington for Jobs and Freedom (what, is that not how it goes?), I figured I would continue the trend. Martin Luther King said that he dreamt of a world where his children would be judged not by the color of their skin but by the content of their character. My dream, in contrast, is much more modest- I just want people to know the @#$! difference between the two. Case in point*, in case you haven’t seen it yet:
This reminds me of the time in school that I had an assignment to go to the mall and ask people to describe what a quadrilateral is. People were shockingly bad at the task, but I just chalked it up to the fact that I grew up in Florida. (You know your state is pretty ridiculous when it has its own category on fark.com.)
In this case, however, I’m not quite sure who or what to blame for the lack of knowledge- in our society, Keynes is not exactly, well, a quadrilateral. (I would make a joke about him being a square, but I hear that he was quite the ladies’ man. And a man’s man. Whatever.) Economics is part of required high-school curricula in fewer than half of U.S. states, and even when it is required it often consists of things that don’t really count as a sufficient introductory treatment of the subject. (Raise your hand if you learned how to balance a checkbook or talked about personal finance in your high-school “economics” class.) Furthermore, not everyone takes economics in college (or even goes to college for that matter), and it’s not like Keynes is a popular topic in the newspaper, on television, or in Harry Potter books (though that would be awesome, in my opinion). Therefore, while I find it a little embarrassing that people made a bad assumption and automatically answered the wrong question, I can perfectly well understand how they wouldn’t know how to answer the right question.
Given the current nature of political discourse, I can’t help but think that it might be helpful for people to know about the works of people like Keynes…and Hayek, and whoever else may be relevant, for that matter. I’ll start with Keynes, just in case you’ve forgotten:
First, the basics. From Wikipedia:
John Maynard Keynes, 1st Baron Keynes, CB (pronounced /ˈkeɪnz/; 5 June 1883 – 21 April 1946) was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, as well as the economic policies of governments. He greatly refined earlier work on the causes of business cycles, and advocated the use of fiscal and monetary measures to mitigate the adverse effects of economic recessions and depressions. His ideas are the basis for the school of thought known as Keynesian economics, as well as its various offshoots.
Now at least we’ve established that Keynes is not a country in Africa. Keynes believed that many economic downturns were the result of inadequate aggregate demand- i.e. not enough people buying stuff and not enough firms investing to grow or improve their businesses. Whereas classical economists believed that prices (both of goods and of wages) would adjust downwards and get employment and output back to their normal levels, Keynes realized that people and organizations were often stubborn about these price changes. (I don’t know about you, but I would throw a bit of a fit if my employer told me that it was cutting my salary, even if I thought that the prices of stuff I buy was going to decrease also.) Therefore, an economy can end up with a bit of a chicken and egg problem: people don’t want to buy and invest when they are uncertain about their financial situations or employment outlooks, but if people aren’t buying stuff then companies can’t employ people to make said stuff, which means that people were right in being uncertain about employment. Keynes decided that the government could step in and make up for the buying and employing that the private sector wasn’t doing, either directly through government projects or indirectly through lowering interest rates (which makes it more appealing to buy and invest) or reducing taxes (since that gives people and/or corporations more money to buy stuff). Keynes thought that this government action would serve to jump start the economy and start a virtuous cycle where the initial recipients of money would spend more, which would give other people more money, who would spend some of it, and so on.
It’s important to note that not all economists agree that Keynes was right, and it’s really hard to analyze macroeconomic data in order to support or disprove Keynes’ theory. (Luckily, we don’t have many Great Depressions to look back to for guidance.) This partially explains why there is so much yelling going on right now- Keynesian policies are currently being put in place, and some people think that the policies are misguided and unproductive. (The arguments about the policies being unproductive usually center around concerns about stimulus programs crowding out private sector business activity, distorting the long-term allocation of resources, causing inflation and/or leaving an unmanageable debt for the future.) That said, the question that we *can* answer is “Is Obama a Keynesian?,” and that answer appears to be yes.
Can you imagine how much more productive political discourse would be if more people debated whether Obama is a Keynesian and fewer debated whether Obama is a Kenyan?
* Yes, yes, I know, the video was edited to highlight ignorant people, yada yada. I get it. But that doesn’t change the fact that I think the world would be a better place if no one was this ignorant.