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Old August 6th, 2005 #1
_DC_
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Default Keynesianism, the clockwork servant

Perhaps we could have a thread on Keynesianism. Keynesianism is basically the idea that government spending should be used to regulate the economy's ups and downs: when things are well, you raise taxes and cut spending in order to fill the government coffers; when things are bad, you pour that money over the consumers, and their increased consumption helps the economy to get well. Sounds pretty good, doesn't it? You pull the levers from on high and steer the economy like a ship, a clockwork servant. Except, it doesn't work that way.

Keynesianism leads to inflation, huge debts, and a bloated state with its hands everywhere. It also leads to corruption in politics. I will explain why, and try to keep it simple.

First of all, we live in a democracy, and unless you want to lose the next election you don't cut spending, ever. Cut spending in good times, to prevent inflation and to gather money for later use? Hell, no. Why should you have to cut spending when everything is fine? So asks the politician. Because obviously you have entered a new Golden Age where all your problems are solved by the new Administration, and there is no need to prepare for a recession later on. And secondly, you can socially engineer society if you control the money and decide where it goes. No bureaucrats believe people can make better decisions about their lives than the enlightened bureaucrats -- it is in the nature of bureaucracies to grow, they don't get smaller. So the part about tightening belts is forgotten.

That means the government won't have any extra money to distribute when a recession comes. That means the government has to borrow. The government's "big surplus and small surplus"-strategy instead turns into the government's "small deficit and big deficit"-strategy.

The democratic government needs to constantly pour out money to please voters, and its most favored groups of voters will always be the biggest receivers. This is the corruption part. An uncorrupted party simply cannot compete; if you don't give your supporters easy money, they won't vote for you.

Note the demise of responsible spending in the GOP. George W. Bush has increased the size of the State more than any president before him, and the GOP is silent, with few exceptions. This used to be the party that resisted immature economics, but responsible voices don't stand a chance of being heard today, because they would cause the party to lose elections. The Republicans have learned from the Democrats, and they have learned well -- this pattern has repeated itself all over the West. Today the American people is more in debt than any other people in history, a situation that can only end in disaster.

Keynesianism says government spending should be cut in good times in part to prevent inflation, but what happens when you have inflation and a stagnating economy at the same time? For this "stagflation" Keynesianism offers no cure. You can't both increase spending to fight stagnation, and cut spending to fight inflation at the same time. (How could stagflation come about? Increasing costs for producers, for example. That means that prices have to be raised, employees laid off, and companies crash at the same time.)


The alternative

Keynesianism now dominates politics, even though it is not always called Keynesianism. The clockwork doesn't work; it leads to increased government debt all over the world, to pay for votes and social engineering. The alternative is to stop this micromanaging of the economy. This doesn't have to lead to inflation in good times; people will learn not to overspend, if you have a conservative, White population that doesn't live like children. If you don't pour out welfare and other goodies, people won't overspend. If you don't subsidize and constantly try to tinker with production, it won't fluctuate, and there will be no large cycles. I believe that economic cycles are mainly caused by the waves created by government interference. I believe this did not happen before governments drastically raised their taxes to pay for WWI.

And yes, I believe race and culture is a factor. With a mature White population you will have less overconsumption, and therefore less inflation to be fought, and less need for welfare.

But in order to escape Keynesianism, you need to escape democracy. Democratic parties need to borrow and spend to pay for votes, and in the process they create an immature people accustomed to excess -- in fact, leftist ideology actively encourages immaturity. Only a dictatorship can stop this corruption. What shape this dictatorship should have is another matter.
 
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