Monday, May 13, 2013

The Dismal Political Economist Interviews John Maynard Keynes – For the Second Time

Because He Wanted to Get His Points Across – Again

[Editor’s note:  About two years ago The Dismal Political Economist had an exclusive interview with the great economist John Maynard Keynes.  No other Forum had an interview with Mr. Keynes, in part because he did not want to do them and in part because he has been deceased for many decades.  The interview is a follow up requested by Mr. Keynes, or would have been had he been alive to read the first one.]

  1. Q.  So Mr. Keynes, after several years of European economic policy following The Great Recession has produce the near catastrophic events you would have predicted, do you think you have been vindicated?

Keynes:  Well let’s see.  My policy would have been to support fiscal stimulus and oppose austerity, as austerity would produce lower growth and higher unemployment.  European leaders imposed austerity.  They have lower growth and higher unemployment.  So what do you think?

  1. Aren’t you worried about inflation from excessive increases in monetary reserves?

Keynes:  I am worried that inflation is not occurring, because it would be helpful.  Inflation produces lower real wages while keeping nominal and that improves an economy in a recession.  It also produces positive expectations that lead to investment that improves an economy.  It’s in the book, although looking back it's also pretty much commn sense.  Common sense seems to be lacking these days.

  1. Is Germany helpful or harmful in all of this?

Keynes:  When exactly has Germany been helpful on the world stage?  Has something changed?   I suppose we should be grateful they have given up the idea of mass murder and declarations of war on everyone.  After World War II I helped implement policy that produced German economic renaissance.  Now they have helped produce a new European depression.  That is terribly depressing.

  1. In the U. S. conservative politicians reject your work and want to follow Hayek.  Are you insulted?

Keynes:  How can I be insulted by people stupid enough to embrace economics from 90 years ago.  Exactly how is the world relevant to Austria in the 1920’s?

  1. But your work is rather dated also, isn’t it?

Keynes:  Well yes, my original writings are.  But you know, people like Paul Samuelson, Paul Krugman (what’s with the Paul thing?) and about ten thousand or more other economists have tested, refined, improved and advanced what I am happy to say is still called Keynesian economics.  Conservatives seem stuck on a literally implementation of a nutty Austrian.

  1. Uh, sorry to bring this up but a Harvard Prof recently argued that your policy was wrong and distorted because of your, uh, not sure how to put this, sexual orientation.  What is your response?

Keynes:  Gosh, Harvard used to be a great school.  What made them lose their faculties and hire idiots like that?

  1. Uh, nice pun.  But aren’t you offended?

Keynes:  Well no, how can a person of my intellect be offended by someone so obviously lacking in even basic knowledge.  Now if someone can do the research and empirical studies and find situations where Keynesian economics (if you don’t mind my calling it that) has failed I would be happy to pay attention to them.  Is there any situation in the current economic crisis where fiscal policy has failed and austerity has succeeded?

  1. Well no, the policy derived from your work has proved to be correct 100% of the time.  In fact, you would think there would be at least one occasion where it didn’t work.

Keynes:  No, you wouldn’t.

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