Sorry, Mr. Paul. It's not the Death of Keynesism, it's the old Bait and Switch!
There is a double standard regarding deficits, which is unique in the amount of blood and tyranny on its hands, and it's about to manipulate good citizens for the benefit of the Corporate-Military Industrial complex yet again. by Russell G. Davis
(centrist)
Wednesday, October 13, 2010
Ron Paul announced, with enthusiastic glee, on a recent interview with Anderson Cooper that what we are experiencing was the "Death of Keynesism"! The Austrian school of economic thought advocated by Mr. Paul, abhors deficits. It puts forward a thesis known as the "economic calculation problem". This thesis says that socialist governments are not capable of the complex economic equations required to run a complex economy. So those who call the FDR New Deal socialism, please note that we had much worse deficits in the 30's and 40's than we have now. We invested in our infrastructure back then and ushered in a wave of prosperity that is largely regarded as our Golden Age.
During WW2, we ran deficits of over 200% of GDP. After we did that, our economy bounced back fast and we were the largest creditor nation in the world. That's the legacy running deficits has when it comes to getting out of an economic crunch.
And of course, we saw recently how expert laizze-faire economists handled complex economic equations such as 5/1 ARM interest only loans and credit default swaps to boost housing prices.
But I don't really want to discuss Ron Paul's prize school of economic thought. I want to talk about the way it is manipulated by elitist forces that have no intention of going back to the Gold Specie Flow Mechanism, no intention of fiscal responsibility, and every intention of further eroding the individual protections of liberty reinforced by the US Constitution.
The selective outrage at deficits is cynical misdirection. There is a cycle of selective outrage at deficit spending that has been going on for most of my adult life.
During the 1980 campaign, Ronald Reagan used the 59 billion deficit of the Carter Administration as an effective propaganda tool against his opponent. By the time Reagan was done, the national debt was 3 trillion. Not coincidentally, the Defense budget (4.9% of GDP in 1980 to 5.8% of GDP in 1988) increased, as did the number of Americans living below the poverty line (29 million in 1980 to 31 million in 1988). In addition, the easing of supply and pricing in the oil market and the 3 year contraction in the Money supply caused an economic rebound, one so robust that we could afford tax cuts.
Also, we funded Osama bin Laden and the Mujahadeen in Afghanistan, helped Saddam Hussein in his struggle with Iran, used tax money to fund the terrorist Contra army in Nicaragua, and taught future South American Dictators at the School for the Americas in Ft. Benning, GA.
If deficits can't be used to pull us out of 70's stagflation but they can be used to enrich defense contractors, fund Bin Laden and Hussein and the Contras and teach dictators, then there is indeed a hideous double standard at work!
If we look at the 1990's, the Democrats have the White House again. Domestic Spending increases as well as military spending. Newt Gingrich and his Contract on America dominate the White House (the abuse of supeona power certainly helped). But they can agree on the need for deficit reduction. Clinton and Congress put aside differences of opinion regarding expensive blowjob investigations and concocted a plan that would have given the US a projected budget surplus by 2005.
We had an opportunity to return to the Gold Specie Flow mechanism. Or if that is too obsolete, we could have instituted something modern with the transparency that would be the modern equivalent. And we could have done so when the price of gold was 1/6th of what it is now. That opportunity was squandered (in the name of the War on Terror) at the first chance by a Republican president and a Republican Congress.
It's no coincidence is that Defense Contractors gave much more legalized bribes, er I mean legitimate campaign contributions to Republicans than to Democrats 1996-2006.
[link edited for length]. That has changed recently. Which is why we didn't even change Defense Secretaries when Obama came into office.
But still, this bloody double standard created our current deficit (let's not forget that it was spent by a Republican president and Republican Congress), is responsible for the Iraq War dead, the Afghan War dead, the unconstitutional torture and death of innocent people in the War on Terror, and Israel's continued creation of new generations of terrorists in Gaza.
This current "concern" with the deficit lasts only as long as the money might be spent domestically on things that would improve our lives. If we can go to 200% of our GDP killing innocent civilians in other countries (probably Iran first), ignoring the Constitution, and questioning the patriotism of dissenters this concern with the deficit will evaporate like the morning dew.
And it's not like there is any shortage of work to do. San Bruno just felt a brutal reminder of the costs of ignoring a crumbling infrastructure. We should not have needed a reminder after the epic failure to repair the levees in New Orleans.
The sequel to The Contract On America, Boehner's "Pledge to America" contains calls for increased Defense spending. It calls for a repeal of the tepid Health Care reform and cuts in "domestic entitlement spending" (entitlements like gas lines that don't explode beneath your house and levees that don't break and kill a whole city). All we have to do is trust the Republicans again, give up those "entitlements"; we can have more military deaths, civilian deaths and rich defense contractors.
Of course, none of that will be cheap. The only way to pay for it will be to run up further deficits. This noise is not about deficit reduction. It's a cynical "Bait and Switch" that will betray the minority of conservatives who genuinely want to see fiscal responsibility, an audited Fed and a return to the modern equivalent of the Gold Specie Flow Mechanism.
I know I started out this column by taking a swipe at Von Mises (whom most Libertarians revere) so I'll close with an olive branch and say I also want to see those things! The Fed and its cronies get to play by different rules and that is an abomination. For the mere price of, $75K you too can get an elite report on what the Fed thinks the current trends are
That's about as far away from Adam Smith's "Perfect Competition" in a Free Market as one can get.
I agree this needs to stop. And I like Ron Paul (sorry to say that I see his kid going along with all this if he gets in!). But we are not seeing the "Death of Keynesism"! Keynesism will be used again to kill innocent people around the world, dishonor our troops and what they fight for, and run up more debt if given the chance by the Republicans. The Right, "Baited" with concern over fiscal responsibility since Obama took office will only have such concern "Switched" to war hawk fiscal irresponsibility if the Republicans take over! Sen. Lindsey Graham has admitted this-he wants War with Iran! [link edited for length]
And so I'll close with the wise words of Ludwig Von Mises-"If they do not plan new aggressions, they are not in need of arms."
Did you like this article? If you did, Thumb It! 8
thumbs so far
The views expressed
in this article are those of Russell G. Davis only and
do not represent the views of Nolan Chart, LLC or its affiliates.
Russell G. Davis is solely responsible for the contents
of this article and is not an employee or otherwise affiliated
with Nolan Chart, LLC in his/her role as a columnist.
Posted By: sarasile
Date: October 15, 2010 02:11:05 AM
At the end of WWII we were the only country whose manufacturing capability was intact and it was going full tilt. We still made things then and much of the world wasl recovering from the war. The monetary system was still based on precious metals and a dollar had intrinsic value. Yes, we survived massive deficits then but times are very different now. There is no real manufacturing base left in this country, with only a very few exceptions, and so your rose-colored-glasses analysis just is not likely to happen this time.
Posted By: Helena
Date: October 16, 2010 02:23:53 PM
Wow, good job in ignoring the thesis if the article!
He was talking about how a double standard is applied when deficit spending might be used to improve our lives as opposed to end other people's lives.
And you are wrong. The manufacturing base of this country remains one of the most efficient in the world! We still make a lot of things. All we've done is follow the capitalist model and outsource the inefficient portions of our industry.
And we are the World's default currency. Granted it's fiat currency but so is everything else we compete with. The closest competitor we have (the Euro) is a basket case.
And he never said we had to go to 200% of GDP as in WW2. But we could run 50-70% of GDP as long as we needed to repair our infrastructure and get the economy booming again!
Posted By: George Dance
Date: October 17, 2010 12:36:03 PM
So those who call the FDR New Deal socialism, please note that we had much worse deficits in the 30's and 40's than we have now. We invested in our infrastructure back then and ushered in a wave of prosperity that is largely regarded as our Golden Age. During WW2, we ran deficits of over 200% of GDP. After we did that, our economy bounced back fast and we were the largest creditor nation in the world. That's the legacy running deficits has when it comes to getting out of an economic crunch.
That's the legacy, is it? Start with ten years of massive deficits, like pre-war Italy, Germany, and the U.S. When that doesn't get the economy going, get involved in a global war. And five years later, depending on whether you won or lost, either you're prosperous or your economy is wrecked.
The U.S. has almost had its ten years of deficits, with no results. Is it time for the global war now?
