If I’ve used that tagline before, then the “really real” core of Keynes. . .
is Signal Distortion. If prices act as a signalling system, and if a system of prices forms an Extended Order which efficiently orders the production, delivery and consumption of wanted goods, then anything which deranges prices deranges the system. The signalling system doesn’t operate properly.
I would use the analogy of my own understanding of cancer: if parts of the economy are made external to the larger free flow of goods as facilitated by the price system, then not just those parts, but the economy as a whole becomes deranged. Massive government spending is a sort of cancer which wears a hole in a weblike fabric.
As an example I have used, much IMF and World Bank aid has been spent on things like dams in third world countries, that did not have remotely enough money or industrial capacity to warrant those investments. The money comes in, gets spent on construction–which employs for some years local people–then the money is gone.
What has happened in the meantime is that the wages paid those workers deranged all the other local wages. Supply and demand, free market forces were not at work. This hurts EVERYONE outside the system, which is to say all private small businesses in that market area. Further, it only helps non-independent entities–which in general is to say government elites–and damages all private enterprise that could be viable independently and sustainably. This is a disaster for any economy. It does HARM, on balance. And this is more or less what FDR did with the New Deal, which beyond question extended rather than shortened the Great Depression.
Keynes knew this. He knew EXACTLY what he was doing.
It is baffling to me to behold people actually arguing, in this day and age, that Keynesian ideas COULD benefit anyone, much less that they do.
Fannie Mae and Freddie Mac: semi-autonomous entities along Keynesian lines. During the time they did their damage, they wee “Government Sponsored Entities” (if memory serves), but they did not have to report to anyone. Moreover, they were largely unregulated. The result? Complete price deviancy and malignancy. Homes were allowed to inflate at far greater rates than free markets would have allowed, prices were deranged, and the fix–which we are still in–can only consist in reattaching the housing sector to the larger economy as a whole, absent–let me coin a phrase: “Price Derangement Entities”, or PDE’s.
As I think about it, such entities could be counted on to roll around as virtual wrecking balls, leaving economic damage wherever they go. This would apply EVEN IF they were not trying to do that, and even if they were not fundamentally socialists of the Keynesian stripe. This would include any agency associated with the misnamed War on Poverty, and quite obviously the entirety of the so-called Stimulus. TARP would apply.
Keynes was unquesionable a first-order economic genius, and as such an idiot savant. He was as stupid in the moral arena as he was brilliant in the realm of economic subversion.
The last century has been filled with much stupidity and much evil. I of course can’t say if it’s too late to turn it back, but perseverance and not giving a shit if you succeed or fail because there is no fucking way you are quitting is a fundamental part of Goodness, as I have defined it. So the possibility of success is entirely irrelevant.
Go to it, and do or die.