January 18, 2004

In the Long Run the Kids Are Alive

"In the long run, everyone's dead" is probably the most famous, fatuous, evil phrase that John Maynard Keynes ever uttered. He used the phrase to great effect to dismiss free market concerns that his nostrums, in the long run, would lead to disaster.

The problem is that while Keynes is dead, the next generation has to live with the consequences of excess death, substandard capital stocks, and a burning desire of Keynes' disciples to do it all over again. That's what he unleashed into the world and it's not a pretty picture.

This is not to say that short term action that would have negative long term consequences if continued is always a bad idea. There are plenty of projects that build things up that are worth saddling the next generation with some debt. Examples might include land purchases like the Louisiana purchase or a war. You don't want to do it too often but there is a sustainable pace.

The difference is that with Keynesian short term focused economic management, there really aren't too many long term positive effects. You get economic sclerosis in the form of eventual stagflation and a difficult mess to clean up. Worse, you get an intellectual atmosphere of kicking the can down the road, front loading benefits and back loading the price to pay. It's a set of bad habits that have jumped party boundaries because the political career benefits are just very seductive.

Posted by TMLutas at January 18, 2004 12:52 PM