Great Depression Online Archive Issue:

Pathological Dedication

Great Depression Online
Long Beach, CA
May 19, 2009

Inside This Issue You Will Discover…

*** Mindless Blockheads
*** We’re Not All Dead
*** Pathological Dedication
*** And More

Mindless Blockheads

In the dismal science of economics the consequences of taking reckless actions today are not often apparent tomorrow.  What’s more, they’re not often apparent the day after tomorrow…or the day after that.  For it’s in an economy, more than anywhere else, where reckless behavior can be temporarily rewarded with apparent prosperity. 

Over the last quarter century, for example, stimulating your way past every downturn in the business cycle, by increasing public spending, has appeared a successful tactic for governments to offer their people the more abundant life.

But ultimately all the reckless stimulation and illusive prosperity piles up like cow pies on the grazing pasture.  And by the time you realize you’re ankle deep in it, there’s not much you can do…by avoiding one, you step in number two. 

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This is where we find ourselves today.  And this is why we pause to ask…

How is it that the nation’s top public officials – it’s supposed best and brightest – repeatedly behave like mindless blockheads?

What follows in an attempt at an answer.

We’re Not All Dead

“In the long run we are all dead,” uttered John Maynard Keynes on a cold British day in 1923.

The idea was a bit counterintuitive.  Namely, that during a period of economic stagnation the government should not save money; rather it should spend it.

Keynes believed that long term economic progress would improve.  In fact, in 1930, at the onset of the Great Depression, he “…predict[ed] that the standard of life in progressive countries one hundred years hence [would] be between four and eight times as high as today.”

But in the short run, he argued, the economy needed a little help from the government to stimulate demand.  By using public expenditures to pump money into the economy – Keynes theorized – unemployment would go down, and the boom and bust cycle could be avoided.

To Keynes’ credit, he did add that during times of economic prosperity, the government should reduce spending.  But no one seemed to hear that part.  And if they did, it was too late…once Pandora’s Box had been opened the wants of man were too great for it to be closed.

The fundamental tenet of Keynesian economics – the gift of Keynes – is deficit spending.  Yet contrary to Keynes, in the long run we’re not all dead; more precisely, we’re all alive.  Just look around, Keynes and his generation may be all dead, but we’re all here.  And we’re all now living with the consequences of Keynesian policies.

Pathological Dedication

There’s nothing like a popular theory or “ism” that can so darken the minds of men and snuff out any fire of genius or original thought.  Here’s what we mean…

The U.S. Government’s been running budget deficits practically nonstop for nearly 50 years.  They’ve been spending more than they tax for so long they’ve managed to run the national debt up to over $11.2 trillion.  Just this year alone, they’ll tack on another $1.84 trillion.

To anyone who hasn’t had their brain softened by modern economic theory, it’s inherently obviously: You can’t solve a problem that was created by too much debt…by piling on more debt.

You may get away with it for awhile.  You may even get away with it for a quarter century.  But eventually things get so out of whack you’re up to your eyeballs in debt to One Billion Communists.

Yet the blockheads in D.C. continue to pile on more and more debt with the pathological dedication of a beer guzzling frat boy at a homecoming football game.  Under the dogma of Keynesian economics that’s all they know to do.  For doing otherwise would require something they’re incapable of…original thought.

Fiscal lunacy is all that’s left.  “If we just spend enough money,” they say.  “We’ll all be rich.”

Sincerely,

M.N. Gordon
Great Depression Online

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