Smugman is up to his old tricks!
This blog allegedly refutes Robert Samuelson’s editorial in the Washington Post about the reckless Keynesian-inspired deficit spending of the 1960s. Both are worth a read. Krugman no doubt found the article because he gets called out by name in it.
Anyway, Krugman wants to “prove” Keynesians didn’t do any damage in the 1960s:
Robert Samuelson has a very peculiar column in which he alleges that we can’t have Keynesian policies because irresponsible Keynesians ended budget responsibility back in the 1960s. Really.
Look, I know that conservatives are still fuming over sex, drugs, rock and roll, and all that; hatred of hippies remains a powerful force in America around 35 years after the last hippie sighting. But look; here’s the history of the ratio of US federal debt to GDP:
OK, something did happen to fiscal responsibility; but it happened circa 1981, not circa 1961. Who was the president then? I’m thinking, I’m thinking.
Did you guys get it? Conservatives are the bad guys!
Notice how it always only ever takes one arbitrary graph to satisfy whatever point Krugman is trying to make. I supposed the GDP ratio gets added in to make it seem like debt went “down” during the 1960s. Which, of course, it didn’t.
The uncontroversial reality is that “irresponsible Keynesians ended budget responsibility back in the 1960s.” Everyone knows this!
Just look at what happened as a result.
Excessive government spending was the principle reason we were forced off the Bretton Woods system in 1971. It’s the reason we left the gold standard. Because we were printing too much money and foreigners started trading debased dollars in for gold. We all know that’s what they were doing, because we put an end to it! It was sort of a “big news story.”
The irresponsible “Sixties Madness” spending led to the United States’ first, and greatest, default on public debt. We removed the backing from the currency! Afterwards, we were paying back bonds with different money. It doesn’t get more “default” than that.
And we all know Keynesians brought us to that point. The most notable economist of the era was probably John Kenneth Galbraith, a big time Keynesian, who was advisor to Kennedy and Johnson. And remember the famous Nixon quote: “We’re all Keynesians now.” It’s “very peculiar” of Krugman to pretend Keynesian economics didn’t end budget responsibility back in the 60s when (1) Keynesian economics dominated the discourse, and (2) our entire monetary system imploded in 1971.
I don’t even know why Krugman is fighting it. He’s a self-described Keynesian constantly calling for massive deficit spending. You’d think he’d be proud of his heritage; not denying it.
Furthermore, Keynesianism has been - by far - THE dominant economic theory in politics since the 1960s. We’ve been using it the whole time. It’s not like Krugman all of a sudden “discovered” Keynesianism in a dusty old attic somewhere in 2008. We’ve been completely relying on it since the sixties! And - guess what; it sucks!