Repeat after me: Keynes never said or wrote that all government spending was stimulus. It might be or it might not be depending on circumstances.
That’s what made me sputter in this New York Times article:
NAPLES, Fla. — For a long stretch, government spending cutbacks at all levels were a substantial drag on economic growth. Now, finally, relief is in sight.
For the first time since 2011, local, state and federal governments are providing a small but significant increase to prosperity.
“There’s not a lot of positive contribution coming from the government sector, but when you’re talking about economic growth, less of a negative is a positive,†said Chris Varvares, senior managing director and co-founder of Macroeconomic Advisers.
Again, it depends on the circumstances. State and local governments are generally required by law to have balanced budgets. That means that spending at that level is generally redistributive. You tax some people and give the proceeds to others. In some cases that might stimulate the economy but I think it’s more likely that it will be neutral or even counter-productive.
I wish that people who should know better would stop promoting the myth that government spending always provides stimulus to the economy. The reality is that it can provide stimulus, it can be neutral, or it can impede economic activity. It can also shift economic activity in time, from the future to the present which, depending on the conditions that prevail in that future, may be beneficial or harmful. The specifics matter. The devil is in the details.
I think its a problem of people, including most economists, never having read Keynes, or Marx, or Friedman, or Hayek for that matter. And yet everyone has an opinion they’ve absorbed and constructed through some weird process of repetitive exposure to what someone else said about it. Healthy, intelligent people don’t question their assumptions.
Understanding the differences between primary and secondary sources was part of my high school education. It’s one of the reasons I’ve learned languages. I don’t need to rely on a translation of somebody’s commentary on events they’ve heard about from somebody else.
As fate would have it I’ve read at least a little of all four of those (plus von Mises). That was a luxury that came from not being an econ major and learning my economics from the textbook written by my teacher.
It’s not unique to economics. Most mathematicians have never read Euclid or Newton in English let alone Greek or Latin.