Appropriate Rhetoric in the War Against Keynesian Destroyers
David Stockman uses the most antagonistic rhetoric against Keynesians that I have ever read. He is merciless. He gives no quarter. That's why I love to read his articles.
Here is a good one. It is on the world's central bankers, who have driven down interest rates to zero, and have thereby sacrificed the interests of savers around the world. He calls them exactly what they are: ignorant government apparatchiks who have no experience whatsoever in the real world, nor do they understand basic economic theory. You can read it here. Here is a sample:
In the name of a crude Keynesian economic model that is an insult to even the slow-witted, Brainard and her ilk are conducting a rogue regime of financial repression, manipulation and unspeakable injustice that will destroy both political democracy and capitalist prosperity as we have known it. They are driving the economic lot of the planet into a black hole of deflation, mal-distribution and financial entropy.The evil of it is vivified by an old man standing at any one of Starbucks' 24,000 barista counters on any given morning. He can afford one cappuccino. He pays for it with the entire daily return from his savings account where he prudently stores his wealth.
After a working lifetime of thrift and frugality his certificates of deposit now total $250,000. Yes, the interest at 30 bps on a quarter million dollar nest egg buys a daily double shot of espresso and cup of milk foam.
What kind of crank economics contends that brutally punishing two of the great, historically-proven economic virtues--thrift and prudence--is the key to economic growth and true wealth creation?
In this age of relentless consumption and 140 character tweets, what kind of insult to common sense argues that human nature is prone to save too much, defer gratification too long, shop too sparingly and consume too little?
Forget all of their mathematical economics and DSGE model regressions. Our 200 unelected rulers are enthrall to a dogma of debt that is so primitive that it's just plain dumb.
He also added this:
These fools think this is owing to such nonsense as Brainard's blather about "stresses in emerging markets including China" and that "slow growth in developed economies could spill over to the U.S…….(translating) into weaker exports, business investment, and manufacturing in the United States, slower progress on hitting the inflation target……etc."
"Fools." "Nonsense." "Blather." These people do not impress him.
Nobody should be impressed by them.
Stockman and I have never been in academia. Well, that's not quite true. I did teach for one semester at an obscure private college in North Carolina. That was back in 1979. Never again!
Stockman and I are not beholden to any department chairman or any university president. We can use exactly the kind of rhetoric that we want, and the apparatchiks, tenured professors, and the rest of the crew that governs academia cannot impose any kind of negative sanctions on us. We are outside their reach.
A DOUBLE STANDARD
Academic etiquette has favored the political Left since at least 1946. Liberals, Marxists, and feminists can get away with rhetorical murder, but people on the Right are supposed to be restrained, gentlemanly, and members of the academic loyal opposition. This double standard has existed in American academic since at least the end of World War II.
Anyone who does not conform, no later than graduate school, is unlikely to be offered a full-time teaching post in a university. Anyone who does not conform as an assistant professor is not going to be granted tenure.
In the field of economics, no Austrian school economist has ever gained a faculty position at any of the major research universities in the United States. The two who did get inside the system two generations ago, who had originally been disciples of Mises in the 1920's and 1930's, both sold out with respect to Mises's theory of the business cycle and his condemnation of central banking. On that basis, and only on that basis, did Fritz Machlup get into Princeton, and Gottfried von Haberler get into Harvard.
The University of Chicago's Department of economics blackballed Hayek in 1950. He just didn't meet their high standards of academic scholarship, because he was not really scientific. He was hired by the obscure campus department, the Committee on Social Thought. He was funded by the Volker Fund.
But Austrian economists and conservative professors are supposed to grin and bear it. The system is rigged against them. They learn this in graduate school, and until they get tenure, they have to live with it.
I never bought into it. I know a con job when I see it. Keynesian professors are protected in their tenured positions either by taxation or by government regulation over the granting of degrees. They get their above-market rate of returns because they are the favored beneficiaries of a self-policed academic cartel that was created by the state for the benefit of the state. This has been the name of the game in academia in the United States ever since the Rockefeller Foundation promoted the licensing of medical schools in the years before World War I. It has always favored the Left. It has always favored bureaucracy, conformity, and academic etiquette.
The sad thing is this: too many Austrian economists in tenured positions have succumbed to the hypocritical standards of academic etiquette. They do not know how to fight to win. They do not see how high the stakes are. They cannot see what lies beyond the faculty lounge.
STOCKMAN'S CHALLENGE
We are in the midst of a battle for Western civilization. It now spreads to the whole world. It is a battle between central banks and the whole world. Stockman understands this. So, he goes after the enemies of civilization with everything he's got. He has put his reputation on the line. He has written the best book on recent economic events that I have read: The Great Deformation. It pulls no punches. It shows exactly how central banks were the cause of the great recession of 2008 and 2009. They are also going to be the cause of the next recession, which is likely to be worse.
Keynes was the most influential economist of the 20th century. His ideas were not only wrong, they were disastrous in their consequences. They have undermined liberty. They have undermined economic rationality. They were adopted precisely because they baptized the deficit spending policies of the West, 1931-1936.
The disciples of Keynes are the tenured tyrants who decide who gets hired and who gets fired in economics departments across the world. They are incompetent intellectually, for they have bought into what was clearly an incoherent, totally erroneous system.
Henry Hazlitt demolished Keynes's economics in 1959 in his book, The Failure of the "New Economics". But academia did not acknowledge the existence of this book. He was not inside academia. He was a better economist than most of the vast tenured lot of them, yet they pretended he wasn't there. But he was there. He was there in The New York Times, and after the Times fired him in 1946 for opposing Keynes' Bretton Woods agreement, he spent two decades writing a column for Newsweek.
Academic critics of these tax-funded charlatans are supposed to be polite to them. They are destroying Western civilization, but we are supposed to come before the public with some version of "Hail, fellow, well met." I think we need to challenge them for the frauds that they are. I think we must lay down the gauntlet.
In the next recession, and especially in the Great Default which they have engineered, when the entire Western system of governments goes bankrupt because of the unfunded liabilities of old-age retirement programs and nationalized healthcare, we need to be in a position to say this:
"These jackasses were wrong, and we said so at the time, when it was not considered polite to do so. We told you why they were wrong in terms of economic theory, and we told you exactly what would happen if you listened to these dolts. Well, you listened to them. Now your economic world is falling down around your ears. Tough luck. Next time, listen to coherent economists, not tenured dolts on the payrolls of the government."
I know. I'm not supposed to say things like this. But I do. So does Stockman.
Day by day, Stockman writes an article showing that these people are fools. And when the system breaks, as it is going to break, he will be the main figure standing in the recently dug graveyard of these fools, holding a gigantic sign: "I told you so."
We all remember the scene in A Christmas Story where Ralphie finally goes berserk, gets on top of Scut Farkus, beats him into submission, screaming obscenities the whole time. All men have wanted to do this at some point in our lives. Well, Stockman is our Ralphie. He got on top of Farkus in 2009, and when the next recession comes, he is going to stay on top. He will not be screaming obscenities. He will be screaming, "Rational allocation of capital" and "market interest rates." But for Keynesians, such phrases are obscenities. They are not to be spoken inside the faculty lounge.
THE KEYNESIAN LEGACY
Bad principles lead to bad results. Bad economics produces bad economies. There is coherence in this world. There is cause and effect.
There are repercussions from this version of the commandment against theft: "Thou shalt not steal, except by majority vote." Keynesianism is the theology of theft by ballot box. It has one overarching slogan and one fundamental principle: "Government deficits overcome recessions." We know in advance what is going to happen to national deficits around the world in the next recession. They are going to get astronomical. Actually, they are already astronomical. We have become used to them. They are going to get much worse. Intergalactic.
The voters trust these people. The voters do not rebel when the politicians refuse to cut the deficits by cutting taxes and cutting spending by even greater percentages. The public wants its tax-funded goodies. The public is going to pay a heavy price when the bills come due.
Stockman keeps reminding us of just how large the bills are going to be.
CONCLUSION
In A Christmas Story, Ralphie's mother finally shows up and takes him home. In the next recession, Ralphie's mother is going to be on the sidelines, cheering him on.
Stockman can continue to deal with Farkus. I will be happy to deal with Grover Dill. With Farkus out of the picture, Dill is easy to deal with.