I heard Niall Ferguson speaking the other day, talking about Keynes and Paul Krugman. He said that Keynes is basically correct about how to fix a “shocked” economy if that economy is largely a closed system, like most economies were when Keynes was writing on the subject. That is, injecting government money into closed economies can work to power things up, but in today’s world most of the money a government puts in “leaks” out of the country and into other countries because of the global economy. Thus almost all that money does not go to the places it was intended to help.
The biggest difference between what Obama’s team (which is loaded with students of Keynes) did and what others believe should have been done (Ron Paul for instance) is not an argument over whether more money in the economy will help the economy, but an argument over who better spends that money–the government or the people. The Keynesians say that tax breaks given to the people will not help, because in bad economic times, people will only save the money. Anti-Keynesians remind us that the government is a notoriously bad spender and that centralized spending is very inefficient.
So again, this comes down to the biggest differences between the Soviet Union and America: Centralized government vs. decentralized. And to comment on that, I do believe that the world has advanced in the past century at an incredible pace primarily because of decentralization. A military example: One of the biggest lessons taken from the German army of WWII was that NCOs and operational commanders should be given great flexibility in how they carry out their missions and orders. People generally believe that because Germany was a totalitarian regime (though the German people were more free than most people imagine), that its commanders and squad leaders must have been micro managed. The opposite was true. Wehrmacht leadership had more freedom and flexibility than its American army counterpart. The results were a 50% better kill ratio than Allied troops.
Corporations in America are adopting decentralized schema, too. Books like, The Starfish and the Spider advocate “leaderless: organizations. In most cases, this is a bit too far. I’m not advocating decentralization in extreme or in all cases. For instance, try running a household full of children by committee, or running an Army rifle platoon by democratic vote. Some things must be directed to achieve certain goals. But, the more educated, capable and honest is a group of people, the more decentralization works. A Special Forces team resembles an egalitarian sports team more than a military unit. SF members are a special breed, chosen not only for their combat capabilities, but for their integrity and maturity.
So it appears that the war is still on. Why, I’m not sure. All countries that have decentralized ie democracies, have far surpassed all those that still cling to centralized control. Centralized control measurably decreases productivity, creativity, and freedom. And yet it’s too difficult for the socialist dreamers to give up their dream in the face of reality. When it comes to the American people, they are the most capable people in the history of the world. This is not Haiti or Afghanistan.
The people of the United States have earned and deserve a hands-off government.