Keynesian Cannibals

Most of us have seen the nature documentaries where one kind of ant might cannibalize another. We’ve also heard of the “Donner Party,” the ill-fated settlers who had problems going west and got caught by global cooling in late October in the Sierra Nevadas. Some of them resorted to eating the dead to survive. I’m not passing judgment, I’m just sayin’ what happened.

When people decide to go into debt to buy something . . . they are “cannibalizing” future earnings. My hubby and I did this when we last moved. We bought a house we hope will be our “forever home.” We bought furnishings for it . . . and put much of it on credit cards, while paying for two college educations with student loans.

We both figured we'd soon get jobs and would have more money than time (to shop). We didn’t get jobs as quickly as we thought, and because we spent (consumed) a chunk our future income . . . we have to tighten our belts now. We will pay our debts plus interest . . . we don’t expect anyone else to pay them for us.

Keynesian Economics* is the theory that the government can manage the economy better than the free market, that it can regulate enough to moderate the ups and downs of business cycles, and that government spending can stimulate an economy out of a recession/depression.

Much of that “regulation” includes deciding what interest rates banks should charge, and to whom they should give loans. (Housing bubble anyone?) Another key concept in Keynesian economics is “stimulus spending” where the government picks favorites and redistributes money to them to supposedly stimulate the economy. If the government doesn’t HAVE the money to dole out, they borrow it.

Think about it . . . when the government goes into debt . . . they are “cannibalizing” future income . . . just as anyone does who goes into debt. EVERY single dollar the government “gets” has to come from the private sector.

From budget analyst Brian M. Riedl: “Congress does not have a vault of money waiting to be distributed. Every dollar Congress injects INTO the economy must first be taxed or borrowed OUT OF the economy. No new spending power is created. It is merely redistributed from one group of people to another. “

Pixie-dust Politicians claim that every $1 billion in highway stimulus can create 47,576 new construction jobs. But the Job Fairies must first borrow that $1 billion from the private economy, which will then LOSE AT LEAST AS MANY JOBS.

This has been confirmed by the Department of Transportation and the GAO, yet lawmakers continue to base policy on this economic fantasy.

Removing water from one end of a swimming pool and pouring it in the other end will not raise the overall water level. Similarly, taking dollars from one part of the economy and distributing it to another part of the economy will not expand the economy.

The water level analogy is a good one . . . the level would actually go LOWER due to evaporative interest rates and inefficiency spillage.

Let’s be clear . . . Keynesian Economics is government forced redistribution of income, either from current taxpayers, or when it’s deficit spending . . .from future taxpayers. At the present amount of government debt . . . we are consuming the future incomes of our children, their children, and THEIR grandchildren!

Another children's story comes to mind . . . the one about killing the golden goose. Remember? They were in such a hurry for the golden eggs that they cut open the goose to get them BEFORE they were laid . . . and the goose died.

Our goose is cooked.

"I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle."
~Winston Churchill

___________________________________________________

*Named after John Maynard Keynes, a 20th-century British economist, and a life-long member of the British Liberal party. Keynes was also a proponent of the progressive policy of eugenics serving as Director of the British Eugenics Society from 1937 to 1944. He declared eugenics to be "the most important, significant and, I would add, genuine branch of sociology which exists.”

Apparently, Keynes thought directed redistribution of human genes was good policy too.