Thursday, February 14, 2013

Calling the Keynesians’ Bluff

The American reports:
As a rule, the latest economic figures are not that important in themselves, but they shed fresh light on long-run trends. It may or may not be true, as Dean Baker suggests, that the 0.1 percent decline in GDP in the fourth quarter of 2012 (according to preliminary Bureau of Economic Analysis estimates) was caused by a decline in government, especially military, spending. But the real question is why the economy is so feeble that it couldn’t take a few defense cuts in stride. The big picture, which the latest data make a little clearer, is the ongoing poor performance of the Obama economy and the Keynesian paradigm that has informed the Obama administration’s economic strategy.
There is no Keynesian multiplier : if there was why are there less people employed than 12 years ago???