Keynes Plus Growth

Keynes Plus Growth

The “new economics” are clearly in. Congress, the federal bureaucracy, the commander in chief, the intellectual establishment, the fourth estate, indeed all who matter are now Keynesians. This is no minor accomplishment; compare the 25 years it took Congress to learn the new economics with the more than 100 years it took the Tennessee legislature to admit the existence of the new biology. That we are all neo-Keynesians, how it came to be, and that it is a good thing is well told by the former chairman of the Council of Economic Advisers.

Heller’s reminiscences make good history. How the education of, by, and for Presidents on matters economic progresses; how an adviser can go further than the President and how in turn, on occasion, the President is ahead of his advisers is well told. The theme of the “death of ideology” is turned around in a section dealing with the dislodgement of the doctrinally pure at heart from their old ideological foxholes. Heller lauds the triumph of experience over old ideas. In fact, what has really happened is that one economic theory was displaced by another. But it is typically American that the substitution of ideas is presented as the result of experience. Pragmatism inherently is an ex post doctrine even though, in its most vulgar forms, it is used to justify future action.

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