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Faith-Based Economics

by Alan Reynolds

Keynes makes a comeback, but his ideas are still wrong

A recent Wall Street Journal article describes “the new old big thing” in economic policy: “Around the world . . . policy makers are invoking the ideas of British economist John Maynard Keynes . . . who argued that governments should fight the Great Depression in the 1930s with heavy spending.” In the New York Times Magazine, Robert Skidelsky appoints Keynes “man of the year.” Robert Reich, labor secretary under President Clinton, praises the “rebirth of Keynes.”

Long before Keynes published The General Theory of Employment, Interest and Money in 1936, he was a highly persuasive and witty writer on economic issues, often appearing in London newspapers and talking on the radio. But that was very long ago, and Keynes died in 1946. Economics has since become less reliant on armchair theorizing and more deeply grounded in statistical fact.

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