, , ,

It is said that in a crisis everyone is a Keynsian, but why would this be? There is ample evidence that a Keynsian response is often, if not always, counterproductive — especially if a rapid recovery in employment is desired, as it should be.

The trouble is that in a crisis, when suffering is palpable, it is not politically correct to advocate effective measures that would trade short-term pain for long-term gain — measures such as cutting or eliminating minimum wage levels, reducing unemployment and welfare subsidies, and generally addressing disincentives to find some kind of work. This is not unlike the need for politicians to get “on the right side of history” even if the arms we supply to various “freedom fighters” wind up killing Americans instead.

Politicians will be politicians, but if the study of economics is to be a real science then political concerns have no place in policy prescriptions its practitioners advise, no matter how difficult the message may be to swallow both for politicians and electorates.

About these ads