Robert Higgs expresses his disgust to what he describes as mainstream economists declaring "intellectual bankruptcy."
Higgs rails against the now widely-embraced return to "vulgar" Keynesian fallacies such as the paradox of thrift and its "simple minded" disregard for the economic realities of capital theory, the structure of production, the importance of time preference in microeconomic decision-making and the fact that savings provides the only true foundation for economic progress.
Furthermore, Higgs is appalled at the consensus opinion coming from a recent meeting of the American Economic Association (AEA) meeting:
The assembled economists did
agree, however, on one important point: "many said that once the recession
ended, the nation should not go back to the system that held sway from Ronald
Reagan's election in 1980 to the present crisis. It was one in which taxes,
regulation and public spending were minimized." Is it possible that the
statement I have emphasized in the preceding quotation actually represents the
beliefs of most economists? If so, then we can only conclude that they have
somehow removed themselves from this planet and taken up residence in another
world.
The idea that since 1980
"taxes, regulation and public spending were minimized" cannot honestly be held
by any sentient being who has paid the slightest attention to the events of the
past thirty years – a period during which federal receipts rose from $1,137
billion in 1980 to $2,588 billion in 2007 (in constant 2007 dollars), federal
outlays rose from $1,312 billion to $2,730 billion (in constant 2007 dollars),
real state and local taxes and expenditures increased by more than 150 percent,
and regulations spewed out of Washington and the fifty state capitals as if the
bureaucrats saw no need for taking heed of the morrow. Notwithstanding all of
these events and a great many others pointing in the same direction, the recent
converts to active fiscal interventionism would have us believe that this
ongoing blizzard of bigger and bigger government represented taxes, spending,
and government regulation being minimized? The mind boggles at
such flagrant nonsense.
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