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Later down in the comments on Russ’s last post, John Papola (the director of Fear the Boom and Bust) wrote brilliantly:

If keynesians REALLY believed their framework, they would be the most outspoken enemies of everything which makes prices and wages more rigid. They don’t. I’ve never seen it. The degree of wage stickiness is either assumed as if it’s some cosmic constant or actively encouraged by other policies which fall under the broader progressive banner like unionization, indebtedness, high minimum wage laws, etc.

I am trying to imagine how a Keynesian would respond. My sense is that they’d say, “well, these are only problems if economies are not in market clearing equilibrium.” Of course, that would be odd, because Keynesian demand pump priming would never allow such a thing to happen. It begs the question.

I also want to repeat what I’ve said several times before. You show me a time when we followed a Keynesian prescription during a boom-time and reduced spending – that, too, is part of orthodox Keynesian policy. Nonetheless I am puzzled that progressives do not support this in fact. I’ll elaborate next week.

One Response to “John Papola on Keynesian Seriousness”

  1. MattW says:

    I’ve been thinking recently that Keynesianism might work if instead of Congress the US had a technocratic body like the Fed to manage fiscal policy, in large part because during booms an organization like that would be better able to surplus-save.

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