Allan Meltzer in WSJ: Four Reasons Keynesians Keep Getting It Wrong

What drivel.

One reason why anti-Keynesians also keep getting it wrong -- their theories have no proofs, nobody has ever tried them or will try them, and they can keep on pouting nonsense over and over again.

What has been going on - including at the Fed - is hardly textbook "Keynesianism" but bookish people wouldn't understand or accept that. Yes, policies so far haven't quite worked and yes, "reducing ...uncertainty and restoring investor and consumer confidence" would be a good idea. Here's hoping that Allan Meltzer goes to grave fantasizing how his four ideas would've saved the world, without having to be held accountable for death and destruction. ("Cut spending, cut taxes"?? Yeah. If spending on the rich is curbed. We don't have a crisis of investor confidence; they are all bringing their money to US Treasury. What we have, hopefully, is cautiousness, and what we don't have, unfortunately, is a market for products that would employ Americans at a living wage. And no, war is not a long term career option for people or the country.)

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http://online.wsj.com/article/SB10001424052970204777904576651532721267002.html?mod=WSJ_hp_mostpop_read

Allan H. Meltzer: Four Reasons Keynesians Keep Getting It Wrong

online.wsj.com
...

First, big increases in spending and government deficits raise the prospect of future tax increases. .Concern over future tax rates is one of the main reasons for heightened uncertainty and reduced confidence.

Second, most of the government spending programs redistribute income from workers to the unemployed. This, Keynesians argue, increases the welfare of many hurt by the recession. What their models ignore, however, is the reduced productivity that follows a shift of resources toward redistribution and away from productive investment. ...

lose

Third, Keynesian models totally ignore the negative effects of the stream of costly new regulations that pour out of the Obama bureaucracy.

Fourth, U.S. fiscal and monetary policies are mainly directed at getting a near-term result. The estimated cost of new jobs in President Obama's latest jobs bill is at least $200,000 per job, based on administration estimates of the number of jobs and their cost. .

..When will the Fed tell us how and when it is going to sell more than $1 trillion of mortgage-related securities? Will Fannie Mae, for example, have to buy them to hold down mortgage interest rates?

..Clearly, a more effective economic policy would aim at restoring the long-term growth rate by reducing uncertainty and restoring investor and consumer confidence. Here are four proposals to help get us there:

First, Congress and the administration should agree on a 10-year program of government spending cuts to reduce the deficit. . (Note to Republican presidential candidates: Permanent tax reduction can only be achieved by reducing government spending.)

Second, reduce corporate tax rates and expense capital investment by closing loopholes.

Third, announce a five-year moratorium on new regulations.

Fourth, adopt an enforceable 0%-2% inflation target to allay fears of future high inflation.

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