Thursday, March 02, 2006

LaRouche and Keynes

Interesting critique, no answers

Lyndon LaRouche took advantage of the Dick Cheney hunting accident to send his minions out to drum-up interest in his ideas. First I ran into them when some young dude said to me on the suburban (not exurban) campus, "are you ready to throw Cheney in jail?". I said no and went and had a coffee after the subway-subway-bus trek.

Then I ran into them the next day downtown, this guy was less starry-eyed, when I said LaRouche is just a warmed-over Keynesian he said "huh" and I just walked on to meet my friend visiting from New Orleans who has other things to worry about besides political and economic philosophy, like whether the government will allow him to rebuild his house which has been under-water for many months.

I did pickup and read LaRouche's most recent tract on the US economy, saying we are heading for a downfall due to underfunding "infrastructure investment" and saying that the government should spend 50% of our income on this investment. The lead-up to this proposal was very interesting reading. LaRouche talked about how Adam Smith was just a lackey for the slave-traders and Galileo for the power structure in Rome and how Descartes math breakthroughs were a step backwards as dont capture the truly dynamic modelling of our relationships. No doubt there is some truth to everything he said (most of it over my head), but you have to start somewhere - and I kind of like the Cartesean plane.

Anyway the point of this blog-entry is that, 1) it is good to know there are contrarians out there fighting our war-mongering spendthrift two-party (one idea) system, and 2) Keyne's model about the government able to spend our way out of trouble just doesnt work.

The theory says that when we have an economic slowdown government should increase spending to build up demand and therefore economic growth. HOWEVER, government should decrease spending when the economy is OK. The problem is that the latter JUST DOES NOT HAPPEN. Government just does not decrease its spending, except in rare occasions, and therefore this Keynes' model is just not useful as a policy proscription for economic management due to political realities. Maybe LaRouche could come up with some better ideas.