The Rebirth of Keynes, and the Debate to Come
Between now and late January, when the stimulus package will be voted on, we're likely to be treated to a great debate over the wisdom of Keynesianism. Fiscal hawks will claim government is already spending way too much. They'll also worry that post-war baby boomers are only a few years away from retirement, meaning that the costs of Social Security and Medicare will balloon. But what the hawks don't get is what John Maynard Keynes understood: when the economy has as much underutilized capacity as we have now, government spending that pushes the economy to fuller capacity will of itself shrink future deficits.
