The free market had its chance; time for the government to finally act!

As sheep led to slaughter, so are we fools who perpetually adhere to fallacious economic dogma. In this instance, our shepherd is Robert Reich, writing in Salon, wherein he offers a supposedly innovative panacea that reveals itself as a static, predictable policy.

Mr. Reich identifies the fundamental issue that exacerbates America’s economic malaise and propels the recent debt ceiling debate: Two parallel universes exist in America. One universe, inhabited by normal Americans, has been caught by and cannot break a vicious economic cycle that perpetuates unemployment, declining wages, and sub-optimal spending levels. The other universe, inhabited by Washington politicians, hangs aloof, happily oblivious to structural issues and hellbent on reducing the federal budget deficit.

If only the politicians would realize that the government must become the Keynesian “spender of last resort” to repair the broken engine that is the American economy, he writes, the economic downturn can be overcome.

Far be it from my actual intention to suggest his insight of two parallel universes is wrong (inaccurate to a degree, perhaps, but not terribly wrong). However, Mr. Reich ignores a third universe: The one in which he lives. 

In this beautiful fantasy land, government spending equates to productive wealth creation and increased government spending never swallows private spending and investment. Not only this, but in this sparkling land, the New Deal saved America. The Depression ended, not because of reductions to the standard of living during war and aggregate supply plummeting worldwide (eg millions of dead individuals), but because government said let there be light, and saw that it was good. Insightful bureaucrats “catapulted America out of the Great Depression” with increased spending.

Partially, the difficulty of discussing the health of the economy rests in the calculation of the main economic indicator, gross domestic product. By definition, GDP increases in tandem with increases in government spending. While this only bolsters Mr. Reich’s assertions about the negative effect spending cuts release on GDP growth, it is tantamount to prolonging the disease of a hospital patient to ensure a profit.

Mr. Reich laments the apostasy of Americans from the canon of Keynesianism: “As more and more Americans lose faith that their government can do anything to bring back jobs and wages…”

O ye of little faith! What a frightening position Americans face, as dissenters besiege the idea of the overwhelming success of government stimulus as economic savior. This claim appears laughable for two reasons:  One, influential economic opinion remains tethered to Keynesian policy prescriptions and will continue its near-monopoly reign on dictating government policy. Two, after the failed results of stimulus spending over decades of experimentation, it’s worrisome that leading intellectuals retain an unshakable faith in government spending as a godsend. 

I’m aware it is beyond foolish to expect a former secretary of labor to espouse any nuanced inclination for free market policy recommendations. However, a lame revisionist tale should be below an individual of the stature of Mr. Reich. The idea that either party desires the shrinking and limiting of our current Leviathan, shockingly, lacks any foundation in reality. To propose that a philosophy of removing government and curtailing spending in favor of individual rights and voluntary cooperation has dictated government decision-making (or had any influence, for that matter) arrogantly presumes that expansive government action, intrusion, and disruption hasn’t been the default agenda.

Treating it this way, however, presents a grand political opportunity for advocates of Keynesian solutions. It allows them to shift responsibility for failure on small-minded and selfish individuals. It provides a plausible argument for why greater government activism in the economy deserves a conversion from the theoretical to the practical.

Naturally, this couldn’t be further from the truth. It is useful, though:  The greatest method of persuading the American public to desire the cliche, hackneyed, and status quo is to disguise it as innovative, experimental, and new.

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