KEYNES IS BACK

After years of languishing, John Maynard Keynes is back. Not the way he wanted, but in a warped kind of even-though-I-still-believe-in-a-market-economy point of view.

One of the joys of growing old, (and I have said this before) is that your "hindsight" is not based on historic text but on having "been-there-done-that."

Those of us who grew up long before the now-disgraced Alan Greenspan arrived to save the world with monetarism, remember a kinder, gentler, more realistic kind of economics. It was "The Great Communicator" Ronald Reagan, who ennobled Greenspan, gave him the Fed, and promised that "trickle-down" economics would right all economic wrongs. So bizarre that his former opponent for the presidential nomination George Bush senior referred to the principle as "voodoo economics."

Meanwhile, history, and the Republican spin doctors have created the Reagan myth, elevated that bumbling fool to the rank of Savior. Those who believe the current economic chaos harks back to the last eight years of "W" should take a much longer look at the Reagan years when national debt and deficit spending reached all-time highs. Now all the pundits in America, including Paul Krugman, Nobel laureate in economics and Op Ed contributor in the New York Times, are exploding the myth of Reaganomics. There is a new book on the market that proclaims how the Republican brain trust helped make Reagan the most popular president since Roosevelt. It was all spin. The realities are otherwise.

From my youth I remember Keynes. From that same youth I remember the biblical admonition about seven years of plenty followed by seven years of famine. We all remember the Aesop fable about the grasshopper and the ant. The ants were busy storing food while the grasshopper chirped happ0ily in the sunshine and did nothing.

Enough fables. We have corrupted government by corrupting ourselves.
Explanation: governments have discovered that the best way to stay in poower is to give people what they want, or better still, to say they are giving people what they say they want What do George Bush and Stephen Harper have in common? It is the counterfeit populism of statements like: "We believe the average person knows far better what to do with is money that any government." Sounds really good. So the ordinary citizen is given tax cuts. I say "ordinary" with tongue-in-cheek because the tax cuts fall more lavishly on those who need them the least. And the wacky theory that their lavish spending will trickle down has been disgraced. As President Obama said" "We tried that - it didn't work."

Instead of lavishing money on voters during good times then "tightening our belts" during bad times - we should have bveen doing precisely the opposite. I have mentioned this before, that "belt-tightening" always falls to those who can least afford it. Which harks back to what Paul Martrin did to restore fiscal responsibility. He choked those least able to afford it. Which is what Mike Harris did in Ontario, to enthusiastic applause.

Keynes echoed the Biblical admonition. He said that in good times govrnments should accumnulate surplusses so that there will be money to spoend during bad times. It is what came to be called "saving for a rainy day." But that kind of think gets governments voted out and new tax-cut governments voted in.

To some people, clinging to the remnants of market-based reality, my talk is nothing but left-wing heresy. But now,surprise, surprise, the light is dawning everywhere. American politicians are h9olding their noses and voting for bank takeovers, government instrusion into the econonmy, and spending billions to put people back to work.

Simple Keynes: good times = surplus. Bad Times = deficits. And when Jim Flaherty jumps on that bandwagon it is delicious irony - unless, unless you believe that the same government that won power with tax breaks tries to maintain power by spending us into deficits.

The plain fact will always be: it costs money to live in a great country. Someone has to pick up the tab. Even Ronald Reagan was heard to say (as he raised taxes) "There is no such thing as a free ride."