I know some people who read my blog know Don Boudreaux personally and perhaps eat lunch with him regularly, so I am hoping this message gets through.
This kind of stuff is just unseemly.
This Keynesian explanation is adolescent. Lazily identifying the symptom as the underlying problem, Keynesians then craft a "theory" that shows just how inadequate spending can in fact cause inadequate spending. How clever of them!
It’s understandable that many people untutored in economics fall for this nonsense. Just as many untutored in geography naturally think the Earth is flat (looks that way, doesn’t it?), many untutored in economics, upon seeing businesses closing up and workers being laid off, conclude that the problem is inadequate spending (looks that way, doesn’t it?).
Really? No liquidity demand? No deep uncertainty? No sticky prices? No monopolistic competition? No dual role for money as a medium of exchange and a store of value? No efficiency wages? No flight to quality?
Just low spending begets low spending. Keynesians must really be ignoramuses.
Its one thing to disagree with a theory, its another to erect such an insulting straw man. Why do this?
I look forward to Boudreaux’s promised column on regime uncertainty. If he has an alternate theory of recessions, then I am happy to hear it. Yet, I would prefer if he did not begin by spitting on mine.
Additionally, if Don Boudreaux wants to debate these ideas personally I will be more than happy to. Not because I want to “show him up” though I know a lot of people watch debates for this. But, because by actually engaging one another’s ideas intensely and seriously I think we can come to a deeper understanding.