The numbers refute Keynes, Obama, Krugman

The following is presented as an educational service of the Downsize DC Foundation. It contains startling facts that refute economic claims made by left-statists such as President Obama and Paul Krugman. If you read it you will learn . . .

  • How current economic numbers completely refute President Obama, Nobel Prize winning economist Paul Krugman, and John Maynard Keynes
  • How left-statists cherry pick the evidence in order to deceive the American people
  • What we really need to do to restore private investment and hiring

High profile left-statists have made much of a recent survey from the National Federation of Independent Businesses. The survey lists the primary concerns of small business owners. Here are the top three . . .

  • Poor sales – 25%
  • Regulation – 19%
  • Taxes – 18%

People like Paul Krugman, point to the "poor sales" number as evidence that the economy is hampered by a lack of consumer demand. They assert that increased spending by politicians is needed to compensate for this, as proposed by the economic theories of John Maynard Keynes (pronounced Kines). But the following chart contradicts this theory (HT: Mark Perry, Carpe Diem blog):

The actual numbers on consumer spending instantly refute the Keynesian economic proposals favored by President Obama and Paul Krugman. There is no lack of "consumer demand." Instead, consumer spending is at an all-time high. Why then do so many small business owners list "poor sales" as their chief concern?

Could it be because they need more sales in order to pay the increased burdens imposed upon them by The State? After all, 19% of business owners identify regulation as their biggest problem, and 18% name taxes. This means that a whopping 37% of the businesses surveyed cite one state-imposed cost or another as their main difficulty.

A perception that the burden of The State is increasing could easily lead someone to feel that sales are "poor," even when consumer spending is at an all-time high.

Meanwhile, Professor Mark Perry has provided us with another chart showing us where the economy's real problem lies. Spending by consumers and politicians booms, but private investment lags.

How can this be? Why aren't investors rushing to take advantage of the surge in consumer spending? Isn't it possible that businesses are failing to expand and hire because of UNCERTAINTY about the future costs of things like Obamacare, the new Dodd-Frank financial regulations, and other statist schemes that have either been passed or proposed? This suggestion certainly fits the available facts.

It seems to me that left-statists are guilty of massive special pleading. They want us to be concerned about uncertainty, but only when it comes to consumers, NOT when it comes to investors. They also want us to trust the policy descriptions of John Maynard Keynes, but ONLY when it suits their desire to expand The State, NOT when Keynes's proposals would argue against what the politicians are doing. Here's what Keynes really advocated . . .

  • Politicians should accumulate surpluses during good times in order to fund stimulus spending during bad times
  • Stimulus spending should NOT be funded through borrowing, because doing that robs capital from private investment and is therefore self-defeating
  • Stimulus spending needs to be self-liquidating – it needs to pay for itself!
  • Investor confidence is just as important as consumer confidence

But all of this is the exact opposite of what the statists do in Keynes's name.

Left and right statists in Congress have all favored deficits in good times, and the left-statists in particular want to run even larger deficits during bad times. This is not what Keynes proposed. The left-statists cherry-pick Keynes's arguments to fit their needs.

The left-statists in Congress have also failed to focus their "stimulus spending" on projects that will pay for themselves, preferring to use the money to bailout favored constituencies instead, such as government employee unions. This is the exact opposite of what Keynes proposed.

But, worst of all, the left-statists continue to tell us that more statist spending is needed to compensate for low consumer demand, even though consumer spending has completely recovered. Is it too much to suggest that the people who do this, like Paul Krugman and President Obama, are hypocrites and liars?

We think it's time to start undoing this conspiracy of deceit, in which the establishment news media is also heavily complicit. The media has failed to tell Americans about the data and facts presented in this message, so we must step in to correct their error. Here's the truth . . .

  • Consumer spending has completely recovered
  • But private investment lags because of the uncertainty caused by statist policies
  • This means that the statists in Washington need to start doing LESS, NOT MORE.

Please educate the public about the facts that demonstrate these claims . . .

  • Share this message with everyone you know
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When all the powers that be lie, it's up to you to tell the truth, and spread it far and wide.

Perry Willis
Vice President
Downsize DC Foundation