“The biggest Keynesian stimulus in U.S. history was a bust,” AEI economist Kevin Hassett writes today on Bloomberg. He’s referring, of course, to the economic stimulus package that didn’t prevent new unemployment claims from rising to 500,000 in mid-August.
Hassett refutes what he calls the Not-Enough Keynesians, those who believe that if the U.S. had just had a bigger stimulus it would have worked. But why do the Keynesians keep backing the voodoo economics of stimulus? Hassett explains:
Joe the Plumber knows the answer: The left has become religiously Keynesian because that is the only corner of economics consistent with its redistributive ideology.
You remember Joe. During a campaign stop in the 2008 presidential election, Samuel Joseph Wurzelbacher asked Obama whether higher taxes would punish his business. Obama answered in part, “I think when you spread the wealth around, it’s good for everybody.”
Obama’s words captured Democrats’ ideology: outside of fairy tales, only government can play Robin Hood, taking money from the rich and giving it to the poor.
The problem, of course, is that high tax rates inevitably cause economic harm. Such a link is at the core of economics. If you reduce the reward for an activity, you get less of it. Democrats and the economists who serve them deny that harm so they can spread the wealth around.
Hassett’s theme: We must bury Keynesian economics before it buries us.