Does government actually create jobs?

How anyone can believe it does, is beyond me. It takes money from the private sector and spends it inefficiently - how is that supposed to help?

A "government jobs program" is a contradiction in terms.

Is there any reason to believe at least $2 trillion in fiscal stimulus and $2.9 trillion in monetary stimulus since 2008 have made a positive difference in the economy--especially considering that most economic indicators are worse than the worst-case scenarios that were made public when those spending decisions were approved?

Anyone listening to business people already knows: the stimulus was irrelevant, and the new government programs (especially Obamacare) have been a huge negative influence.

How does a deal that contains no actual cuts, adds to an existing $14 trillion pile of public debt, and preserves spending for cowboy poetry qualify as an "austerity" budget?

It doesn't, of course. The entire Congress should be charged with malfeasance. But how else can Congresscritters keep the gravy train flowing? Fact is: most members of Congress are corrupt, by any reasonable definition of the term. Meanwhile, Obama positively flaunts it, making Czars of his friends, and handing stimulus money to his favorite organizations.

how many times can the Keynesian consensus fail the test of outcomes before it goes away for good?

It's morphed from political theory to religious catechism. Left-liberals are every bit as fundamentalist as their counterparts on the extreme Right.

Which is why evidence does not work to change the minds of the hard-core lefties. Believe me, we've tried with my New York liberal Jewish clan. They are far more impervious and far less "freethinking" than anyone in my Orthodox synagogue.

The real problem is that the Keynesians aren't really Keynesian. They're the first to call for massive pump-priming spending when the situation is bad, but they forget about the necessity to scale back government spending and run surpluses in the good times. Which is how is was actually meant to work.

In Australian politics, which centers around reasonably liberal but always means-tested and incentivising (read - shitty life if you have to live on it) welfare policies, this is usually referred to as the "automatic stabilisers". Meaning that if you have policies that say "we will give a subsistence living if you're really in trouble", you automatically cut spending when times are good - because people have better options and go off benefits - and automatically raise spending when times are bad because people have no choice. So the correct option to an economic downturn effectively becomes do nothing. Spending will rise naturally, and drop naturally, and come closer to the Keynesian ideal than creating long term new programs.

Unfortunately our current government decided a massive stimulus was also a good idea, and have been crowing about how that prevented a recession here like everywhere else. Never mind that it probably would never have happened (due to our very good fiscal situation at the time, plus more room to move on monetary policy). So now that GFC II is on the way, there's fuck all left in the cupboard.

It was nice while it lasted.

The Hawk.

In a business column, It's a Wonderful Life star James Stewart compares 2011 with 1938, briefly debating whether Depression-era stimulus saved the economy or would have saved the economy if it were larger.

I'm hoping that was a tongue-in-cheek comment, considering Jimmy Stewart, the actor, passed in 1997.

I'm hoping that was a tongue-in-cheek comment, considering Jimmy Stewart, the actor, passed in 1997.

I thought so!

Let's seize Google.

Keynesian economics is a disaster even if done "correctly."

Look at it this way. The government borrows say $1 billion and hires a bunch of people. That money runs out and those people now must be laid off. That sudden loss of jobs has as big a negative impact on the economy as the hiring cycle did. So there is a net gain of nothing. However, the government is now $1 billion more in debt and must tax its citizens. That $1 billion in taxation will reduce jobs. Thus, it turns out, Keynesian stimulus has a negative impact on the economy.

(The true fraud of Keynes is that when it came time to say what the government actually should do, he waved his hands a lot and essentially said "magic.")

What frosts me is that they're reducing the amount of a scheduled increase, calling that a cut, and not even the Tea Party is calling them on it. We're doomed, I tell you.

When your plan relies on a step that reads "And then a miracle happens", you're fucked.

Our government has nothing but plans that read like that.

We are so fucked.

"Is there any reason to believe at least $2 trillion in fiscal stimulus and $2.9 trillion in monetary stimulus since 2008 have made a positive difference in the economy"

There's no way to know what the outcome would've been had there been no stimulus, or, before that, had there been no bailout of banks. This amateur economist's opinion is that today's unemployment rate would be much higher. Even conservative economist R. Samuelson has said the same, in so many words. There might've been a lot of civil unrest, too. Disregarding the 1930s, this country experienced bad depressions in the 1870s and 1890s, before gov't was so interventionist.

"And how many times can the Keynesian consensus fail the test of outcomes before it goes away for good?"

Compared to what? My amateur economist's opinion: there is NO economic policy that the fed. gov't can implement which will result in anything better than a slow-growth economy for a few years to come. The wreckage of decades of bad policies, and bad decisions by both political parties dooms us to that. (Same in Europe.) I'm not believing a word I hear from the 2012 Republican presidential candidates so far on economic matters. I optimistically think the economy will recover vigorously when we least expect it.