William Anderson at The Ludwig von Mises Institute takes a look at the continuing failure of Keynesian economics and it’s most visible spokesman working today, Paul Krugman. In this essay Anderson takes apart the argument Krugman has been making; that we have not had enough spending by government.
The notion that the economy is weak because government does not spend enough is rooted in the idea that the private sector is not acting rationally because there is not enough demand. If there were enough demand the economy would pick up and therefore the government must step in and create demand. It does not occur to the liberal mind that it is production that really drives the economy and that when the government keeps attacking the producers the economy suffers.
