John Maynard Keynes is the infamous “hero” of government economics. He wasn’t a Marxist or an Austrian. He didn’t believe in socialism or in the free market. He believed that government should be somewhere in the middle. Mostly hands off, but during a recession they should print as much money as they can.
I think he was wrong — dead wrong. Some debate his complex thoughts regarding monetary policy, inflation, and other issues. My disagreement with him is much more fundamental – I think that even if his views on economics were right (which they aren’t), that the government should still keep their hands off the economy. I explain my reasoning below.
What Keynes Believed About Central Planning
Mr. Keynes was a believer in centrally planning the economy. He believed that the government was able to fix economic problems by printing money if the economy slowed down. He believed that the government was capable, theoretically, of printing just the right amount of money in the right way at the right time so as to fix recessions.
At the time of his writing, most people who understood economics knew that was absurd. They knew that the government is slow, ignorant, and attracts fat, privileged, lazy, corrupt men who like being famous and getting their rear-ends kissed. Sorry for the blunt language, but this is unavoidably true.
Keynes thought most economists were wrong. He thought that the “social unit” was more likely to figure stuff out collectively than individually.
Keynes literally said, emphasis his:
“Experience does not show that individuals, when they make up a social unit, are always less clear-sighted than when they act separately.”
I’m not sure how anyone can possibly conclude this. I’ll assume that he was either on some very dangerous drugs or didn’t have any experience at all with any of these so-called “social units”. I like the anonymous quote I stumbled across much better:
“A committee can make a decision that is dumber than any of its members.”
It’s true. Even if Keynes was right about central planning. Even if printing the right kind of money at the right time for the right people somehow made the economy stronger — which it doesn’t — the government still wouldn’t be capable or educated enough to actually do it.
Why Central Planning Always Fails
Just because something is possible doesn’t mean it’s likely enough to be attempted. Understanding this is one of the most important aspects of having a philosophy that makes sense. It allows you to understand risks properly. Then you’ll realize that yes, that “get rich quick scheme” might be real, but it probably isn’t — and it’s not worth the money to try to see.
It’s the same principle when it comes to economics — only the chances of Keynes being right are essentially zero, considering we’ve experimented with his views for half a century, and, well, he was wrong.
Still, even without the experimentation, this is why the default response to Keynes should be a rejection of the notion that government should be allowed to dump cash into certain sectors.
The government isn’t realistically going to manage the economy correctly, they’re corrupt, and they will never even completely understand Keynes in the first place.
Central planning of an economy isn’t just about economics — it’s also about politics. And that’s where the “somewhere in the middle” train leads us — into the abyss, courtesy of fat, corrupt bureaucrats whose only goals are their self-interest. The irony would be amusing if it wasn’t destroying lives.
Central economic planning is a huge harry ordeal — something nearly every economic central plan doesn’t account for. There aren’t enough competent people alive to consistently centrally manage an economy. There aren’t even enough people who understand economics to do it. And there aren’t enough people who understand economics and who are competent who aren’t also non-corrupt.
What This Means for You
Always assume that central planning will fall short of its goal. Assume that spending projects won’t work. Assume that when the government regulates a market, prices will go up. Assume that when the government starts pouring money from the sky, some markets will get huge bubbles — spotting one means you can make a lot of money.
It’s a little cynical, but it’s 100% true. Congress and the president will continue to come up with ingenious plans that aren’t as brilliant as they think they are. The market might not be perfect, but the government is much, much worse.
To see why this is important, read what I personally believe is happening to gold and silver.
If you want to see more examples of the economy being mishandled, watch this video.
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