Admittedly I can’t recollect much about the Keynesian economics I was taught at school; the little I remember revolved around the idea of flattening out the peaks and troughs, running a surplus through the ‘good’ times and thus having money for ‘infrastructure’ investment during the ‘bad’. But there were two fundamental problems I had with this as a teenager and they are the same two problems I have today:
If investment in infrastructure is required, what has this to do with any economic cycle? Are we saying we should time any such expenditure accordingly? That doesn’t seem likely. Or are we to invest in something that normally we wouldn’t consider? That doesn’t seem sensible.
My main concern however was more human; I couldn’t envisage any government being able to show the self-restraint necessary during the boom years to run a surplus. The previous government proved this point chillingly by gorging through tax receipts during the larger part of the last decade, and still managing to build up debt to eye-watering levels.
But having a dig at Labour, fun though it is isn’t what I wanted to get off my chest; it’s the continued use of the ‘Keynesian’ adjective. To be valid, this is a qualifier that can only be applied to an extended period of time over which there has been both ‘more’ and ‘less’ expenditure, otherwise it’s… well, fluffy nonsense used to justify spending money we haven’t got on things we don’t need. Talk of ‘Keynesian-style’ investment is gibberish because of what has, or rather hasn’t, gone before; I may as well take a fiscal contraction during the 1980’s of Margaret Thatcher and call it Keynesian; and I can’t imagine anyone arguing that.