First came the Great TIME.com Blog Crash of 2008. Then I spent Monday as the Nauseous Capitalist, and really didn’t feel up to posting. I still don’t feel great but here, finally, is a perfunctory post linking to my latest column. It begins:
We are all Keynesians now. It’s a phrase that entered public discourse as the headline of a TIME cover story in 1965. Now it’s coming back into fashion.
This does not signify that we are all–as was Englishman John Maynard Keynes–Cambridge University economists with lucrative side jobs as investment managers, spectacular art collections, lots of famous friends and Russian-ballerina wives. At least I don’t fit that description. Do you?
The resurgence of interest in Keynes also doesn’t represent a full return to 1960s-style Keynesianism–the belief, shared by many economists and politicians in those days, that government could tame the business cycle and guarantee good economic times indefinitely.
Instead, what we are seeing now in Washington and other world capitals is fear we might be headed for an economic collapse caused by a collapse of demand caused by a collapse of credit. Confronted with that threat, governments seemingly cannot help turning to the remedy formulated by Keynes during the dark years of the early 1930s: stimulating demand by spending much more than they take in, preferably but not necessarily on useful public works like highways and schools. “I guess everyone is a Keynesian in a foxhole,” jokes Robert Lucas, a University of Chicago economist who won a Nobel Prize in 1995 for theories that criticized Keynes. Read more.