Thinking about Keynes

As some of you may know, Béatrice has been in France over the last couple of months. She’s been helping her Dad and Mom who are 93 and 85 years old respectively. Her Dad has been waging a battle with congestive heart failure and Béatrice is doing her best to help him keep his fighting spirit intact. So if you have a moment to send some thoughts, prayers, good vibes, and positive wishes wending their way to the southwest of France, we’d greatly appreciate it!

In any case, being in “bachelor mode” has left me with some time on my hands. And, hey, there’s only so much Sports Center one can watch in a given day! So I’ve been thinking about Keynesian economics to keep myself out of trouble. It’s funny, isn’t it, how one returns to childhood themes and thoughts? My Dad taught economics and was, I believe, a bit of a “Keynesian” himself. I think Dad liked the fact that Keynes was a bit of an outsider in economic circles and not so much a professional academic as someone who had a foot in multiple camps, including, ethics, politics, philosophy, and the arts. Hey, anyone who hung out with Virginia Woolf and Bertrand Russell and made them both feel like “dim bulbs” in comparison must have had something going for him!

For what it’s worth, it was kind of fun being the only kid in my circle who knew who Keynes was – not that that got me any dates or anything. I also think the name “John Maynard Keynes” had and still has a kind of atavistic power for me. As such, he shares that distinction with Eugene O’Neill. When I was a kid, both of their names gave me something of a frisson or existential shiver. Maybe it was because Dad was studying Keynes at USC while my step-mom was simultaneously studying O’Neill at “Valley State” (since dubbed Cal State Northridge). I also think this combination of an interest in economics and theater is what compelled me to write not one, but two plays where the hero was an economist (WWJD? and Safeway Encounter). That probably also has something to do too with the total indifference with which the wider theater world (not to mention the Econ crowd!) has greeted these humble efforts. But there you go….

Of course, Dad was an actor before he became an economist. So that link was there as well.

If you’d like to see my Dad on film, just go to the link below. He comes up at the 3.55 mark. He’s the hard-nosed upper upperclassman who gives Burt Lancaster a hard time about his mighty sloppy bed…

http://www.youtube.com/watch?v=g-hmsxznWMw&feature=related

For many reasons, I wish my Dad was still here. But one of them is that we could talk about Keynes. When I was younger, I was too far impatient/bored/full of myself to want to go into any of the macro-micro-miso elements of economics. But now I wish I could ask Dad what he thought of Keynes’ place in our very fractured and heartsick modern world. Above all, I also wonder what Dad would think of the fact that Keynes has been enjoying something of a “comeback” lately.

Everything is kind of a stock market, isn’t it – including the bauble/bubble of reputation? For many years after World War II, Keynes’ name and policies were “golden”. They were linked for most Americans to the deficit spending programs of the New Deal that kept the Great Depression from devouring us all. As such, Keynes was lumped together (on this side of the pond at least) with FDR. It’s funny how both men excite the same passions in folks on the Left and Right. To the arch conservatives, they’re both “closet Commies” who introduced the virus of invidious, insidious “socialism” into the Body Politic. Therefore, they are both devils - which you would think would make them figures of honor for most Progressives. However, for many people on the Left, they are highly ambiguous figures who are often condemned for “saving” a capitalistic power structure that might better have teetered and tottered on down into the Abyss of History. And the fact, that Keynes was kind of withering in his estimation of Marx’s technical “chops” as an economist didn’t endear him greatly to many Lefties either. But, for me, that’s one of those arguments – like, “Did Ornette Coleman really know how to play the saxophone?” - which is far above my pay grade to adjudicate!

In any case, Keynes’ “stock” plummeted during the Reagan/Thatcher/kinda-sorta-Bill-Clinton/Bush1-Bush2 years. Meanwhile, Milton Friedman’s theories about the dynamism of free markets held greater and greater sway. Get rid of those cumbersome regulations! Tear down the wall between commercial and investment banks! Get government out of managing the economy (except for a very limited role in setting interest rates to ensure price stability). Cut those deficits! Lower those taxes! Balance that budget! Lift that barge! Tote that bale! And get out of the way! Government is slow, cumbersome, unwieldy, and always fighting the last war. Markets are dynamic, self-correcting, armed with better information, and always moving in a rational way towards an ideal equilibrium where (except for the, ahem, occasional “shock”) there is happiness and full employment for all (if, ahem, at slightly lower wages than some might wish). In this paradise on earth, the occasional “bubble” (if such a thing even exists) is quickly pricked by super-rational investors armed with perfect information and neat computer models that precisely calculate risk and quantify investing like some glorified kind of life insurance where one can predict “actuarial” variables down to the last percentile of finger-lickin’ good accuracy.

Most of all, you will never see the “black swan” of a full-fledged market collapse (except at very, very long intervals and certainly never twice in the same century). Make it more like once every… every… Well, how old is the universe again? Well, longer than that!

I think we all know how that worked out….

So what about Keynes in all this? Does he have something to offer us still? I know buckets/gallons/tsunamis of ink have been spilled on this but I have been thinking about it more than a wee bit myself lately. In particular, the moral, ethical and philosophic implications of some of his thinking have been rattling around inside my little kuh-noggin. But I see that I have come up to the end of my self-imposed blog limit. Can’t be too long and windy in these blog posts! This is an era of short-attention spans! Beginning with my own! And besides a “very special episode” of “Buffy” is about to come on the SciFy channel! So I’ll hold those thoughts until next time. Tee, hee! That will also give me a little more time to brood and ponder on what to say next!

Is that a manipulative cliff-hanger or what? Shameless!

Speaking of shameless, here’s another piece of video for you on a (somewhat) related (and quite mean-spirited) topic. But it does speak to how well many of us learned about "the dismal science" back at school:

http://www.youtube.com/watch?v=ouXB-tvUF4w