Keynes, Keynesians, the Long Run, and Fiscal Policy: One dead giveaway that someone pretending to be an authority on economics is in fact faking it is misuse of the famous Keynes line about the long run. Here’s the actual quote:
But this long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.
As I’ve written before, Keynes’s point here is that economic models are incomplete, suspect, and not much use if they can’t explain what happens year to year, but can only tell you where things will supposedly end up after a lot of time has passed. It’s an appeal for better analysis, not for ignoring the future; and anyone who tries to make it into some kind of moral indictment of Keynesian thought has forfeited any right to be taken seriously.
And there’s an important corollary: how you should go about getting to some desired long-run outcome may depend a lot on how you think the economy works in the short run.
I don’t like the framing of this Blanchard-Leigh piece , which simply takes it as a given that we should be engaged in fiscal consolidation even in the short run, and the only question is how much. The truth is that the economics suggests strongly that we should be engaged in fiscal expansion right now. Still, framing aside, Blanchard and Leigh do get at the right issue: because the short-run effects of fiscal policy may differ greatly depending on the state of the economy, appropriate policy depends hugely on where we are right now.
And look, this isn’t hard. The overwhelming fact about our current situation is that conventional monetary policy is played out, with short-run interest rates at zero. This means that there is no easy way to offset the contractionary effects of fiscal austerity (maybe there are exotic ways to do something, but they’re tricky and unproved). And this in turn means that austerity right now is a terrible idea: any fiscal savings come at the expense of reduced output and higher unemployment. Indeed, even the fiscal savings are likely to be small and maybe even nonexistent: lower output and employment reduces revenues, and may inflict long-run economic damage that actually worsens the long-run fiscal position.
The other things B-L mention,like credit constraints, just reinforce this basic point. (By the way: Gillian Tett notes today that consumer spending is now fluctuating dramatically with the timing of paychecks, suggesting a lot of people living hand to mouth. What she doesn’t point out is that this is a world in which Ricardian equivalence, in which expectations of future taxes drive current spending, is even wronger than usual — and fiscal multipliers will be large).
The point, then, is not to ignore the long run; it is to recognize that the boom, not the slump, is the time for austerity, and spending cuts right now are disastrous policy. In the long run we are all dead; the point is to avoid killing our economy before its time.
As to the sexual politics: for 67 years--since Joseph Schumpeter in his obituary for John Maynard Keynes took what had been a within-Harvard whispering campaign into print, it has been a thing on the right to say, or at least hint, or to tiptoe up to: "Keynes was a perv and Keynesianism is pervy and Keynesians are perhaps perverts themselves." Niall Ferguson's been doing this for decades. But lots of other people have been doing it too.
Some now are still doing it. Some now are bewildered that it is now considered a social and intellectual faux pas to do it. Some are apologizing for doing it. And some are saying they never did it.
Political Animal - “There’s wrong, there’s very wrong and then there’s Niall Ferguson.”: Ferguson’s slur was ugly indeed — so much so that the no-doubt conservative audience fell into a stunned silence following his remark. But Ferguson — a man for whom the term “hackademic” would surely have been invented, had it not already existed — is part of a long right-wing hack tradition…. Ferguson likely stole the “childless homosexual” epithet from British wingnut Daniel Johnson (who’s the son of another winger, Paul Johnson. Why do these demon spawn second generation right-wingers tend to be even more appalling than their progenitors? ). The great novelist — and famously nasty conservative — V.S. Naipul has characterized Keynes as a gay exploiter.
Over on this side of the pond, conservative author Mark Steyn attempted to smear Keynes’ ideas by referring to him as — surprise! — a “childless homosexual.” The American Spectator has repeated that slur, as has this contributor to FrontPageMag.com. George Will has also cast the “childless” aspersion (which is pretty clearly a dog whistle for “gay”) against Keynes. So did right-wing economists Greg Mankiw and Joseph Schumpeter. I am reliably informed that William F. Buckley used to gay-bait Keynes as well, although a quick internet search did not produce evidence of this…
Joseph Schumpeter: "He was the English intellectual, a little deraciné and beholding a most uncomfortable situation. He was childless and his philosophy of life was essentially a short-run philosophy. So he turned resolutely to the only 'parameter of action' that seemed left… monetary management…. If only people could be made to understand this, they would also understand that practical Keynesianism is a seedling which cannot be transplanted into foreign soil: it dies there and becomes poisonous before it dies…. Let me say once and for all: all this applies to every bit of advice that Keynes ever offered."
George Will: "The author of that statement, of course, was childless. Parents do not think that way. The great conservatizing experience is having children."
Tom Kostigen reporting on Niall Ferguson: "[I]n front of a group of more than 500 investors, Ferguson responded to a question about Keynes's famous philosophy of self-interest versus the economic philosophy of Edmund Burke, who believed there was a social contract among the living, as well as the dead. Ferguson asked the audience how many children Keynes had. He explained that Keynes had none because he was a homosexual and was married to a ballerina, with whom he likely talked of 'poetry' rather than procreated. The audience went quiet at the remark."
Gertrude Himmelfarb: "If it was partly accident that originally drew him to economics, it was talent and ambition that kept him there. Yet even while pursuing that sordid occupation, at Cambridge and at the Treasury, he made it clear that he regarded economics as a separate and altogether inferior sphere of life…. Something of the 'soul' of Bloomsbury penetrated even into Keynes's economic theories. There is a discernible affinity between the Bloomsbury ethos, which put a premium on immediate and present satisfactions, and Keynesian economics, which is based entirely on the short run and precludes any long-term judgments. (Keynes's famous remark. 'In the long run we are all dead', also has an obvious connection with his homosexuality - what Schumpeter delicately referred to as his 'childless vision'.)"
Niall Ferguson: "There is, however, no question that a series of meetings with one of the German representatives at Versailles added an emotional dimension to Keynes’ position. Carl Melchior was Max Warburg’s right-hand man… […] It may be that Keynes’ subsequent declaration that he ‘got to love’ Melchior during the armistice negotiations at Trier and Spa obliquely alluded to a sexual attraction. As we have seen, Keynes was an active homosexual at this time. However, it seems more likely that Keynes was simply captivated by the sound of his own pessimism…"
Greg Mankiw: "The longer-term problem we now face, however, may be more serious than any that Keynes ever envisioned. Passing a larger national debt to the next generation may look attractive to those without children. (Keynes himself was childless.) But the rest of us cannot feel much comfort knowing that, in the long run, when we are dead, our children and grandchildren will be dealing with our fiscal legacy."
Paul Kelso on V.S. Naipaul: "Naipaul, who has a new novel out next month, also labelled Forster's most famous work, A Passage to India, 'utter rubbish' in an interview with the Literary Review, published today. In it he derides Forster and his friend, the economist John Maynard Keynes, as homosexuals who exploited the poor and those in their power for sexual gratification."
Niall Ferguson: "Though his work at the Treasury gratified his sense of self-importance, the war itself made Keynes deeply unhappy. Even his sex life went into a decline, perhaps because the boys in London he liked to pick up all joined up..."
Mark Steyn: "In his pithiest maxim, John Maynard Keynes, the most influential economist of the 20th century social-democratic state and the patron saint of 'stimulus', offered a characteristically offhand dismissal of any obligation to the future: 'In the long run we are all dead'. The Greeks [currently in upheaval over their economic crisis] are Keynesians to a man: The mob is demanding the right to carry on suspending reality until they’re all dead. After that, who cares?… […] I’m always struck by that line. He’s the most influential economist of the 20th century. Barack Obama is a Keynesian to a fault, they fall back on Keynes to defend the stimulus and all the rest of it. [dramatic pause] Keynes was a childless homosexual, he was a libertine in many ways in his personal life. And I think that reflected his particular view of the purpose of life: In the long run we are all dead. That’s his most famous quote, it’s the one that’s in Webster’s, it’s the one you can--if you’ve only got one if you’ve only got one quotation from Keynes, it’ll be that one in whatever quotations book you look up. And I think that’s not how humanity works, that human existence is a compact between the present and the past and the future…"
Peter Skurkiss in The American Spectator: "In his article about avoidance of personal responsibility ('The Long Run', TAS, April 2009), Roger Scruton makes passing note that John Maynard Keynes was a homosexual but does not tie this aspect of the Englishman’s life in with Keynes’s promotion of economic irresponsibility. Mr. Scruton should have because the two are, indeed, related. Keynesian economics is a live-for- today-type philosophy. It favors current pleasures over the future. This dovetails exactly with the childless homosexual view of life, and contrasts sharply with the view of parents who care as much, if not more, for the future as they do for the present, for the sake of their children and grandchildren. And it is utter nonsense to argue that Keynes’s private life should be kept separate from his professional life. When something as emotional as the forbidden sex is fundamental to a man’s being as homosexuality was to Keynes, there can be no compartmentalization. Mr. Scruton, who studies the culture, should appreciate this more than most. The essence of the Obama economic program is to rob from the future to avoid discomfort today. Call me politically incorrect, but I feel America would be better advised to move toward the Prophet’s advice and away from the homosexual’s."
Jonah Goldberg says: Himmelfarb and Schumpeter could bash Keynesian economics as gay. Why can't Ferguson do so today? nationalreview.com/corner/347396/…— J. Bradford DeLong (@delong) May 4, 2013
Ferguson suggested that because John Maynard Keynes was gay, effete, and childless he might have lacked concern for posterity. After all, Keynes famously proclaimed ”in the long run we’re all dead.” In a nigh-upon hysterical and terribly written item, Tom Kostigen of Financial Advisor says Ferguson took “gay-bashing to new heights.” He adds, “Apparently, in Ferguson’s world, if you are gay or childless, you cannot care about future generations nor society.”
Now, I don’t know exctly what Ferguson said and I don’t trust Kostigen…. Ferguson has offered an abject and total apology, which I take to be sincere. Still, I am a little surprised that so many people have never heard this idea before…. Joseph Schumpeter, I thought famously, suggested that Keynes’s childlessness was a key issue. In his obituary of Keynes, Schumpeter wrote: “He was childless and his philosophy of life was essentially a short-run philosophy.”
Even a cursory look-see in Google Books or LexisNexis shows it’s been around for a long time… a 1986 Harvard Business Review article by George Sim Johnston…. "John Maynard Keynes would have done a great service if he had begun The General Theory of Employment, Interest and Money with the disclosure that he was a Bloomsbury aesthete and a practicing homosexual… did not believe in self-denial or consider that they had any obligation to posterity. (An historian has pointed out that Keynes’s famous remark, “In the long run we are all dead,” is easy to make if you have no children and don’t want any.) Perhaps as a result we might have lower federal deficits."… William Rees Mogg, the former editor of the Times of London went so far to say that Keynes’s rejection of morality caused him to reject the gold standard…. The Ferguson episode teaches us that is now beyond outrageous to suggest that Keynes’s rejection of Puritan values inclined him to embrace a slightly different economic theory (Keynesianism)? Got it…. Ferguson was trafficking in an old theory that was perfectly within the bounds of intellectual discourse not very long ago. Now, because of a combination of indifference to intellectual history and politically correct piety he must don the dunce cap. Good to know.
Supported by Ramesh Ponnuru:
I could swear I read the same shot Niall Ferguson took at Keynes in The Economist in the late '80s.— Ramesh Ponnuru (@RameshPonnuru) May 4, 2013
Niall Ferguson’s empty apology niallferguson.com/blog/an-unqual… These were not ‘off the cuff’ remarks. I heard him make the same over 20 years ago.— Michael Kitson (@MichaelKitson) May 4, 2013
And more right-wing slime:
Harvard Prof Discusses Link Between Keynes Being Gay and His Economics: Time to grab some high powered antioxidants. Gawker is reporting this:
Harvard professor and prominent Obama-critic Niall Ferguson told more than 500 financial advisers at a conference on Thursday that Keynesian economics, an economic philosophy that advocates stimulus spending and is not kind to the idea of empire (which Ferguson loves), is flawed because Keynes was gay and uninterested in future generations. Reportedly calling Keynes "effete" and operating on the general assumption that our own children give us concern about the future of humanity (and not empathy or kindness), Ferguson explained that Keynes was more interested in discussing "poetry" than having sex with his wife, and because of that, his complex economic philosophy doesn't make sense.
Professor Hans-Hermann Hoppe tried to explain this years ago:
In March of 2004, during a 75-minute lecture in my Money and Banking class on time preference, interest, and capital, I presented numerous examples designed to illustrate the concept of time preference (or in the terminology of the sociologist Edward Banfield of "present- and future-orientation"). As one brief example, I referred to homosexuals as a group which, because they typically do not have children, tend to have a higher degree of time preference and are more present-oriented. I also noted--as have many other scholars--that J.M Keynes, whose economic theories were the subject of some upcoming lectures, had been a homosexual and that this might be useful to know when considering his short-run economic policy recommendation and his famous dictum "in the long run we are all dead."
Hoppe, a man ahead of his time. Will we now be hearing that Harvard has offered him a position on the faculty?
The American Spectator : 'In the Long Run…': Malcolm Muggeridge was a constant gadfly of British journalism…. Muggeridge the Christian believer lost none of his sharp tongue in his conversion…. Saint Mugg could skewer even so high a personage as Lord Keynes. When someone repeated to Muggeridge Keynes’s famous dictum — in the long run we’re all dead — Muggeridge shot back. “Well, he would think that wouldn’t he? He was a predatory homosexual.” That line was considered below the belt. But there is more than an element of truth in it.
Keynes at Harvard: Economic Deception as a Political Credo (1969): Keynes’ aversion to human conception and marital fidelity, defeminization of women via state intervention and the shattering of the family as a cohesive unit sound strangely like something out of the Communist Manifesto of 1848. The above item on “sexual offenses and abnormalities” is indeed a strange note. Keynesian apologists have maintained an uncomfortable silence on J.M. Keynes championing the cause of sexual offenders. In 1967 the world was startled by the publication of the letters between Lytton Strachey and Maynard Keynes. Undisputed evidence in their private correspondence shows that Keynes was a life-long sexual deviate. What was more shocking was that these practices extended to a large group. Homosexuality, sado-masochism, lesbianism, and the deliberate policy of corrupting the young was the established practice of this large and influential group which eventually set the political and cultural tone for the British Empire.