BOOK REVIEW by Joanne Conrad, Where Keynes Went Wrong

Where Keynes Went Wrong
by Hunter Lewis

(Submitted 10/29/09)
Published 12/3/09.

Is it the government’s fault? Are we too ignorant? Are we doomed to ten years or more like The Great Depression? Must we eventually suffer 25% unemployment? Are we emulating Japan’s decades of misery? Are we ‘those who cannot remember the past and are condemned to repeat it’? Where Keynes Went Wrong and Why World Governments Keep Creating Inflation, Bubbles, and Busts by Hunter Lewis examines those probabilities, saying that Keynesian economics are now being replayed just like 1929 in the U.S. and Japan’s lost decades of 1980-2008. John Maynard Keynes was a British economist who advocated government-managed economies and government intervention in times of market distress.

Lewis details Keynes’ proclamations from various sources, including Keynes’ General Theory and other writings. It is an interesting format, as Lewis quotes Keynes, and then comments and/or refutes each quote. He also includes comments from Keynes’ defenders. It is thoroughly readable and does not include too much technical language. He avers that the “Federal Reserve Board is a case study of government by experts run amok.” Keynes had said that “…economic questions will involve intellectual and scientific elements…which must be above the heads of the vast mass of more or less illiterate voters.” That the public is upset about spending doesn’t take rocket science. It is extremely disconcerting that Lewis says, “… each time [Keynesian remedies] have been applied by Roosevelt, the Japanese government, and the second Bush administration…[they] have not produced the hoped-for results, and…that there are very good reasons…that it has caused the problems.” If that’s true, how can governments unwittingly be so cruel to its economically “illiterate” voters, the cruelties being things like high unemployment, high deficits, insolvent government entitlements? If that’s true, why are leaders like Henry Paulson, Ben Bernanke, Tim Geithner, Cynthia Romer, et al being so cruel? Keynes’ followers will probably say the government is not spending enough nor soon enough. What is the truth? It is being reported that the U. S. 3rd quarter 2009 GDP (Gross Domestic Product) suggests that the recession is ending, so is the unemployment a lagging economic indicator and soon we can expect more jobs? And that decimated pension funds will soon recover? That there will be more capital for expansion? That there will be no bailouts? That there will be no national deficit? That Medicare, Social Security, et al will be solvent? That revenues will increase enough to pay government expenses? That happy days will be here again?

Economists will find copious endnotes and citations, but general readers will also find thought-provoking analyses and opinions about the economy and many historic examples. But Keynesians and people who believe big government and big spending will solve economic crises will not like this book.
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