Modern Keynesians also tend to ignore the second half of his thoughts on government fiscal policy. They love the first half, namely that government spending should increase and that the government should run deficits during downturns in the business cycle. They ignore completely the other half of this, namely that the government should reduce spending and run surpluses during good economic times to pay for the deficit spending incurred during downturns. Somehow, nobody ever mentions this part of Keynes’ acutal ideas.
Acutally, in theory, I could get on board with ACTUAL Keynsian policies, but only in theory, not reality. If we had a government competent to spend wisely to stimulate the economy during downturns, and if we had a government with the integrity to actually do the right thing and reduce spending and run surpluses during good times, then the Keynsian prescription might not be so bad. Of course, I don’t think there’s EVER been a government that had both of those qualities (or even either one).
Dan Mitchell points this out as well. He, Dan, really is one of the best budget guys around.