In 1971, after taking the US dollar off the gold standard, President Richard Nixon is said to have famously quipped, “I am now a Keynesian in economics” (NYT Jan 4, 1971). A half century later, it would appear, the entire Republican delegation is ready to make the same confession.
In his General Theory (1935), Lord Keynes told the story:
If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coal-mines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.Chapter 10, “The Marginal Propensity to Consume”
The US Congress is currently preparing to do precisely what Lord Keynes jokingly advised. It are preparing “to fill old bottles with banknotes, bury them at suitable depths in disused coal-mines . . . and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again.” Because the fact is, whenever a capitalist economy is performing at below industrial capacity, borrowing from tomorrow’s healthier economy to jump-start today’s sick economy is always a good bet. And, while “it would, indeed, be more sensible to build houses and the like,” so long as digging up the bottled bank-notes creates jobs and stimulates spending, “it would” — still — “be better than nothing.”
But now let’s say, hypothetically, that Donald J. Trump were an African American Democrat. And let us say that the United States had just experienced the largest drop in value since the Great Depression. I am sure that Mitch and his buddies would ignore the fact that Donald J. Trump is an African American. I am sure they would ignore the fact that he is a Democrat. And, yet, faced with this choice in 2008, Mitch and his buddies unilaterally placed race and party ahead of nation (see “Death of an Omnibus”). Why? Because economists — all economists — had assured Congress that it would take $1.2T to restore the US economy. And because Mitch and his friends knew that an African American Democratic President would receive all of the credit. Instead, the approved a paltry $800M, which proved enough, but only enough, to set the economy on track to realize the so-called “Trump Boom.”
Twelve years later, Mitch is back at it. But now he and his buddies are now all Keynesians, in economics. Not that any of them would say so publicly. Instead, they will say that, beyond the pocket change they will toss to working families, the lion’s share of the money must be allocated to sectors that will invest it most wisely: private industry, finance, and banking. That is to say, banknote filled bottles. What is more, it is likely that consumers will begin to feel the effects of this boondoggle sometime in late September or early October, just in time for the Presidential election. (Assuming the election has not been called off.) Sure. It would be better “more sensible to build houses and the like.” But, however spent, $1.2T will restore stability to global markets.
But that’s not all. That $1.2T does not come out of thin air. It comes in the form of bonds; bonds which, when mature, will be paid for out of taxpayers wages. Does it matter where the money Congress appropriates tomorrow is spent? It might be spent on a Green New Deal which would employ working families saving the futures of their children and our planet; or, it might be spent giving tuition relief to countless millions of college students, money that could be better spent creating a new generation of workers, researchers, and innovators; or, it might be spent giving real relief to overtaxed healthcare workers and extending real, universal single-payer healthcare — the same healthcare Mitch and his buddies enjoy — to every American. All of which would be “more sensible.” And all of which would place American taxpayers in a better position to settle the debt incurred by the sale of bonds when they come due.
But Mitch and his buddies are not idiots. They know they can have their cake and eat it too. They can fleece future taxpayers to pay for Donal J. Trump’s reelection campaign. But, can they count on the support of Nancy and her cronies? You can bet on it.