This is what we might call \”not serious\”. Purely a look at the underlying logic of what everyone is telling us we must do about the economy, recessions, depression, double dips and all that.
Very roughly speaking, as a piece of economic history, we\’ve had a series of recessions over the last couple of centuries. The business cycle does its stuff perhaps, maybe it\’s all to do with external shocks, maybe it\’s swings in animal spirits, whatever.
We\’ve had two that might be considered \”depressions\”. The one we all know about, the 30s in the US and another that\’s not so well known. So unwell known that without looking it up I\’m not sure when it was myself. 1870s? Looking it up, yes, 1870s.
Of all those recessions /depressions the only one where people have tried to do huge great gobs of Keynesian counter-cyclical spending, that stimulus stuff, job creation schemes and the like, was the 1930s one, the one where such things worked so well that we call it the Great Depression.
In comparison with the 1920-21 recession which was as deep in the fall in output, but which went away pretty rapidly without such Keynesian counter-measures.
Now I agree, there\’s been a huge amount of work done on how the macro-economy works and very large numbers of people much brighter than I insist that all these measures do indeed work.
It\’s just that looking at that bare bones record I\’m not all that sure where the support for the idea is. The one time we seriously tried all these measures turned out worse than almost all of the times that we didn\’t try those measures.
So where is the empirical support for such measures: rather than the logical support gathered from theories about how the macro-economy works?
Jus\’ askin\’, you understand.
And yes, of course I know what the theories are. I\’m asking where\’s the proof in action? You know, like the apple falling on the bonce for Newton\’s ideas, the perturbations of Mercury\’s orbit for Einstein\’s? What can we point at as a matter of historical record to show that doing all these things is better than doing nothing?