The Problem With Keynes
Brian Barder, my favourite unreconstructed Old Labourite, has made an impassioned plea - 'Come back, Keynes'.
I sympathise with him - but a purely Keynesian approach to the current financial crisis would, with the greatest respect to Brian, be unworkable.
The problem with a purely Keynesian approach would not be the accumulation of deficits; it would be those upon whom they were accumulated.
A vastly higher proportion of the population has vastly higher levels of personal indebtedness than their ancestors did. Instead of stimulating demand for goods, the monies they receive would be spent on servicing debts instead. The only winners would be the financial institutions that got us into the mess in the first place.
Even if we did succeed in stimulating demand, the 70 years that have passed since the publication of the 'General Theory' have seen the quite deliberate decimation and hollowing out of our industrial base. It is now so weak that the extraction of oil and gas, reaping the fruits of the earth, is considered to be manufacturing. Even if government could stimulate demand, the goods for which demand was being stimulated would have to be imported; for Man cannot live on ready-made sandwiches and curry paste alone.
Over the same period, of course, a vastly higher proportion of the population has been shoehorned into mediocre and unsuitable higher education programs like an obese woman's foot into an unsuitable shoe. They go out, they go out full of song, expecting that they're going to improve their social mobility; they come back, they come back full of tears, holding useless qualifications and up to their eyeballs in debt to the Student Loans Company - the vehicle by which John Major vented upon the nation's youth his rage and feelings of inadequacy for not having had a university education himself. A Keynesian solution requires that many be prepared to do dirty work for low pay; could the existence of such a workforce be guaranteed, unless, like the goods for which demand would be being stimulated, it is imported?