The New Republic has a good article on Keynes that points out the tendency for governments (specifically in the US) to flock toward Keynesianism during the bad times and ignore it when things pick up and to implement the facets of Keynesianism that suited their own agenda rather than the nation as a whole:
If you look at America’s periodic experimentation with Keynesian policy, it has been guided from the beginning by a determination to avoid any measures that might be described as socialist. It began with what was later called “military Keynesianism”–defense spending being one kind of public investment that was politically safe. But it has increasingly centered on tax cuts.
Sound familiar? I lost count of the number of right wing politicians, business journalists and economists who called for tax cuts back in 2005 when the economy was running hot and we were already at the limit of our productive capacity due to underinvestment in skills and capital. In short they were calling for higher inflation and depletion of the government’s capacity to deal with a potential bust.
Well that bust is here now. And thanks to the Keynesian policies of the last government (excepting their failure to alter the reserve bank act) we’re in a better state to deal with it than most of our trading partners. Now rather than say “I told you so” (and I and other left commentators did) I’m going to offer some more advice to the numbskull pundits and to the people who believed them:
When we get out of this recession, and we will, remember exactly how we did it, remember the failings of business and don’t complain when the government increases taxes, focuses on redistributing wealth and pours money into debt repayment and government savings.
If they have any spine the next boom-time government will also regulate the hell out of speculative capitalism and the finance industry. With luck voters will cast their minds back to these days and applaud. I suspect however that faced with the irresponsible political howlings of business and the right that they will forget.