Politics

Jobless Rate Up to 8.3 Percent: Time to Call Keynesian Economics a Flop?

Aug. 3, 2012 11:47am

- Cato Institute

Daniel J. Mitchell is a top expert on tax reform and supply-side tax policy at the Cato Institute. Mitchell is a strong advocate of a flat tax and international tax competition. Prior to joining Cato, Mitchell was a senior fellow with The Heritage Foundation, and an economist for Senator Bob Packwood and the Senate Finance Committee. He also served on the 1988 Bush/Quayle transition team and was Director of Tax and Budget Policy for Citizens for a Sound Economy. His articles can be found in such publications as the Wall Street Journal, New York Times, Investor's Business Daily, and Washington Times. He is a frequent guest on radio and television and a popular speaker on the lecture circuit. Mitchell holds bachelor's and master's degrees in economics from the University of Georgia and a Ph.D. in economics from George Mason University.

Can we finally all agree that Keynesian economics is a flop? The politicians in Washington flushed about $800 billion down the toilet and we got nothing in exchange except for anemic growth and lots of people out of work.

Indeed, we’re getting to the point where the monthly employment reports from the Labor Department must be akin to Chinese water torture for the Obama Administration. Even when the unemployment rate falls, it gives critics an opportunity to recycle the chart below showing how bad the economy is doing compared to what the White House said would happen if the so-called stimulus was enacted.

But for the past few months, the joblessness rate has been rising, making the chart look even worse.

 

Mitchell: Jobless Rate Up to 8.3 Percent: Time to Call Keynesian Economics a Flop?

Unemployment Predictions and Results with the Stimulus (Mitchell/CATO)

I never watch TV, so I’m not in a position to know for sure, but I haven’t seen any articles indicating that the Romney campaign is using this data in commercials to criticize Obama.

This seems like a missed opportunity.

But since it’s not clear to me that Romney would actually do anything different than Obama, I don’t focus on the political implications.

Instead, I’m hoping the American people will learn an important long-run lesson. If you want more growth and prosperity, the recipe is smaller government and free markets.

In other words, our economic policy should be more like Hong Kong and Singapore, but Obama has been making us more like France.

Comments (4)

  • drphil69
    Aug. 6, 2012 at 8:49pm

    Obamanomics is not really Keynesian. Keynes did not advocate massive debt and higher taxes during tough economic times. Even Keynes realized that taxes must be cut to spur the economy.

    No, what Obama is doing is destroying the economy to force a collapse – this empowers the goverment even more, especially with the chaos that ensues, which is a good excuse for martial law. Coming to a city near you!!

    Watch how fast things move when obummer realizes he might lose the election…

    Report this comment

    drphil69  
    • truemedia
      Aug. 6, 2012 at 9:54pm

      Obamanomics is not really Keynesian??? What the H*ll is 15 trillion in debt and Obama SENDING MORE THAN ALL OTHER PRESIDENTS COMBINED. Are you kidding me. STOP making excuses for this FAILURE of a man, leader and president!

      Report this comment

      truemedia  
  • pbforsberg
    Aug. 5, 2012 at 4:33pm

    If Obama could operate a hotdog stand on a street corner of a city profitably and without govt. assistance for 12 months, I’d have a lot more faith in him than I do now.
    HE IS A MORON – and I am quite sure a caveman could run the hotdog stand – but not Obama. Nor could any of his advisers.
    He has surrounded himself with college educate idiots. ALL INCAPABLE of running a hotdog stand.
    My dad used to say a person goes to college to get brainwashed and loose all common sense – The older I get, the more I agree with him.

    Report this comment

    pbforsberg  
  • turkey13
    Aug. 3, 2012 at 12:30pm

    I just barley passed economic 101 back in my college days but I knew that Obamas throwing money at the unions and same old construction companys that have the ongoing contracts with the government. They use the money for payoffs to make sure the same companys get their contracs renewed and as needed will hire some temp. employees. My sons have their own construction company and would expand but then all extra profits would go to buying insurence. As they now have 4 crews and just handle extra jobs with overtime. If this 800 billion had been offered as low interest or no interest loans to small business a lot of new people would have been hired across the country. As the program went the money mostely went into very wealthy peoples pockets.

    Report this comment

    turkey13  

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