Apr 282010

As some of the better Tea Party activists have begun promoting ideas such as “limited government” and “fiscal responsibility”, we’re seeing intellectual pushback from the Left, arguing the deficit spending is good.

Here’s one example from a mailing list I subscribe to. I’m posting this here so as to alert folks as to the sorts of arguments we will be encountering so we will be able to best refute them:

In Defense of Deficits“, James Galbraith, 3/22/2010.

This is from the leftist publication, The Nation. Galbraith is a professor at Univ. Texas Austin and is the son of famous Keynesian economist John Kenneth Galbraith. So his academic credentials and intellectual pedigree are to be taken seriously.

Basically Galbraith argues the following:

1) The political push to reduce government deficits is economically misguided, based on an irrational “phobia” of deficits.

2) If we want economic growth, we need more spending. Only banks and governments can stimulate spending because, “Governments and banks are the two entities with the power to create something from nothing.”

3) Increasing spending by having the government do it is preferable to having the private greedy selfish bankers do it. And the real reason bankers oppose government spending is because it competes with their private lending.

4) We shouldn’t worry about the so-called impending bankruptcy of Social Security or Medicare or of the US government itself. The government is the source of money and therefore can’t run out.

5) Nor is government debt a “burden on future generations”, because it never has to be repaid. Each generation can just pass it onto the next generation, so there’s no problem.

(Read the full text of “In Defense of Deficits“.)

I’m still astounded that these sorts of ideas are regarded as part of the intellectual mainstream (albeit at the liberal end of the spectrum). We have our work cut out for us.

Although the moral and philosophical case for limited government should be the primary argument, we will have to contend with these sorts of Keynesian-type economic arguments defending deficits and massive government spending as positive goods (not just necessary evils).

My own economic background is not very strong, so if anyone can steer me to good links and references accessible to the layperson (not the professional academic economist) on these issues (especially the various fallacies of Keynsianism), please feel free to post them in the comments section.

(I’m already familiar with Capitalism: The Unknown Ideal, and would be especially interested in other books at that level of discussion, aimed at the lay audience.)

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