Wednesday, December 30, 2015

Bartlett: Supply-Side Keynes?


The two faces of Janus. [A]

"As final proof of Keynes's 'supply-side' tendencies, one might also point out that he understood the existence of the Laffer Curve long before Arthur Laffer was born. In 'The Means to Prosperity,' written in 1933, Keynes said: 
'Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget. For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more-and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss'."



Bruce R. Bartlett, respected commentator and author of the quote above, is a historian by trade, supply-side economics expert, former staffer for Congressman Ron Paul, advisor to Ronald Reagan, and Treasury official under George H. W. Bush. To summarise: he has unimpeachable Republican credentials.

He is also one of the most interesting members of the commentariat: he is a high-profile Keynesian.

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In 1984, around the time he joined Jude Wanniski's consulting firm and before moving to the arch-conservative Heritage Foundation, Bartlett published "Keynes as a Conservative" (Modern Age, no. 28, pp.128-33; freely available), a short, interesting, revealing, and eminently readable exposition of Keynes as conservative, containing the opening quote.

(Over the years, Bartlett has reiterated his thesis of Keynes' conservatism. For example, writing for Forbes, he published "Keynes Was Really a Conservative", August 14, 2008)

In the 1984 paper, Bartlett makes many points. I'd quibble with a few. One of them: "Although successful in virtually every endeavour", a starry-eyed Bartlett writes of Keynes, revealing thereby he never read Ronald Fisher's demolition of Keynes' "A Treatise on Probabilities". But, as Fisher would have said, that's secondary.

As important as Keynes' conservatism, is Bartlett's highlighting Keynes' "supply-side tendencies" (influence which Arthur Laffer himself has acknowledged), to the dismay of the contemporary pseudo-Left and their hagiographic reconstruction of Keynes as pinko.

There is indeed a Keynes for every occasion, although Bartlett's thesis (and Laffer's, apparently) has a lot of credibility: it's advanced by conservative insiders with intellectual authority.

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There's no better way to close this post than Bartlett's own closing words:
"The ironic conclusion of all this may be that to fight back against the new economic planners, conservatives are going to have to revive Keynes. As distasteful as this may be for some, I believe they will find in Keynes much to admire and much they can call their own."

UPDATE: 
31-12-2015. Robert Vienneau detects "Lucasian tendencies" in Keynes, as well. There is disturbing wisdom in Robert Skidelsky's words: "The passage of time reduces the Cambridge debates of the 1930s to family quarrels" ("Hayek versus Keynes: The Road to Reconciliation")

Image Credits:
[A] Ultima Thule, 1927. Image in the public domain. Source: Wikipedia.

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