[jyl]

It is hard to discuss economics intelligently, because none of us are educated in economics. Staying in a Holiday Inn doesn’t cut it.

It is also hard because economic policy is all tied up with politics, business, profits, social issues, etc. Put another way, there are huge reasons for many interest groups to want to confuse and mislead us.

I have possibly had more exposure in economics than the average bozo. I took your basic micro and macro in grad school, a lot of finance classes, and have spent 27-some years in the stock market world which is closely related to economics, practical economics anyway. We sure pay a heck of close attention to economic data and policies, and have to bet on economic outcomes.

Even with that, I can come up with no reason to think that Keynesian economics are better or worse than supply side economics. I actually think the debate is, as a practical matter, pretty meaningless because no country actually does one but not the other in any manner pure enough to be a good test.

Every country does some Keynesian things: government steps in to stabilize the economy when it falls, to support demand in crisis, etc. Every country also does some supply side things: encourages more output of desired things with regulatory or tax relief. For that matter, every country also does lots of other things: industrial policy, social safety net, etc.

Depending on the situation, interest groups will sometimes call for one or the other. For example, when the economy is “good”, businesses are all for supply side policies. Lower taxes, less regulation, government get out of the way and let us make more money! When the economy is “bad”, those same business interests will howl for Keynesian actions. Fiscal stimulus, monetary stimulus, boost demand for our products, government don’t just sit there do something!

Investors will clamor for exactly the same things, of course, since we generally make money when corporate profits are high, but when we lose money the government needs to step in to stabilize markets and “protect the little guy” by which we mean protect the wealthy investor class since the little guy’s percent ownership of stocks and bonds is laughably small.

My feeling is, most countries including the US would do well to stick to a moderate, balanced, not extreme path. Keep taxes and regulations moderate, keep public debt moderate, keep income and wealth inequality moderate, keep social benefits moderate, keep corporate profits moderate, keep asset valuations moderate, etc.

Maybe I should invent a new school of economic thought. The “Moderation” school.