Wednesday, January 23, 2008
Personal Asides: U. S. Treasury Secretary Mentioned for Illinois Governor Not Again! Keynesian Economics Rears its Head.
I mentioned roundabout that I hear Henry Paulson, the U. S. Secretary of the Treasury might be interested in running for governor. He has an estate in Barrington Hills, is 61, was CEO of Goldman Sachs and like a lot of other Goldman Sachs CEOs is interested in public policy. Unlike a lot of them, he is a Republican. Jon Corzine as you know became the U. S. Senator from New Jersey and governor of that state. Robert Rubin became Clintons secretary of the treasury. Paulson who is nearly a billionaire would be almost entirely self-funded so it would obviate going hat-in-hand to the usual GOP sources which exact fearful concessions for their money.
But probably a central reason for opposing Paulson down the road would be his likely role in formatting the Bush panicky reaction to the so-called recession. Paulson should know that the current view that recession is either hear or about to arrive should be taken with a large dose of salt.
For the life of me I dont understand why George W. Bush is being panicked to go for an economic stimulus package to forestall a recession when the pretext, Keynesian economics, has been so widely disproved. I appreciate why the Congress has been stampeded to this point since they all want to be reelected, but Bush? The idea stems from British economist John Maynard Keynes who believed that spending was the paramount force in the U.S. economy. But his views were hatched during a period of world-wide deflation when deficit spending by governments often appeared to be the only means of getting money into circulation at a time when the markets were beset with lack of liquidity and the Feds efforts were impeded due to the closure of so many banks. It is old-fashioned economics by todays rubric and not very good economics at that. Tax cuts were feared to be inflationary. But economics have come a long way since then. There is no case history showing that tax rebates which Bush supports are effective in kicking starting the economy.