By Peter Galuszka
John Maynard Keynes, the British economist, advocated government spending and monetary intervention as suitable for modern economies.
When I was a student at a liberal college in New England in the early 1970s, we were taught that Keynes very much had the right idea. As evidence, we had the Great Society programs of Lyndon B. Johnson and, strangely, the Vietnam War. They all relied on vast amounts of deficit public spending.
Since then, free-market types came into favorable light and it all became the magic of the market, little regulation and other panaceas.
According to whom you read, pro-capitalism economist Milton Friedman admitted the necessity of Keynes’ thinking by stating, “We’re all Keynesians now.” President Richard Nixon, a Republican, is also credited with the quote when he took the U.S. off the gold standard.
The phrase is taking on increasing relevance with the COVID-19 pandemic. Virginia is no exception.
The Trump Administration’s woefully bad initial response to the pandemic has been quickly replaced with bipartisan approval for a $2.2 trillion federal spending package. It includes measures unthinkable just a few months ago, such as big bailouts for local and state governments and direct payments to individual citizens.
Virginia should get $1.8 billion for the state and $1.5 billion for counties and cities. The state’s formerly healthy budget will be taking a huge hit as many business are shutting down per Gov. Ralph Northam’s social-distancing orders. Republicans are crying out for re-thinking. That’s doubtful because there are bigger fish to fry at the moment.
Today’s dilemma gives pause for thought. For many years, Virginia’s economy elite tended to side with the low tax, little regulation and pro-business ideas.
Cheering those ideas along are conservative, free-market groups such as the Mercatus Center at George Mason University in Northern Virginia and lobbyist-heavy think tanks such as the Thomas Jefferson Institute for Public Policy. Both have been recipients of funding from the free-market, manipulative and petroleum money-backed Koch group.
Republicans dominated the General Assembly until this year, so such ideas flourished. They were buttressed with a flood of “screw the poor” policies.
Now, they are becoming increasingly irrelevant and likely will be for a long time.
Free-market policies that emphasized short-term returns have squandered the ability of Virginia and the country to be prepared for pandemics that many have predicted for years. That’s why we have massive shortages of personal protective equipment, ventilators and N-95 face masks. Profit-minded businesses just didn’t want to spend the money.
We are paying the price for this with closed businesses and stay-at-home orders.
With so much down time, people might start rethinking the future. One place to start is the writing of Keynes.
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