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Zero evidence–literally zero.
And that’s not just my view. That’s the conclusion of Harvard economist Robert Barro. Here’s Barro in today’s Wall Street Journal:
Keynesian economics–the go-to theory for those who like government at the controls of the economy–is in the forefront fo the ongoing debate on fiscal-stimulus packages. For example, in true Keynesian spirit, Agriculture Secretary Tom Vilsack said recently that food stamps were an “economic stimulus” and that “every dollar of benefits generates $1.84 in the economy in terms of economic activity….”
How can [this] be right? Where was the market failure that allowed the government to improve things just by borrowing money and giving it to people? Keynes, in his “General Theory” (1936), was not so good at explaining why this worked, and subsequent generations of Keynesian economists (including my own youthful efforts) have not been more successful.
Theorizing aside, Keynesian policy conclusions, such as the wisdom of additional stimulus geared to money transfers, should come down to empirical evidence. And there is zero evidence that deficit-financed transfers raise GDP and employment—not to mention evidence for a multiplier of two.
On what basis, then, has the Obama administration increased our indebtedness by more than $1 trillion, raising federal outlays to the highest share of GDP since the Second World War? On the basis of a theory–just a theory.