The father of economics, Adam Smith, wrote government out of directing a productive economy in 1776 in his seminal “The Wealth of Nations.” His influence did much to erase the then popular idea of “Mercantilism,” the idea that for a country, exports made money and were desirable but imports lost money and should be avoided. Smith pointed out that everyone gained when things were provided in competition by the low cost producer.
That reduced costs for consumers who had b forced to pay higher prices for imports by government tariffs imposed to protect high cost local producers. It deprived government of revenue and political influence over trade, too. Politicians did love smith for curtailing their grift, but it took until 1935, a hundred fifty nine years later, for J.M. Keynes to write: “The General Theorey of Employment, Interest and Money.” With that, the politicians were invited back into economic control by the prescription that a slow economy could be perked up by government spending. Keynes reversed Smith’s market, handing it back to government; the appreciative politicians made him Lord Keynes.
Keynes’ successors have pushed the idea much farther than did Keynes himself, bringing us to today’s central bank fiat money printing intended to, as the idea was derided during the Great Depression, “spend us rich.”
Frederic Bastiat had ub 1859m reinforced Adam Smith with his “Parable of the Broken Window.” . In short, celebrating the productivity of a broken window because it enriches the glazier who replaces it is to blind oneself to the loss suffered by the owner of the window, whose money spent on the repair could have been used productively if it had not been spent upon restoring the status quo. Keynesianism as practiced today fails for that sane reason. To repeat once more our favorite analogy, it is providing a blood transfusion to a needy patient using blood first drained from him, since government has access only to money taken from the private economy via taxation, borrowing or fiat money printing, all of which end as obligations of taxpayers one way or another.
But Adam Smith is dead and not taught in schools. Frederic Bastiat is dead and was not much taught in any case. And Lord Keynes is revered by the politicians whom he put back in charge of the action and by their descendants. Economics is in reality, a subset of politics, after all.
If you are a U.S. taxpayer, your share of the present U.S. National Debt is over $160,312.