The Biz Bucks Blog provides former Biz Bucks students and other busy professionals with a summary and commentary of seminal articles from the opinion pages of the Wall Street Journal. You can be notified of a new posting by subscribing to the blog (enter email in box on right) or by following on Twitter: @BizBucksGuy.

Breaking the Secret Code of Macroeconomics Lingo (Part IV: Opinion) September 8, 2012 6:01 PM | Tagged as Hayek, Keynesian, macroeconomics


Of course the big question is which school is right? The Biz Bucks Guy comes down firmly with the Hayekians.  A common poke at Kenyesians is “OK, we Keyenians admit that unfettered free markets work in practice, but do they work in theory?” A-hum.  Yes, they do.


Does demand-side stimulus (spending) fix an economy in recession? The data is clear. No.


Does supply-side stimulus (tax cuts and no spending) fix an economy in recession? The data is also clear. Yes.


Consider the work of Alberto Alesina of the Harvard School of Economics. See his NBER Working Paper 15438 of the National Bureau of Economic Research. His work studied recessions throughout the world from 1970 through 2007. Conclusions:


1. Tax cuts (Hayek) are more likely to increase economic output than increased spending (Keynes).

2. Spending cuts with no tax increases (Hayek) are more likely to reduce deficits and debt than tax increases (Keynes).

3. Spending cuts (Hayek) are less likely to create recessions than tax increases (Keynes).


Also see Hendrickson’s short paper:  A Brief Review of the Success of Tax Cuts ( Hendrickson shows that tax cuts by Harding/Coolidge, Kennedy, and Reagan improved the economy each time.  The Bush tax cuts did also, although the economy was tacking into the winds of his and Congress’ spending binge. 


Read Amity Shales’ The Forgotten Man about the Great Depression. Roosevelt’s Keynesian spending never worked. See Morgenthau's comment in “The Blip President” blog Aug 6, 2012. Obama is repeating that history. The Democratic Party’s platform calls for some $600 billion more demand-side stimulus…on top of what they did for the past 3 ½ years! 


Clearly, Hayek and “fresh water” economics wins.

Posted in Global Warming | 0 Replies

Subscribe to Our Blog

To receive email updates when a new post is made, please enter your email address in the box below and click Subscribe.


Use these key words to search past blogs:



1994 97% Alesina Recession Alinsky Allesina austerity Baloney BAT Binz bird kills Bogle Border Adjustment Tax Brulle Bryce capitalism carbon Carbon Dioxide CBO CFTC chains China Churchill Climate Climate Change Clinton Comparative Advantage Crichton Cronyism Cummins Curry Darwin Death panel demographics population economics Denier derivatives Dodd-Frank Drug dynamic Dynamic Scoring education electric car Energy Energy Policy Enron Debt Entitlements Eugenics Fat Fry Flat Earthers fracking free markets free trade Free Trade E-Verify Free Trade Zoellick Freedom Heritage Foundation Friedman gas lines Gas Prices glaciers Global Warming Global Warming Sustainability global warming subsidies IMF Globalization Trade God Google Gore Gramm Green Blob Grifo Groupthink Growth Hannity Hayek Hostess Hybrid Immigration Imports index funds Indexing Intellectual Denial investing investment IPCC JFK Joint Tax Kennedy Kerry Keynes Keynesian Keynesian Tax Cuts King Barak Bird Kills Koch Koonin Laffer Lamar Smith Lomborg macroeconomics macroeconomics;static; dynamic MACT Makiel markets Marxist medical care minimum wage Mitchell Model T Moore Morgenthau Navarro Neumark NOAA NY Times Obamacare ObamaCare Rove Health Insurance O'Reilly participation rate Patrick Moore peer review Peer Review EPA Piketty Pipelines plywood Presidential authority Price Controls Pruitt Racial divide Rare Earth Reagan Recession REE Renewable Portfolio Standards Renewables Ricardo Ridley robotics RPS Ryan Schlaff Science science integrity scoring Settled Science Shaffer shortages socialism socialized medicine Solar Panels Solvaldi Sovaldi static steel STEM Stephens Steyer stimulus subsidies subsidy sugar Supreme Creator tax policy tax reform Taylor territorial taxes corporate taxes Tesla Trade train wreck Trump unemployment wages Wind wind power women Zuckerman