Saturday, May 7, 2011

What if Keynes didn't have to become Keynesian?

I'll be talking more about Keynes vs. Hayek on Monday in my music blog - yes, my music blog. But I happened to run across this comparison of Keynes and Hayek in the Daily Kos. Written by VA Classical Liberal, who confesses being in the Hayek camp, the post concludes with a defense of Keynes - and an interesting point:

Keynes was a vocal critic of the Treaty of Versailles. He understood that the economic costs reparations would impose on Germany would destabilize Western Europe. During WW II, he advocated financing the war through savings, not borrowing. Worrying about inflation, he sounds almost like a monetarist. If politicians had followed his advice, we would have been spared much of the pain of the Great Depression and possibly even WW II.

Imagine that. If people had listened to Keynes in the 1920s, he may not have had the opportunity to become popular in the 1930s...and 1940s...and 1950s...and 1960s...and 1970s...and 1990s...and 2000s...and 2010s...

In a related note, it's interesting to see how the U.S. Holocaust Museum characterizes the Treaty of Versailles:

The war guilt clause, its incumbent reparation payments, and the limitations on the German military were particularly onerous in the minds of most Germans, and revision of the Versailles Treaty represented one of the platforms that gave radical right wing parties in Germany, including Hitler's Nazi Party, such credibility to mainstream voters in the 1920s and early 1930s. Promises to rearm, to reclaim German territory, particularly in the East, to remilitarize the Rhineland, and to regain prominence again among the European and world powers after such a humiliating defeat and peace, stoked ultranationalist sentiment and helped average voters to overlook the more radical tenets of Nazi ideology.
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