Ignoring elementary economics13 July, 2015 at 19:12 | Posted in Economics | 6 Comments
The negotiations on the Treaty of Versailles have so far been disrupted by the attitude of a British negotiator, a certain John Maynard Keynes. He has a flamboyant personality and dubious morals, and has consistently employed an arrogant and professional tone to crush other negotiators with his contempt.
Ignoring the elementary lessons of economics, Mr Keynes has argued that countries running current account surpluses, and which have made significant efforts, are just as responsible as countries running deficits in creating economic imbalances. Moreover, he has asserted that in times of underemployment, the surplus countries should spend more, thereby encouraging prodigality. He has claimed that in periods of economic hardship, public spending should be increased, and has mocked officials who naturally believe that a country cannot increase its output by spending less in order to save more. He has supported the view that Germany should be allowed to reconstruct its economy by cancelling its debts, whereas crushing Germany under the weight of repayments would push the country into misery, and so encourage its far right. In fact, it is of course clear that even a partial cancellation of debts would set a dangerous precedent, and favour waste. Lastly, he has called on all countries to scrap policies decided unanimously, which support the return to gold parity at pre-war levels. Moreover, he has claimed that this objective is not only costly and unfeasible, but has also been responsible for Europe’s weak growth, while Mr Keynes has refused to accept that wages are excessive.
Having alienated all the reasonable representatives and delegations, Mr Keynes has chosen to resign. This is good news for peace in Europe.
Sounds familiar, doesn’t it?