Betrayed by Keynesians

Gary North’s Reality Check

In the fourth quarter of 2008, the whole world turned to the central banks for deliverance. The central banks responded with the largest monetary expansion in the post-World War II era. All but Austrian School economists either applauded — Keynesians and monetarists — or else remained mute. The politicians did the same. Economic intellectual leaders invoked their central confession of faith: “salvation by monetary inflation.” They spoke on behalf of their followers — the whole world — in the name of their sovereign masters: central bankers. That is what leaders do: they represent.

Lesson: choose your representatives wisely. You are always at risk of betrayal.

Everyone is a follower. There is no escape from this. This world is a series of hierarchies, and everyone belongs to several of them. Some are automatic at birth; others are automatic when you become an adult. You have the option of switching allegiances, but you do not have the option of avoiding allegiances.

Therefore, among the most fundamental and long-lasting decisions that anyone makes is deciding which leader to follow. A woman makes this decision when she decides to marry. A man makes this decision when he decides to go to work for a company. Everyone makes this decision with respect to belief in fundamental principles of life, which people may or may not believe are grounded in a superior force, whether God, society, or economics. As Bob Dylan wrote a quarter-century ago, you have to serve someone.

In making decisions regarding which intellectual leader to follow, you would be wise to take a close look at how that leader responds to criticism. If a leader asks you to commit to some supposedly unstoppable, irresistible, inevitable force in history, you would be wise to see how he defends his proposition whenever that proposition, or perhaps only his version of it, comes under assault by critics.

If the leader gives as good as he gets, if he can defend himself effectively against all comers, and if you can actually understand both the critics and the leader’s response, then you have a pretty good reason to either sign up as a follower or re-enlist. If the leader is an intellectual, and he provides intellectual defenses of his position, that is a good sign. If he is prominent enough to warrant organized attacks against his position, this indicates that you have committed yourself to somebody who is a serious contender.

There can be serious contenders who do not get a lot of criticism. This may be the early stages of the movement. Or, for multiple reasons, the individual is not well known in those circles which would be most likely to provide critics. Then there is this possibility: the critics know better than to take on this person in full public view, because he will hand their heads to them. This is fairly rare, because most intellectuals are sufficiently confident of their abilities, whether or not they possess significant abilities, so that they rush in where angels fear to tread. They go on the offensive, and they find that they were not equipped to handle the defender.

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