Morning Must-Read: Daniel Kuehn: Quick Thoughts on “How to Pay for the War”

Daniel Kuehn: Facts & other stubborn things: Quick thoughts on “How to Pay for the War”: “I’ve recently been leafing through a first edition…

of Keynes’s How to Pay for the War…. It’s a really fascinating read…. I like it a lot for a couple reasons: 1. First it highlights quite explicitly the mission that is animating Keynes pretty much from the beginning, which is how a free society works in the modern economy. He sees one group of people who embrace a free society that pretend there is nothing really different about a modern economy (what he refers to elsewhere as ‘laissez faire’, and then he sees another group that understands there is something different but addresses it by abandoning the free society (communists and fascists). He thinks that neither are a viable option. This understanding of his role is there throughout his life, but it comes out very clearly in How to Pay for the War. 2. The General Theory is detailed on investment theory but not as detailed on consumption…. [Here] Keynes seems to really deal a lot more with micro consumption behavior, which is understandable since he’s talking about intertemporal public finance and tax issues. 3. He is talking about slowing growth and fighting inflation. A lot of people act like Kenyes forgot to address this, sometimes based on nothing more than a well circulated Hayek Youtube video…. 4. He talks about expectations for post-war slumps, and as anyone that knows about his exchange at the Fed in ’43 I believe (maybe ’42) he is not pessimistic about it like Samuelson was at the time. 5. He carries over critiques of price controls and rationing that echo insights into consumer theory that he was making as far back as Economic Consequences of the Peace.