krugman and others have been arguing that we're all keynesians now, in among other respects that we all see that government (deficit) spending is the only way to avert disaster, etc. here is a nice response, by robert samuelson. one sort of vibes that excessive keynesianism may just lead to a horrendous world financial meltdown and subsequent depression. of course, one would vibe that, and one could be wrong. krugman has struck back, and pointed out last week that the fed's 'printing money' to the tune of $ten trillion or whatever it is hasn't actually led to hyper-inflation, as your more miltonfriedmanian economists would predict. that's true, but we're still in the process of seeing what happens.
however, if there is a financial meltdown and/or an inflation nightmare, i predict that krugman will blame something else entirely, possibly even 'austerity.' then again, if it doesn't happen, your laissez-faire economists will have an explanation of that in line with their own theories. now, this might get you just a wee bit worried about whether anyone's position has anything to do with the empirical facts. the problem is that economics is very very closely bound up with ethics and politics; you nobelists can keep crunching numbers, but ultimately that's not where your commitment is. you already know how it has to turn out, unless you are terribly self-deceived: if you're a leftish economist, it will turn out that insufficient state activism is the prob. if right, excessive state action will be the culprit. really we might say that it's a very raw combat between pro- and anti-statists, whose commitments come way before evidence: in other words, a mirror of the left-right political spectrum in one of its nodes or permutations.
now, when you hear a friedman-type say that the situation shows that keynes had a point after all, or when, during the next extreme depression, krugman goes, oops i guess maybe keynes was wrong, then (and not until then) it might be rational to conclude that they're responsive to something in the world, that their economics is not purely a priori: a political ideology. if that doesn't happen, the numbers are actually neither here nor there for these people, however they may appeal to them in their arguments. guess what? that is obvious!
