Toronto Star: A Keynes insight into free markets

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A Keynes insight into free markets
Seminal economist's interventionist views fell from grace in the hyperinflation 1970s. They're back

Dec 21, 2008 04:30 AM

Ann Perry
BUSINESS REPORTER


"When the facts change, I change my mind," John Maynard Keynes once famously quipped. Perhaps that helps account for the resurrection of the long-dead British economist's theories, which fell out of fashion in the 1970s but have recently regained favour among policy-makers grappling with the deepening global economic crisis.

Even staunch free-market, small-government advocates are turning to Keynesian economics – which has come to stand for government spending as a means to stabilize the economy – to get themselves out of the current jam.

Prime Minister Stephen Harper has become an unlikely convert, as exemplified last week when he abandoned his widely questioned forecast for a small surplus next year, and suggested a planned stimulus package could drive the federal deficit to as much as $30 billion.

"I think Harper has had a Keynesian moment," said Joe Martin, director of business history at the Rotman School of Management at the University of Toronto, adding that his "calculus" was likely "both political and sound public policy."

Harper isn't alone.

Governments around the world are readying massive stimulus packages aimed at jump-starting flagging economies as central banks run out of room to cut interest rates. .......(more)

The complete piece is at: http://www.thestar.com/Business/article/556911