In an earlier post, we discussed the idea of leading Keynesian economist Robert Shiller to raise taxes but to spend the proceeds rather than apply it to deficit reduction. This wasn’t Shiller‘s first preference. That was to borrow more money for “stimulus” spending. But recognizing that expanding the deficit wouldn’t fly in today’s political climate, his fallback proposal was to tax more, especially the rich, and to spend this money.
We pointed out that among other things this would just take money from experienced managers and investors and give it to the government to spend. Did Shiller really think that the government was a better investor than the rich? The best jobs generator is investment rather than consumption spending, and not just any investment. It needs to be the most astute investment possible, for which you need astute investors. These qualitative factors ultimately dominate economic results, but Keynesians like Shiller willfully ignore them because they can’t be fitted into equations.
In the article below, Steve Forbes also reviews the continual efforts of the Japanese government to raise taxes following the pop of its real estate bubble in the late 1980’s and continuing to this day. Printing money and deficit spending have only dug Japan into a deeper and deeper hole. And raising taxes without using it to reduce deficits has only made it worse.
Japan is a laboratory for Keynesian experiments. Unfortunately for the Japanese the experiments have all been colossal failures.