Mankiw is always someone who I question a little, just in principle. Supposedly he's a "New Keyensian." As he's a Keyensian-of some sort, even if "New" you'd logically assume surely then those of us who are Keyensians, even if "old Keynesians" would expect find sometihing in common with him. Yet it's not easy for me to find much to agree with.
For one thing while he's some kind of "Keynesian" he is also a Republican-I know of no Democrat he's worked with and he was the point man with the Bush Administration and now is working with Romney's campaign. I must admit that for me Keynsian and Republican are a contradiction in terms.
While Mankiw wrote one of the first programmatic papers for the new New Keynesianism back in 1992 this New Kennesianism had nothing good to say either about Kenyes himself or much if his work especially The General Theory, and claimed the very name New Keyneisian was a misnomer. Her certainly left little ground for why he was using the Keynesian name at all.
While he didn't explain it, the reality was it was due to an intellectual need. Monetarism had failed, Friedman's rule about the money supply wasn't tenable and there was a vacuum. That's the reality why someone like Mankiw had to become a "New Keynesian" as much as he probably would prefer not to.
How obvious this is shows when he grasped at the pretty thin straw of Scott Sumner's claim that Keynes was not a great investor and this is proved by the fact that in 1920 he lost money on an investment and needed his father to bail him out.
Mankiw pounced on this absurdly declaring he'll "never again believe it when someone tells me Keynes was a great investor" as if having a benefactor proves you aren't a good investor. So does this mean that all the trading units at Goldman Sachs, Bank of America, and Citi are not good investors either because they had the government as their benefactor. At least Keynes' wasn't on the public dole.
In any case let's take a look at Mankiw's paper which attacks fiscal stimulus. This was at the time when there was debate over President Obama's stimulus:
"Yet many Americans (including quite a few congressional Republicans) are skeptical that increased government spending is the right policy response. Their skepticism is motivated by some basic economic and political questions:If we as individual citizens are feeling poorer and cutting back on our spending, why should our elected representatives in effect reverse these private decisions by increasing spending and going into debt on our behalf? If the goal of government is to express the collective will of the citizenry, shouldn’t it follow the lead of those it represents by tightening its own belt?"
http://www.brookings.edu/~/media/Files/Programs/ES/BPEA/2011_spring_bpea_papers/2011a_bpea_mankiw.pdf
Admire the casuistry of this argument. If you are having trouble making ends meet, you don't want to government to help you as this reverses your private decision! If your daughter needs an operation-if she doesn't have it she dies-and the insurance companies wont give it, I'm sure you'd be outraged if teh government tried to help you make sure she gets her life saving operation. No, you'd rather it sit with it's hands in it's pockets and "respect your tightening your belt by tightening it's own."
In fact as MMT shows us, it's precisely when the prvate sector has to tighten it's belt that we want the public sector to make up the short fall. It's wholly illogical to argue as Mankiw does that it's somehow democratic government for the government to copy what every posture the private sector is taking at any moment. To the contrary it's the opposite.
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