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February 04, 2009

Theodore Dalrymple asks, are we all Keynesians now? Or might Keynesianism mean quite different things in Britain and Germany

Posted by Theodore Dalrymple

Theodore Dalrymple considers how a term Keynesianism changes its meaning as it travels from Britain to Germany.

We are all Keynesians now, or so many newspapers and journals have sought to persuade us: by which is meant that we all believe in government stimulus of the economy, no matter what it is that is to be stimulated. This is especially the case after the cautious Germans, with less than wild enthusiasm, agreed to apply a 50 billion Euro whip to goad to their economy into life, or at any rate to bring it back from the dead.

The interesting question, however, is not whether we are all Keynesians now, in the newspaper-sense of the word, but whether, if we were, we should be right to be so? That is somewhat more difficult to decide, and is not simply a matter of canvassing opinion and counting heads.

One of the things that has struck me most about the commentary, at least that I have read, is its high level of abstraction, as if the particular circumstances and propensities of different countries did not matter very much or have any effect on what the correct policy (if there is such a thing as correct policy) should be.

For example, no one alluded very much to the differences between Britain and Germany: as if both countries were suffering from the same pneumonia and needed the same antibiotics for cure. But while Germany is a producing country, Britain is a consuming one; Germany has levels of personal indebtedness a third of Britain's, and it has a huge trade surplus while Britain has an equally huge trade deficit; and Britain's public debt is set this year to overtake Germany's (and would probably long have done so had we even minimally honest methods of public accounting).

There are other less tangible, but very important, differences that give Germany more room for manoeuvre without bringing about catastrophe. The German public administration, mulishly bureaucratic as it no doubt is, is much more honest than the British, which is equally mulish but in addition has found a way, with government blessing and encouragement, of legalising peculation on an unprecedented scale. This is not an unimportant consideration when public works are being considered as a way of reviving the economy.

Here the story of the Scottish parliament is instructive and emblematic. Originally estimated to cost 40 million, in the event it cost more than 400 millions: and all to establish yet another layer of politico-bureaucratic control for the ultimate benefit of the small but ever-growing class of what the Spanish and Latin Americans, with superb and justified contempt, call politiqueros. The Welsh Assembly building cost more than five times the original estimate.

Then there are the Olympics. They are well on their predictable way to costing some large multiple of the original estimate if estimate is quite the world I am looking for. They, too, are an illustration of what is now the first law of British public administration, the consequence of moral, intellectual and financial corruption: namely, that it can absorb almost any amount of money without marginal benefit to those who pay for it. (Here I cannot forbear from commenting on and praising the principled and intelligent refusal of the Indian government to encourage - ie subsidise the participation of Indian athletes in the great four-yearly festival of xenophobic futility.)

It is now quite beyond the mental resources of the British government and its administration to distinguish between the worthwhile and the worthless, the important and the trivial, investment and frittering, even should it wish to do so. (We are ruled by people who have achieved the remarkable distinction of being both dull and frivolous.) Capital expenditure is not the same as investment, as many communist countries, with high levels of such expenditure, found to their cost: or should I say, to their people's cost. This is not a new observation.

Let us take the question of school buildings, upon which some small part of extra expenditure will be spent. (I leave aside the interesting but irrelevant question whether British architects are by now capable of designing and building anything other than gimcrack eyesores.)

It is, or should be, obvious that school walls do not an education make. The reasons for our low standards are no doubt complex, though they include the radically unsocialised nature of many children when they enter school, thanks in part, but not exclusively, to the government policy of encouraging and subsidising family disintegration; the idiotic pedagogic theories long peddled in teacher training colleges and put into practice by educational bureaucrats; and government bullying of the teaching profession, by means of the imposition of meaningless, absurd and easily corruptible procedural outcomes. Bad school buildings would have to be very bad indeed - a straw hut in Antarctica, say before children could not be taught to read in them.

The relation between good school buildings and a good education is roughly that between the Parker Morris housing standards and an urban environment in which people enjoy their lives. These were as follows: In one, two and three bedroom dwellings, one water closet is required, and it may be in the bathroom. A semi-detached or end-of-terrace house for 4 people should have a net floor area of 72 square metres. A dwelling for three or more people should have enclosed storage space for the kitchen of 2.3 cubic metres.Dwellings should be fitted with heating systems that maintain the kitchen and circulation space at 13 degrees Celsius, and the living and dining spaces at 18 C, when the external temperature is -1 C.

No doubt excellent in themselves, they were less than utopian in their effect upon town planning, and the official mind, once it realised this, then built concrete-bunker community centres in which the demoralised youth of Parker-Morris-land could safely traffic in drugs.

I shall not here go into the vexed question of the connection between length of education, or attendance at supposedly educational establishments, and the success of an economy. Suffice it to say that life without literacy is very hard for individuals in the modern world, and I seem to be one of the few who are outraged that we persist, despite the expenditure on education of four times as much per head of population as in 1950, in refusing to teach a large part of the
population to read fluently and add up. This is an illustration, of course, of the first law of British public administration; it is far from clear that the building of better, or at least different, walls is the answer to the problem.

What Keynesianism means in Britain, then, is the temporary propping up of the standard of living of people, particularly those employed by or economically dependent on the public administration, until such time as there is a collapse ending in general impoverishment or degradation, and humiliating resort to the IMF. There is a good chance, fundamentally for cultural reasons, that Keynesianism would mean something different in Germany.

In short, economics is not just a science in which a few variables can be altered to bring about a desired result: it is a humanity as well. To think of economics as pulleys and levers is to end up with a Heath-Robinson contraption, but one that will be disastrous rather than merely amusing and ridiculous.

I do not have the solution. If I were Chinese, I suppose I might say that the British people and its government had lost the mandate of heaven.

Theodore Dalrymple is a writer and worked for many years as an inner city and prison doctor. He is the author of the author of Junk Medicine: Doctors, Lies and the Addiction Bureaucracy.


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Jeez Doc, don't hold back. Tell us what you really think, would ya'?

Posted by: RKV at February 12, 2009 08:52 PM
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