This Is the Biggest Mistake Conservatives Make About Keynes

In the long run, critics misinterpret what he meant by the 'long run'

(Wikimedia Commons)

Here's some completely irrelevant information. John Maynard Keynes was bisexual and never had any children. His wife Lydia suffered a miscarriage in 1927.

Now, the sexual lives of economists don't usually come up in policy discussions, or anywhere else for that matter, but they did last week. Speaking at an investing conference for individuals with at least $2 million in liquid assets, Harvard historian Niall Ferguson said Keynes was wrong because he was too short-termist, and he was short-termist because he was gay and childless.

You read that right.

To his credit, Ferguson has offered an "unqualified apology" for his "stupid" and "insensitive" remarks. But to his discredit, this is far from the first time he has imputed Keynes' policy views to Keynes' sexuality. For one, Cambridge professor Michael Kitson recalls hearing Ferguson make the same argument in a seminar 20 years ago. For another, Ferguson suggested in his book The Pity of War that Keynes may have opposed the Versailles Treaty, not because it was a short-sighted disaster, as Keynes argued, but rather because he had a crush on the German negotiator (a claim Ferguson made in even stronger terms before). But, of course, as Jonah Goldberg of National Review points out in a majestically thick-headed piece, this conservative obsession with Keynes' bedroom partners is hardly new: It's an attack that's been around since Joseph Schumpeter first made it in the 1940s.

And it's as illiterate as it is bigoted.

The idea that Keynes didn't care about the long run is based off a fundamental misreading of what he said about it. Here's Mark Steyn of National Review with a typical example of this:
In his pithiest maxim, John Maynard Keynes, the most influential economist of the 20th century social-democratic state and the patron saint of "stimulus", offered a characteristically offhand dismissal of any obligation to the future: "In the long run we are all dead."

Context is always important, but it's particularly important in this case. Here's the full quote from Keynes' A Tract on Monetary Reform:
But this long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.

In other words, Keynes was saying economics has to do more than just tell us how the world works when the world works. It has to tell us how the world works when it doesn't -- and how to make it work again. An economist who only says our problems will eventually go away is no better than a doctor who says the same of illnesses. This is not a call to ignore the future, but rather to stop ignoring the present.

But the reality of what Keynes said hasn't stopped conservatives from arguing against their strawman version of it. Even people who should know better. For instance, here's what Harvard professor, and former George W. Bush economic adviser, Greg Mankiw wrote in the New York Times back in November 2008:
Passing a larger national debt to the next generation may look attractive to those without children. (Keynes himself was childless.) But the rest of us cannot feel much comfort knowing that, in the long run, when we are dead, our children and grandchildren will be dealing with our fiscal legacy.

This is stupendously wrong. Once again, there's the insinuation that Keynes didn't care about the long run, and that this may have been because he had no children of his own. But Mankiw doesn't mention that Keynes wanted governments to run surpluses during the good years. (Perhaps Mankiw omits this because the Bush administration didn't do so?). Indeed, Keynes characteristically had an aphorism for this too: The boom, not the slump, is the time for austerity. It's what Henry Farrell and John Quiggin call "Hard Keynesianism", and it isn't exactly what you would expect from someone who supposedly didn't care about the fiscal consequences of the stimulus.

It's ridiculous to say someone who wrote an essay on the Economic Possibilities of Our Grandchildren, as Keynes did, didn't think about the future. It's even more ridiculous to ascribe this made-up position to his sexuality or childlessness. If these are the best arguments conservatives have against running bigger deficits when interest rates are zero, then maybe we are all Keynesians now.

Or in the long run, we will be.