How Sound Is The Process Of Providing Government Stimulus Based On Keynesian Economics In A Country With A Large Fiscal Deficit?

Bertil Hatt answers the question correctly. But I think I”ll try to add an answer to WHY that trust is necessary.

I tend to criticize Keynesian advocates daily, Krugman included, for arguing under the pretense that people do not understand the Keynesian model and the value of Keynesian stimulus.  It’s not that they don’t understand.  Its that the act of providing such a stimulus rewards and expands the government and its influence.  And the citizens have become polarized, into the the masculine hierarchcal model (conservative aristocracy) and the feminine communal model (social democracy), and no longer trust the government to spend in favor of all, but in favor of their cultural constituency.

Small homogenous cultures tend to be redistributive.  One of the sillly myths, is that 350M americans of various value systems can be governed as are 10M northern european protestant germanics.  Majority rule assists us in selecting fiscal priorities when our interests and values are the same.  But as the values of a country become heterogeneous through immigration, or the breakdown of the nuclear family that allows women to return to their communal state of bearing children but asking others to pay for them, we render majority rule impossible. Because now we are not selecting priorities for the use of scarce resources, and generating laws to prevent privatization of those investment ‘commons’, but we are instead, generating laws to advance one system of moral codes at the expense of another, and using money from one group to achieve what is amoral to them.

This is why democratic government is limited to homogenous cultural entities.  And why the market serves us across heterogeneous entities.  Our institutions of majority rule are not competent to solve this problem of heterogeneous values.

So in a heterogeneous state, the Keynesian stimulus only works if the government can spend on investments that do not favor one constituency or another. And that is impossible.

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