Stimulus packages are politically popular, but do they make economic sense? Russ Roberts explains the problems with public policy measures intended to provide short-term economic stimulus.
A less measured way to put this would be, why Keynesianism was wrong in 1936, 1956, 1976, and will be wrong in the year 2056. In other words, Keynesianism is just wrong analytically and practically as argued by both Hayek (analytically) and Friedman (practically). But it does have a powerful lure politically that has persisted despite its intellectual defeat by first Hayek, then Friedman, and finally by Lucas. Perhaps nobody has explained why it has such political sway as well as James M. Buchanan, starting with Public Principles of Public Debt and continuing in Democracy in Deficit: The Political Legacy of Lord Keynes (with Richard Wagner).
Hopefully, the listeners of NPR will hear Russ Roberts's reasoned argument and pay attention to what he is trying to say to them about the less than stellar track-record of policies that attempt to provide economic stimulus, as compared to the success of policies that promote long run economic growth by structuring and aligning incentives so that we are more productive and more innovative.