Record spending...record deficits, sovereign debt near collapse and the world wide economy is still slow, unemployment is still high and no one seem to believe that the debts will ultimately be repaid. Is this finally then end of the disastrous recent revival of Keynesian economics? The Wall Street Journal thinks it might be.
Today's G-20 meeting has been advertised as a showdown between the U.S. and Europe over more spending "stimulus," and so it is. But the larger story is the end of the neo-Keynesian economic moment, and perhaps the start of a healthier policy turn.
For going on three years, the developed world's economic policy has been dominated by the revival of the old idea that vast amounts of public spending could prevent deflation, cure a recession, and ignite a new era of government-led prosperity. It hasn't turned out that way.