“Priming the pump,” or “pump priming”–this is the key principle behind Keynesian economics: the idea that the state can–and should–artificially stimulate “aggregate demand” (as opposed to aggregate supply) to revitalize the economy.
It was an idea first pioneered by John Maynard Keynes, the eminent British economist adored by the American Left, and later perfected by various theorists, including John Kenneth Galbraith, the distinguished Harvard “economist” and noted socialist.
The idea was simple enough. To get out of a protracted recession, the government should spend, spend, spend, even if it incurs a substantial budget deficit in the process. The main aim was to stimulate the demand side and thereby spend the nation’s way out of the economic doldrums. Hence the phrase, “priming the pump.”
It was a revolutionary new way of spending the nation into unprecedented economic prosperity and vitality, rather than what we would normally expect: massive debt, bankruptcy and hyper-inflation. It captured the extraordinary imaginations of leftists everywhere.
Indeed, Keynesian pump-priming economics first took hold in America during the Great Depression. It was an economic school of thought cleverly exploited to justify President Franklin Delano Roosevelt’s notorious New Deal policies, which, incidentally, never did anything to end America’s greatest economic depression.
Despite the New Deal’s failed policies, however, old-fashioned Keynesian pump-priming continued to strangle world economies everywhere–wherever it was vigorously applied. It reached a high mark in the early 1970s, when President Richard M. Nixon, a Republican, ominously declared, “We are all Keynesians now,” and then proceeded to plunge the nation into extended inflation.
Only with the election of President Ronald Wilson
Reagan was America finally liberated from Keynesian pump-priming stagflation (high inflation, no growth). “In this present crisis,” President Reagan correctly declared at his first inauguration, “government is not the solution to our problem; it is the problem.” Sadly, it was a lesson never completely mastered by all.
Japan, for instance, is now flirting disastrously with that old Keynesian cure. At this very moment, billions of dollars of consumer vouchers are being promulgated to artificially stimulate Japan’s domestic consumption (that is, to once again stimulate the aggregate demand side).
Which, of course, naturally begs the question: Why not artificially stimulate the aggregate supply side? That is, why not massively subsidize giant Japanese corporations into producing myriad unneeded products and services?
What, after all, would be the crucial difference? Whether we are priming the pump or merely inflating the supply, we are still dealing with the same old folly: state-induced market distortions, as opposed to natural market equilibriums.
But who cares? As John Maynard Keynes himself once declared, “In the long run, we are all dead, anyway.” So go ahead, spend away! Make the liberals’ day!