John Maynard Keynes was a smart man, and a full analysis of his ideas goes well beyond one blog post. But most people claiming to be “Keynesians” haven’t really read Keynes. Instead, they expound two nonsensical ideas that sound vaguely like Keynes: “government spending solves all problems”, and “people buying stuff creates economic growth”. Both can be easily disposed of.

For the first, note that all government spending comes from somewhere. Therefore, all government spending is at something else’s expense. If the government taxes, it’s at the expense of consumer goods. If they borrow, it’s at the expense of investments. If they print it, it’s at the expense of anyone holding cash. Government spending is only a win if the new use makes us better off than the original use. Sometimes it does. Often it doesn’t. But there’s nothing magical about government spending that solves all woes. Usually, this argument is just an excuse to spend more on some pet project.

For the second, this confuses cause and effect. A healthy economy highly correlates with consumer spending. A lot of not-very-smart people assume this means spending causes a healthy economy: the reason people are broke is because they aren’t buying stuff. But this is a logical fallacy. In reality, consumer spending is our goal, the thing we want. A healthy economy is the means of achieving that goal. The economy is the cause and spending is the effect. People aren’t broke because they aren’t buying stuff: they aren’t buying stuff because they’re broke.

This is easier to see if one looks at physical stuff, rather than money. In all but the very short term, production and consumption are equal. If consumption is low, there must be low production. It’s much, much easier to consume than produce: production is the hard part. Hence, our problem is that we need more production. At the individual level, no one is ever short of demand: a construction worker would happily buy a private jet if he could. He can’t because he can’t afford it, and he can’t afford it (on the average) because he can’t find sufficiently productive employment.