The Congress and the Deficit

A New Kind of Keynesian?

by Elaine Schwartz    •    Apr 2, 2012    •    378 Views

Reading about John Maynard Keynes’s investing acumen in last Saturday’s Wall Street Journal, I wondered whether being a Keynesian could involve more than your attitude about the role of government.

So, as a teacher, I created this “Am I a Keynesian?” quiz:

  1. When you get your lowest mark in economics on a standardized test, do you blame the test writers? On the British civil service examination that got him a job in the India Office in 1907, Maynard Keynes received the second best grade. Hearing that he had fared worst on the economics section of the exam, he said, “I evidently knew more about the Economy than my examiners.” And, he was right.
  2. Do you own an auspicious art collection? Using profits from currency speculation in 1919 and 1920, Keynes purchased paintings by Seurat, Picasso, Matisse, Renoir and Cezanne.
  3. Are you a good investor? Keynes was an extraordinary investor. Reacting to his mediocre record during the 1920s, he switched his investing style from a macro approach to a long term bottom-up stock picking perspective and his returns soared. The results have been cited as better than Peter Lynch, Warren Buffett and John Templeton.
  4. During the morning, do you remain in bed to sip your tea, read reports, and call stockbrokers? Every day, for a half hour after awakening, Keynes started working in bed.
  5. Would you like to marry a Russian ballet dancer? Described by Sylvia Nasar as, “a Russian ballerina with a voluptuous body and a droll sense of humor but no obvious intellectual interests,” Lydia Lopokova married Keynes in 1925. (The Keyneses honeymooned at her parents’ home in St. Petersburg. He had a lot to say about the Russian economy.)
  6. Do you sound like a mathematician? Having met with Keynes during the early evening on May 28, 1934, FDR said, “he had ‘a grand talk with Keynes and liked him immensely’ but complained that he talked like a ‘mathematician.'”

During his talk with FDR and in a subsequent NY Times letter to President Roosevelt, Keynes recommended deficit spending to jumpstart the economy.  And that is why, today, those of us who supported the $800 billion, 2009 stimulus spending are Keynesians.

My sources: The Worldly Philosophers by Robert Heilbroner, Grand Pursuit by Sylvia Nasar, John Maynard Keynes by Robert Skidelsky, Keynes and Hayek: The Clash That Defined Modern Economics by Nicholas Wapshott. And, this WSJ article.

 

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