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Conservatives Favored Deficits Before Keynes

Originally Published on the Huffington Post

Believe it or not aggressive deficit spending was a conservative idea before it was a liberal one. In 1932 with unemployment over 20 percent, the Great Depression in its fourth year, and four years before John Maynard Keynes made deficit spending respectable among liberals, the founders of the famously conservative Chicago School urged then-President Herbert Hoover to spend aggressively to revive growth and employment. Those who Milton Friedman himself identified as the founders of the school —- Frank Knight, Lloyd Mints, Henry Simons, and Jacob Viner —- all backed big deficits.

Americans need to understand the reasoning of the Chicagoans and of Keynes then and its relevance now. Sadly, politicians and the public 80 years after the Depression still don’t understand why economists are overwhelmingly urging more spending until the recovery gets stronger. They still believe that balancing the budget is “common sense” although plain