More Keynes

I have been following a discussion of Keynesianism at an obscure journal of economic thought, and was struck by this observation:

...the main point is actually quite simple: Keynesianism stipulates that sometimes governments know better what people should do with their money than those people themselves.

This can only be true if those people fail to optimize their utility function i.e. behave non-rational[ly]..
.

I expect that this is true, even if I'm a little fuzzy about what looks like conflation of Pareto optimality and utility maximization, but I'm a little bummed by this rejection of the fundamental creation myth for governments. If there aren't circumstances in which governments are able to spend peoples money better than individuals can, why have governments at all? That's a very radical, even anarchist point of view.

The Whig view, Lincoln's view, and mine, is yes, there are economic functions that the government can do better than individuals. And sometimes that includes increasing spending to stimulate the economy. Unfortunately, the US has had a series of Republican Presidents (Reagan, Bush, and Bush, if you can't recall) who chose deficit spending at exactly the wrong times of the business cycle, and the debt they ran up severely limits our capability for the kind of response we need now.

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