What we lost at the Astor.(on the right)(economic policy)

NEW YORK, MAY 3

THIS is a morality tale, springing from the old saying, "I lost it at the Astor." For the benefit of the newborn (70 or younger), the Astor was a hotel with a famous bar popular with the young, at which seductions were frequently initiated, resulting in the loss of virginity. The Astor, reconceived in formal economic terms, usefully summons John Maynard Keynes as the great seducer--so that one can ruminate, with appropriate melancholy, on the theme of, "I lost it with Keynes." What was lost was the innate sense of national husbandry, which taught us that deficit spending was wrong. Why? Because it was simply wrong--not moral--to spend money you hadn't set aside.

Keynes taught us that deficit spending is morally neutral. It is simply an instrument of economic policy, useful in correcting maladjustments. If there is great unemployment, and the impulse to spend is anaesthetized, you get things like national depressions. To avoid these you need to deploy hot cash into the economy, such as will revitalize consumption, induce production, and restore full employment. Say's Law (Jean-Baptiste Say, 176-832) taught that there can't really be overproduction, because the appetite of man is infinite. If there is unemployment, that's because something has got in the way of the impulse to satisfy the appetite. In Keynesian doctrine, what got in the way was an imbalance between production and consumption which is mitigated by federal spending.

Keynes was absolutely right on that score, and for 60 years deficit spending has been approved even by people who thought themselves impregnable to the lures of misbehavior at the Astor.

But what crept into the act, with the acceptance of deficit spending, was an attitude of detachment toward the old principle that you should not spend what you do not have. And this detachment is degenerate, as witness popular political attitudes on the matter of Social Security.

President Bush didn't attack the Social Security problem in moral terms. He'd have been laughed out of town if he had attempted this, but that doesn't bar ...