Writing in the Wall Street Journal on December 24, 2008, Martin Feldstein gives us an article entitled "Defense Spending Would Be Great Stimulus." The title tells you everything you need to know: military Keynesianism is the medicine being prescribed by a leading figure of the politico-economic Establishment – a Harvard professor, former chairman of the Council of Economic Advisers, former president of the American Economic Association, president emeritus of the National Bureau of Economic Research, and member of the President's Foreign Intelligence Advisory Board. That a man so drenched in professional honors and attainments would be peddling such long-discredited claptrap speaks volumes about the state of mainstream economics. When you think it can't sink any lower, it does.Feldstein opines that "countering a deep economic recession requires an increase in government spending to offset the sharp decline in consumer outlays and business investment that is now under way. Without that rise in government spending, the economic downturn would be deeper and longer." This statement encapsulates the essence of vulgar Keynesianism. It would seem that Feldstein, like nearly every other lion of the mainstream economics profession, failed to notice that by the very empirical-test standard the profession considers sacrosanct, this theory was decisively refuted by the events of 1945–47 – or perhaps the mainstreamers believe that after their model had, as they see it, proved its mettle so beautifully on the upside from 1940 to 1945, its abysmal failure to predict from 1945 to 1947 need not be taken seriously.
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