What happened to Goldilocks?
Three decades ago, both President Richard Nixon and Milton Friedman announced that “we’re all Keynesians now.” Since that time, Keynesian economic policy has remained out of favor both in the ivory towers of academia and in our nation’s capital. Every president from Jimmy Carter forward reduced the presence of government in our society. Since the early 197Os, not only were “welfare” programs cut but federal government also reduced its support for state governments, slowed growth of defense spending as the Cold War wound down, and increased payroll taxes in a series of steps — all of which simultaneously reduced the role of government while tightening the fiscal stance. In the international sphere, the United States pushed privatization, globalization, and free trade as the Washington Consensus reduced protection for workers, consumers, and the environment around the world. And it all seemed to work — at least for America — as we enjoyed a cornucopia of Goldilocks growth in the secon
