JMK for Dummies, Abridged, Revised and Further Abridged Edition

by the Sandwichman

Once upon a time, Paul Krugman wrote, "Taken in moderation, green cheese can be good for your health." That was good enough for Argentina in 2000. But for the US in 2009, Professor Krugman has revised his prescription in accord with Barry Goldwater's famous maxim, "extremism in the defense of recovery is no vice; moderation in the pursuit of economic growth is no virtue." To put Krugman's green cheese reference in context, though, it would be helpful to examine the evolution of the concept since John Maynard's use of it in his General Theory of Employment, Interest and Money.

The original read as follows:

Unemployment develops, that is to say, because people want the moon; — men cannot be employed when the object of desire (i.e. money) is something which cannot be produced and the demand for which cannot be readily choked off. There is no remedy but to persuade the public that green cheese is practically the same thing and to have a green cheese factory (i.e. a central bank) under public control.

What was needed to operationalize Keynes's prescription was a mathematical model. But even metaphorical green cheese would tend to gum up the works of such a model, so the Harrod and Domar version of Keynesianism dutifully substituted economic growth for full employment.

Unemployment develops, that is to say, because people want employment; — men cannot be employed when the object of desire (i.e. full employment) is something which cannot be produced and the demand for which cannot be readily choked off. There is no remedy but to persuade the public that economic growth is practically the same thing and to have an economic growth factory (i.e. a central bank and expansionary fiscal policy) under public control.

By the late seventies, old time religion Keynesianism was knocked off its pedestal by Hayek and Friedman. So a revised, non-accelerating inflation rate of unemployment edition had to be developed under the editorship of Alan Greenspan:

Inflation develops, that is to say, because people want economic growth; — men cannot be employed without inflation when the object of desire (i.e. growth) is something which cannot be produced and the demand for which cannot be readily choked off. There is no remedy but to persuade the public that embezzlement is practically the same thing and to have an embezzlement factory (i.e. a central bank) under public control.

Superficially, one might assume that with the Greenspan version, green cheese had pretty much reached the end of the road. But no. In keeping with the high-speed communication nature of the Internets, Keynes's General Theory of Employment, Interest and Money can now be expressed as a four letter acronym, "ICHG":

I Can Has Greencheeze?

(Funny cat photo to follow in due course.)