Whither the Dems?

Everybody wants more cash, right? -- Current TV ad

   Without enough votes in the House of Representatives to push through their programs, and with an opposition determined to stall or undermine President Obama at every opportunity, can we expect any progress at all?

   Here's some background. The nation may be facing an economic showdown between followers of John Maynard Keynes and Friedrich von Hayek; between those Keynesians who believe that government intervention is sometimes necessary to prevent a complete breakdown and those Hayekians at the extreme end who believe that government should never intervene in the economy at any time in any way under any circumstances, ever.
   Both economists lived through major crises in the first half of the 20th Century. Hayek as a young man in Austria saw the collapse of the economy in the aftermath of World War I. Keynes, a few years older, saw the dangers of punitive "peace" talks as the war ended, and later the need for government help to rescue a faltering economy during the Great Depression.
   Who was right? Each has valid points. Hayek and his followers, including Milton Friedman of the University of Chicago, warn of excess money supply. As Friedman put it, "Inflation is always and everywhere a monetary phenomenon." They warn that pumping extra money into circulation is self-defeating, in that it raises prices beyond the reach of those who need help most. This is the catastrophe that fell on Europe after World War I, and they blame government intervention for ruining things by printing extra money and causing hyperinflation.
   Keynes, on the other hand, noted that at a time of crisis, something -- anything -- must be done to get the money -- and thus the economy -- moving again. If the private sector cannot or will not, government must. If extra cash helps, even at the risk of some rise in price, so be it. Later, when the economy recovers, government can pull back and deal with debt and deficits.
   Kayek and his followers insist, however, that no government intervention is ever warranted. Left alone, the economic body will heal itself, and the long-term price of high inflation is too much to pay for short-term benefit.

   So one part of the solution is for the GOP to listen to what they may -- or may not -- perceive as a mandate from the electorate for cooperation. Another part is for the Administration to stand ready for compromise but not to lose sight of the long-term need for a balanced budget and debt reduction.