Keynesian economics is popular with politicians because it espouses all sorts of things that politicians can and should do to fix a stalled economy.
Hayek’s Austrian economics holds that politicians will be creating more harm than good by doing the things Keynesianism approves of, and that there are only a few things that government should do. Those few things are generally loathsome to politicians because they offer little opportunity for political gain, as least not in the short term. Often the best course of action for economic improvement is for politicians to do nothing.
Examples of good economic times resulting from politicians following Hayek (of course, they had never heard of Hayek or his mentor Ludwig von Mises at the time) are the 1920’s the 1950’s. Harding did little about the panic of 1921 and within 18 months things were back to normal. Coolidge presided over good times in the 1920’s by doing basically nothing.
Examples of good times ushered in by Keynesian policies are ….well, there aren’t any. The Great Depression was caused by government overreaction to the stock market crash on Black Friday in 1929. If government had not restricted the money supply, enacted the Smoot-Hawley tariff, and raised taxes dramatically (all done by or under Herbert Hoover), the market crash would not have led to a recession that resulted in a run on banks that lasted until Roosevelt took office in 1933. But the recession would still not have turned into the Great Depression if Roosevelt had not inflicted the New Deal on America. The only thing that ended the Depression was events beyond the control of the politicians. WW II ended the New Deal and then the Depression ended.
Another example of good times when politicians restrained themselves was the 1950’s. Eisenhower decided he would rather play golf than meddle with the economy, and the country prospered as a result. He’s not remembered as a great golfer, he is remembered as a good president. There is political gain to be had by a politician for following Hayek’s advice, it just doesn’t come in time for the next election.
The difference between liberals and conservatives is that liberals believe raising tax rates at the highest margin will have little or no effect on production, and will enable them to effect greater re-distribution of wealth. Conservatives believe that raising taxes will change the rate of return on investment which will in turn change investment behavior leading to a reduction in production of good and services in the economy as the private sector retreats and government grows, resulting in less wealth creation and less wealth to be re-distributed by liberals.
Conservatives are right; liberals are wrong.
Excepting former Georgia governor and senator Zell Miller, all Democrats are liberals. Not all Republicans are conservatives, however. Some are liberals but differ in important respects from their Democrat counterparts. Republican liberals don’t generally believe much of the nonsense that true liberals believe but they think they will gain politically be adopting some of the liberal jargon and policies, or at least pretending to. Even though they aren’t firmly committed to the liberal ideology they like being in charge of government for the opportunity to control the finances of the country. They know how money talks and they want to have that power. They don’t much care for conservatives and they don’t have any more commitment to conservative principles than for liberal ideology. Seen in this way, liberal Republicans can be more harmful to the country in terms of achieving good government and wise economic policies because they will join forces with liberal Democrats whenever they think it will help them maintain and increase their personal political power. One party pushing liberalism but being held in check by a conservative party is less dangerous to liberty and prosperity than one liberal party running amuck and half the other party going along for the ride, with the conservative wing being forced to operate at half strength while being betrayed by those who should be helping them stop the Democrats.
Examples of such opportunistic liberal Republicans include the obvious such as Lisa Murkowski of Alaska and Snowe and Collins of Maine; sadly, Scott Brown of Massachusetts appears to have joined them. Less obvious and less avowed but still dangerous to limited government and individual liberty are George W. Bush and Mitt Romney. These Republicans are not flaming liberals but they are not conservatives either. They are nevertheless quite worthless to the conservative cause of preserving the sort of government the founders created.
The choice between another four years of Obama with Republicans in control of both houses of Congress (as seems probable), or 4 years of a Romney presidency with Republicans controlling both houses, appears to be Hobson’s Choice. That usually means that while there are two choices apparent, the choices are a matter of form only. The substance is only one choice, and it’s a bad one. The lesser evil would be, in my opinion, to keep Obama with Republicans in control of Congress. Even the liberal Republicans in Congress will understand they have nothing to gain politically in helping Obama impose socialism on the country. The upshot is the country would be better off with an Obama/Republican Congress than a Romney/Republican Congress because four years of Romney pushing liberal policies and Republicans going along because they don’t want to oppose their president will destroy conservatism for good, as the 8 years of George W. Bush so weakened it that we got Obama and a solid Democrat Congress from 2008-2010. In just 2 years that combination so wrecked the economy it will take years to fix it. If the patient is left in the trauma center waiting room for 4 more years because of liberal Republicanism without any counter balance, we’re toast.