Should Governments Smooth Business Cycles?
If the economic cycles are a healthy sign, why even attempt to smooth out the cycles. By doing so, you would hinder technological progress. It is wrong to flatten them all out without discerning the underlying reasons.
Keynesians attempt to smooth out economic cycles, which they do not
appreciate. Their theory of economic cycles is built ironically on a basis
that lacks understanding of the subject. It should be named as a
counter-cyclical theory without a single chapter of economic cycles. We must
ask ourselves: if economic cycles are caused by technological progress, should
we also smooth out such cycles? If we did, we would hinder technological
progress. Is that desirable? Chapter 4 of the book, Marcoeconomics Has No
Clothes, will show that cyclical
fluctuations are a sign of a healthy and vibrant economy. We need to at least
differentiate the causes of cyclical fluctuations. It is wrong to flatten them
all out without discerning the underlying reasons. Keynes himself attributed
economic fluctuations to the animal spirits of entrepreneurs. However,
government officials possess animal spirits as well. Why is it that the animal
spirits of entrepreneurs lead to economic fluctuations while the same spirits
of government officials smooth out economic cycles? That is absurd.
Reviewed 27-10-2026 16:32