Throwback

clipped from online.wsj.com The fallacies of Keynesian economics were exposed decades ago by Friedrich Hayek and Milton Friedman. Keynesian thinking was then discredited in practice in the 1970s, when the Keynesians could neither explain nor cure the double-digit inflation, interest rates, and unemployment that resulted from their policies. Ronald Reagan's decision to dump Keynesianism in favor of supply-side policies—which emphasize incentives for investment—produced a 25-year economic boom. That boom ended as the Bush administration abandoned every component of Reaganomics one by one, culminating in Treasury Secretary Henry Paulson's throwback Keynesian stimulus in early 2008. Mr. Obama quintupled down on Mr. Bush's 2008 Keynesianism. Rejecting Keynesianism in favor of fiscal restraint, France and Germany saw economic growth return in the second quarter this year. U.S. economic recovery and a permanent reduction in unemployment will only come from private, job-creating investment.