How to Think Like a Keynesian

Currently economists are debating whether the stimulus worked. The President's economists state that spending about $200B created about $400B in GDP net net. If the payoff is that high clearly we should spend more, way more. As Hayek said, ultimately, facts drive policy disagreements.

The empirical logic used, however, is often quite twisted. Here's Cato's Dan Mitchell with an analogy:

Next time I see my buddies, I’m going to claim that I enjoyed a week of debauchery with the Victoria’s Secret models. And if any of them are rude enough to point out that I’m lying, I’ll simply explain that I started with an assumption of spending -7 nights with the supermodels. And since I actually spent zero nights with them, that means a net of +7. Some of you may be wondering whether it makes sense to begin with an assumption of “-7 nights,” but I figure that’s okay since Keynesians begin with the assumption that you can increase your prosperity by transferring money from your left pocket to your right pocket.