It is ironic that Joseph Stiglitz waited until he gained the credibility of sharing the Nobel Prize in Economics to become an unabashed cheerleader for Keynesian economics, especially when it comes to suggesting policies for Japan. Receiving the universally recognized accolade allowed him to come out of the closet to support a body of economic thought that had recently been thoroughly discredited by notable failures.

Now he and other promoters of Keynesian economic theories are "outing" themselves to encourage governments to engage in active policies to manage levels of demand and consumption. Their selective memory blithely reveals a gap that overlooks stagflation of the 1970s, soaring public-sector deficits of the 1980s and 1990s and relentless growth in government control over private lives during most of the postwar period. It would be wise for the rest of us to resist their belief that governments can fine-tune an economy by making adjustments in taxes or government spending or manipulating interest rates.

This caution is offered since there is a dearth of evidence to support their views. As it is, Keynesian policies are based upon a widely accepted fallacy that economic growth is driven by demand, especially consumption spending. Perhaps unwittingly, those who support this view see savings as a nonessential and even counterproductive activity that undermines the health of the economy.