US economy: less volatile

[Doug Henwood]

The August issue of the New York Fed's Current Issues in Economics & 
Finance  <http://www.ny.frb.org/rmaghome/curr_iss/ci5-13.html> is an 
interesting study of the reduced volatility of U.S. GDP growth since 
1984: all components, as well as overall growth, have shown a 
smoother pattern over the last 15 than earlier decades.

This is somewhat counterintuitive to anyone schooled in Keynesianism; 
the 1984 breakpoint coincides pretty well with the onset of the 
Reagan boom, when countercyclical stabilization policies were 
renounced and pretty much everything had been deregulated. 
Keynesianism was supposed to stabilize the economy, reduce 
uncertainty, and calm anxieties about the future. As Negri put it, 
the Keynesian state

"must take on the function of guaranteeing the basic convention of 
economics. The state has to defend the present from the future. And 
if the only way to do this is to project the future from within the 
present, to plan the future according to present expectations, then 
the state must extend its intervention to take up the role of 
planner, and the economic thus becomes incorporated in the 
juridical.... [The state] will not guarantee the certainty of future 
events, but it will guarantee the certainty of the convention.... In 
effect, the life of the system no longer depends on the spirit of 
entrepreneurialism, but on liberation from the fear of the future."

What's it all mean? Is this further proof that Keynes was full of it?

Doug