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Author Topic: economics sub-board should be removed  (Read 3828 times)
amincd
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June 22, 2011, 03:49:02 AM
 #41

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I think this right here is the crux of our difference. Nothing I have read of Keynes suggests that his ideas are about extending government action beyond its primary responsibilities.

But Keynes either does not believe the government's responsibilities are solely to solve the free rider problem, or he thinks that a decline in aggregate demand is a result of the free rider problem, without providing an adequate explanation for why.

His 'paradox of thrift' theory makes a number of assumptions, like prices dropping discouraging production, people not being able to use alternate currencies to carry on trade when the supply of a particular currency deflates, gold production not increasing in reaction to a decline in the money supply, etc.

It's a sloppy theory, that aims to find evidence to fit a neat and highly speculative conclusion, rather than find a conclusion that fits the evidence.

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I happily admit that Keynes model of the economy does not represent a number of things in real life, there are fair grounds to disagree with him, but don't forget that models are just that, simplified maps of reality the purpose of which is to try and capture certain relationships or behavior. Keynes did a lot for macro-economics, he basically founded the study. I just think criticisms of his ideas should be more constructive and not just used as a banner by metalists, rightwingers, libertarians etc to rage and condemn 'Progressives" or "Liberals" or 'Socialists' or 'fiat' or whatever their problem is. He certainly did not consider inflation a good thing.

I don't think Keynes' ideas can be criticized enough. They are immensely destructive.

As one example:

The Second Coming of Keynes

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You see, the fiscal stimulus might as well be literally filling holes, since according to Keynes's ridiculous understanding of how an economy works, it doesn't matter what the government spends money on; even digging up holes just to refill them would qualify as beneficial stimulus. You might think that this must not be literally true. "Keynes may have been wrong on some things," you may protest, "but no economist as prominent as him would believe something so foolish!" Read the man's words for yourself:

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If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coal mines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.

The above passage is not some off-hand note written to a colleague in a fit of academic speculation. It is part of Keynes's chief contribution to economics, upon which his reputation rests: The General Theory of Employment, Interest, and Money. I don't care how prominent, credentialed, or "accomplished" an economist is. If he says that burying cash in the ground can be a boon to society, then he should be immediately dismissed from public and academic discourse.

The simple fact that Krugman regards such a fellow as an exemplar of economic scholarship would be highly telling by itself. "Okay," you might think, "Keynes was a bit extreme. But Krugman himself wouldn't go so far as to believe something like that."

Wrong again. In April, Krugman actually bemoaned the fact that Obama's stimulus projects were under budget.

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President Obama hails the fact that stimulus projects are coming in ahead of schedule and under budget. Yay — but boo.
Ahead of schedule is good. Under budget — well, ordinarily that's a good thing. But the point of the stimulus is to increase spending!

That's right: Krugman would, all other things being equal, prefer government stimulus spending to be inefficient. He then goes on to quote the very same ridiculous passage from Keynes's General Theory, which I quoted above, but favorably. And the title of the piece in which he made this complaint? "Time for Bottles in Coal Mines."
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June 22, 2011, 11:16:34 AM
 #42

The difference is Keynes emphasis on distribution and consumption of wealth, versus those that emphasize saving and investment. Keynes seems to be more interested in how income flows around the economy, even through make-work projects that everyone gets to wet their beak in. You'll probably disagree with that if you beleive that spending should not take place unless it is efficient and profitable. One could see this as a matter of paying as few people as little as possible for as much work as possible. But that may undermine the ability of people to buy the stuff you've invested in making. In the Depression the income stopped flowing, seems this affected Keynes thinking.

Krugman sounds like a dick, the bail-outs have not circulated through the economy in any way I would describe as Keynesian, welfare for the banks is all it was. Would have been more Keynesian to just hand the money directly to households. I understand that some of the money made its way to local government spending (building roads and so on) but mostly in a retarded kind of way. But covering the banks asses so they can sit on it and not lend it out into the economy isn't Keynsian in my opinion, and that's not even assuming Keynsianism is a good thing.

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June 22, 2011, 12:15:02 PM
 #43

The difference is Keynes emphasis on distribution and consumption of wealth, versus those that emphasize saving and investment. Keynes seems to be more interested in how income flows around the economy, even through make-work projects that everyone gets to wet their beak in. You'll probably disagree with that if you beleive that spending should not take place unless it is efficient and profitable. One could see this as a matter of paying as few people as little as possible for as much work as possible. But that may undermine the ability of people to buy the stuff you've invested in making. In the Depression the income stopped flowing, seems this affected Keynes thinking.

This make absolutely no sense, as I have tried to explain to you. You need to go deeper into keynesian though to understand its flaws. You just took a quick course and took it as faith and that is a problem.

Even in the case that you are paying people less, you are also producing cheaper, thus the level of consumption of the people does not get affected. In reality what happens is that because prices are somehow more sticky than other prices, the prices of the goods go down quicker than the wages, thus benefiting the poor people. Keynesianism is the contrary.

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Krugman sounds like a dick, the bail-outs have not circulated through the economy in any way I would describe as Keynesian, welfare for the banks is all it was. Would have been more Keynesian to just hand the money directly to households. I understand that some of the money made its way to local government spending (building roads and so on) but mostly in a retarded kind of way. But covering the banks asses so they can sit on it and not lend it out into the economy isn't Keynsian in my opinion, and that's not even assuming Keynsianism is a good thing.

But this is another problem of keynesianism: not taking into account how the political system works. You can not give power to the government and then when the political system does not act exactly as you have prescribed complain. Politicians have their own self-interest, and if you give them power they will use it, not necesarely how you have prescribed. Maybe the only realistic solution is for the politicians to not have so much power.
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June 22, 2011, 01:49:38 PM
 #44

Quote from: ~~~~~~
The difference is Keynes emphasis on distribution and consumption of wealth, versus those that emphasize saving and investment. Keynes seems to be more interested in how income flows around the economy, even through make-work projects that everyone gets to wet their beak in. You'll probably disagree with that if you beleive that spending should not take place unless it is efficient and profitable.

Keynesianism believes in the broken window fallacy, which is seductive to those with political influence/power, as its implication is that a government action they propose (e.g. digging ditches and burying old bottles filled with bank notes, government spending programs, etc) could actively improve people's lives. If widely accepted, it would make their role in the eyes of the public potentially much more important and positive.

Being solely the arbitrator of disputes, and balancing the rights of various constituents as they decide on the use of public goods, is less glamorous and more laborious, but IMO, that is the most a government can do to contribute positively to society.
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June 22, 2011, 06:20:25 PM
 #45

this section is a joke
most of the posters here (all of them) know very little (absolutely nothing) about economics
even if they did it's not a riveting subject
I do like some of the threads that cause people to sell but they could easily be in the bitcoin discussion

If the section was closed people would just post the same crap somewhere else.
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