Keynesian economic theory

[Hermit]

What has happened in the United States is what happens when all the original platform of the Socialist Party is enacted into law.

[Horwood Beer-Master]

"There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs." - John Rogers

[JOZeldenrust]

All idealised societal models are doomed to failure because mankind is not ideal. Mankind is unpredictable, capricious, prone to acting against his own best interests and, capable of great acts of altruism and selfishness in equal measure. That doesn't make man evil or impure, merely human.

If ideal systems have nothing to do with human nature, what makes them ideal? Capitalism as proposed by Adam Smith, von Mises, von Hayek, and many others (yes, including Ayn Rand) was based on their understanding of human nature, not some other-worldly, pipe-dream "ideal."

Read up. Start with Hayek.

Seriously, Austrian economic theory? I could respect it if you went with the Chicago school, but goldbugs?

Keynesian economics got us out of the depression in the 1930s (largely accidentally, but going to war is increasing governement spending), and has made sure nothing like that happened again.

The countries in Europe least affected by the current economic downturn are the ones with strong systems of social security, i.e. Keynesian systems.

Because interest rates have been structurally too low during the 1990s we're in some economic hard times at the moment. Did Keynesian theory tell Greenspan it's a good idea to lend money to people who stood no chance of repaying their debts? That's what loan sharks do. Not really a regulated market.

[hiyymer]

Keynes specialized in generating arguments to support any economic bullshit any particular government wanted to try. His work consists of bogus mathematics as a smoke screen for specious arguments.

Did you learn that from your professors, or was it your own interpretation?

[Hermit]

Keynes specialized in generating arguments to support any economic bullshit any particular government wanted to try. His work consists of bogus mathematics as a smoke screen for specious arguments.

Did you learn that from your professors, or was it your own interpretation?

Don't expect a reply any time soon. Red Katie last visited Sun Jan 03, 2010 5:36 am

I did admire the conviction with which he expressed his feelings on the matter.

[hiyymer]

Keynes specialized in generating arguments to support any economic bullshit any particular government wanted to try. His work consists of bogus mathematics as a smoke screen for specious arguments.

Did you learn that from your professors, or was it your own interpretation?

Don't expect a reply any time soon. Red Katie last visited Sun Jan 03, 2010 5:36 am

I did admire the conviction with which he expressed his feelings on the matter.

Thanks. As far as I can remember about all Keynes really showed us was that the government role in the economy exists and has a big impact on demand and we might as well recognize that. In other words the government has an obligation to manage its fiscal behavior in such a way that it stabilizes the economy and doesn't aggravate the business cycle. In the hands of politicians that can become chronic deficit spending, but that's not what Keynes advocated. Because of that his name gets associated with all kinds of stuff that he said nothing about, like government welfare, and became associated with government activism as a general style.

In my view the issue of "big government" is just a smoke screen (along with the abortion issue) that has allowed a lot of people to enrich themselves at the expense of the general population. Anyone who believes that the republican party stands for fiscal responsibility and free enterprise and small government is about as gullible as a person can get.

[Hermit]

In my view the issue of "big government" is just a smoke screen (along with the abortion issue) that has allowed a lot of people to enrich themselves at the expense of the general population.

Oh boy! Just you wait until our local gaggle of libertarians hears that! They'll give you what-for!

[hiyymer]

In my view the issue of "big government" is just a smoke screen (along with the abortion issue) that has allowed a lot of people to enrich themselves at the expense of the general population.

Oh boy! Just you wait until our local gaggle of libertarians hears that! They'll give you what-for!

I am not a libertarian but I am very pro free markets. We need the government to assure that markets are fair and regulated in such a way that self-interest can't game the system. The republicans have always stood for the exact opposite. Every oligopolist that want a sweet deal in Washington can find a sympathetic hearing at the republican trough. In addition the republican record on fiscal management and control of big government spending is pathetic to dismal. But the record seems to matter far less than the rhetoric, because people are gullible and susceptible to having their hysteria button pushed and some of them even think criminalizing abortion is more important than economy. Where I disagree with the libertarians is that the verdict of the market is synonymous with social equity. But that argument should be dealt with after the free market has done its thing, because free market capitalism is by far the best and most efficient way of allocating resources for the maximum benefit of all.

[Hermit]

I am very pro free markets. We need the government to assure that markets are fair and regulated in such a way that self-interest can't game the system.

You don't see the contradiction there? Adam Smith's invisible hand? Private greed being synonymous with public good?

Where I disagree with the libertarians is that the verdict of the market is synonymous with social equity.

Libertarians are not claiming that the verdict is synonymous with social equity. They say that you get what you deserve, and that this is how things ought to be. They say that if you work part time in a car wash and consequently struggle to stave of hunger, you deserve your predicament as much as the CEO who earns in excess of a million dollars a day. Social equity simply doesn't enter into the equation.

[Svartalf]

Double talk. What free market? This recent disaster is the result of government control of the economy. And Keynes has been a disaster for every country that ever touched him.

Surely you jest my lady... the current disaster is a result of Say's law gone amok (offer any toxic shit you may cook up, there will be a market to make you rich off of it)... Keynesian economics and empowering the demand side of the economy actually gives a nice jumpstart, and if handled correctly will truly enable the trickle effect... It certainly has nothing to do with the mad greed and outrageous concentration of wealth that have been dominant since the 80s

[Svartalf]

"There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs." - John Rogers

Nice quote... but was it a good idea to perform such unhallowed thread necromancy?

[hiyymer]

I am very pro free markets. We need the government to assure that markets are fair and regulated in such a way that self-interest can't game the system.

You don't see the contradiction there? Adam Smith's invisible hand? Private greed being synonymous with public good?

Where I disagree with the libertarians is that the verdict of the market is synonymous with social equity.

Libertarians are not claiming that the verdict is synonymous with social equity. They say that you get what you deserve, and that this is how things ought to be. They say that if you work part time in a car wash and consequently struggle to stave of hunger, you deserve your predicament as much as the CEO who earns in excess of a million dollars a day. Social equity simply doesn't enter into the equation.

Then the CEO doesn't deserve what he gets, because there is no free market for public company CEO salaries. They are determined by a system of cronyism that circumvents the legitimate interests of the those paying the salary, the stockholders. Governance of public corporations is a dysfunctional mess. But that's not really the issue.

I fail to see the difference between "you get what you deserve" and the verdict of the market is synonymous with social equity.

[Tero]

2000s economy:
Icelander claims his dog is worth a million. Another Icelander says his cat is worth a million. They trade, both are now millionaires. If they could only buy the pet food.

[Hermit]

I am very pro free markets. We need the government to assure that markets are fair and regulated in such a way that self-interest can't game the system.

You don't see the contradiction there? Adam Smith's invisible hand? Private greed being synonymous with public good?

Where I disagree with the libertarians is that the verdict of the market is synonymous with social equity.

Libertarians are not claiming that the verdict is synonymous with social equity. They say that you get what you deserve, and that this is how things ought to be. They say that if you work part time in a car wash and consequently struggle to stave of hunger, you deserve your predicament as much as the CEO who earns in excess of a million dollars a day. Social equity simply doesn't enter into the equation.

Then the CEO doesn't deserve what he gets, because there is no free market for public company CEO salaries. They are determined by a system of cronyism that circumvents the legitimate interests of the those paying the salary, the stockholders. Governance of public corporations is a dysfunctional mess. But that's not really the issue.

Libertarians do justify executives' salaries on precisely the grounds that they are determined by market value. The board directors, and everybody else who defends those salaries commonly say something like: "If we don't pay him (and for some reason it is rarely "her") this amount, someone else will, and we lose him, which is to the detriment of our company."

I fail to see the difference between "you get what you deserve" and the verdict of the market is synonymous with social equity.

There isn't one as far as libertarians are concerned.

[hiyymer]

Libertarians do justify executives' salaries on precisely the grounds that they are determined by market value. The board directors, and everybody else who defends those salaries commonly say something like: "If we don't pay him (and for some reason it is rarely "her") this amount, someone else will, and we lose him, which is to the detriment of our company."

They can justify anyway they want, but it doesn't make it so. The board has no economic stake in the outcome. It's that simple. They just have to set a price that looks fiduciary. Typically what happens is the hired consultant says manager of companies this size make between x and y, and board says our guy is the best (they're his friends) and give him a little less than y. What do they care. It looks right, they get their weekend junket, and get to network with other people in the club. It's like you have to buy bread in one place, and the price is set by the bread seller and the bread seller's best friend (as your ostensible fiduciary representative even though you're paying for it, not him) and they can set any price they want as long as it's not too far above what other bread makers charge.

If stockholders had to approve every employment contract before it went into effect it would help.