Think nothing of it. I think you'll find that English is a pretty decent language once you get to know it.Quote from Anaconda:
Thanks internet grammar grandma.
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Keynsian economics is dead
- Thread starter Humpy
- Start date
Quote from Thunderdog:
How about roads and a crumbling infrastructure? How about hospitals? How about that levy in New Orleans? Again, I'm not that big on economic theory, but let's not load the dice here, eh? At least keep it intellectually honest.
Those are all maintained by the government. And they're crumbling. See where I'm going here?
As for the levies in New Orleans...apparently they got the earmarked money and the city of New Orleans decided not to use it for the levies but to build a greenway instead. Consequences for government? None.
Imagine if the levies were built and maintained by a private entity. They would keep those things in working order if only to avoid law suits.
You really don't even understand the argument, do you? Nice try, though.Quote from Angrycat:
Those are all maintained by the government. And they're crumbling. See where I'm going here?
As for the levies in New Orleans...apparently they got the earmarked money and the city of New Orleans decided not to use it for the levies but to build a greenway instead. Consequences for government? None.
Imagine if the levies were built and maintained by a private entity. They would keep those things in working order if only to avoid law suits.
Quote from Thunderdog:
I expected that someone would make that comparison sooner or later, and I think it is flawed. Communism would never work in the real world because it blunts ambition and initiative. Because human achievement and economic progress are predicated on ambition and initiative, communism does not even really work on paper. It is theoretically flawed. Keynsian economics relies on intellectual honesty and discipline, which is at least conceivable, if not necessarily probable, in the right hands.* Therefore, I think it is at least theoretically possible to successfully implement, unlike communism, which dies on paper. Perhaps I'm putting too fine a point on it, but I'm not a fan of broad brushes. Again, let me state that I'm not big on economic theory, but I try to approach it honestly.
*And at the end of the day, unless a country's finances are addressed with intellectual honesty and discipline, then any approach under any label will likely result in a shambles. Meanwhile, those who wish to rely solely on the "invisible hand" can take their cue from a host of Third World countries for inspiration.
I'll try to summarize it:
Communism assumes the masses will be motivated by altruism.
Keynesian economics assumes politicians will be motivated by altruism, honesty, and intellectual discipline.
Small-government capitalism assumes both people and politicians will be motivated by self-interest and ambition.
Which do you think fits true human nature in the real world?
In my opinion, Keynesian economics is even *less* likely to work than communism, because politicians on average are less altruistic and honest than the general population. They are motivated by getting votes, getting power, getting big budgets, and patronage, far more so than by intellectual discipline and honesty. Keynesian economics might work better in a benign dictatorship - but we all know those are rare, and the few that have ever existed die out as soon as the dictator dies and gets replaced with a selfish dictator (which is 98% of them). The only reason Keynesian economics has not been disastrous is because it only tries to affect a portion of the economy at certain times, rather than the entire society at all times.
Because of politicians incentives and thus actions, Keynesian economics always degenerates into wasteful boondoggles and patronage, and you get a huge amount of boondoggle fiscal drag and fiscal bribery/vote-buying over the course of the cycle. Instead of running budget deficits in recessions and surpluses at all other times, they run deficits at all times except huge booms, and run monster deficits in recessions. IMO the cause is entirely predictable in theory, given our knowledge of human nature. It's just as predictable as how communism will work out if it's ever tried again.
Because of this inherent nature of the political class, any system apart from the nightwatchman state will inevitably have huge wastage for its entire lifetime. And IMO the wastage will always trend up. We've seen that with every democracy that has ever existed. As long as people think that social democracy is the ideal political system, social groups will continue fighting for their share of the tax revenue pie, and competition will ensure that this pie gets bigger and bigger until you end up in quasi-socialism anyway. The USA is already socialist by 19th century, or even 1920s standards.
Quote from Thunderdog:
Keynsian economics relies on intellectual honesty and discipline, which is at least conceivable, if not necessarily probable, in the right hands.
And at the end of the day, unless a country's finances are addressed with intellectual honesty and discipline, then any approach under any label will likely result in a shambles. Meanwhile, those who wish to rely solely on the "invisible hand" can take their cue from a host of Third World countries for inspiration.
Short answer - Keynesianism wouldn't work, even if it was economically the correct thing to do (which is debatable), because politicians in democracies not only aren't generally intellectually disciplined and honest, but because they *get punished* for being so.
IMO a small government society can survive fiscal incompetence from politicians much better, because the tax burden would be low, along with the size of the state. A participatory/republican system with a constitutional % cap on taxation & spending would be ideal. The alternative is a slow, steady drift to becoming France.
To Cutten:
Are you a fan of Austrian Economics, if not what do you think it's short comings are?
Are you a fan of Austrian Economics, if not what do you think it's short comings are?
Not only are the politicians driven by short sighted thinking and their thirst for expanding & maintaining personal power - - - many of them are also ignorant. Recently a number of government officials, many of whom were elected, - - failed an exam in history, civics, and economics. Most of them in this country are lawyers - - those who have made their living in the obfuscation, extortion, and protection rackets. They haven't even run a hot dog stand, and now they are grilling - pardon the pun -(quite incompetent) execs about presenting a proper business recovery plan before putting the taxpayers further in hock ? - - We are now presented with the prospect of having even more clueless captains steering the Titanic in the years ahead. Not only are they ignorant, but blinded by dogma pounded in their soft heads while they were getting stoned in college back in the 60s. Guess they weren't reading the papers or paying attention to the evidence of the absolute failiure of central planning througout history and around the world.
Cutten, I appreciate your considered responses. I agree with a number of your observations but not all of your conclusions. I am not quite a devotee of Keynesian economic theory. However, I took exception to those people who trashed it without even understanding its most basic premises. Evidently you have a fairly good grasp of it and choose to disagree with it. Fair enough.
I, on the other hand, do not believe in the almighty "invisible hand" which, when no one is looking, usually has its thumb up its ass. Admittedly, the US is more "socialist" than it was in the 19th century, but I doubt most people would have wanted to live during that time, all of the romanticizing of the period nothwithstanding. Unless you were rich, you worked at least 6 days a week for a pittance. Commerce was far more predatory and not necessarily in the best interest of the general population, with the monopolies, the combinations, the rampant price fixing and so on. If you were not at the top, chance are you were at the bottom. There was not much of a middle ground. I think it was a fascinating period in history, but it is far easier to read about it than for most of the people who lived through it.
Presently, there are many instances where the tail is wagging the dog. Surely there is a middle ground somewhere...
I, on the other hand, do not believe in the almighty "invisible hand" which, when no one is looking, usually has its thumb up its ass. Admittedly, the US is more "socialist" than it was in the 19th century, but I doubt most people would have wanted to live during that time, all of the romanticizing of the period nothwithstanding. Unless you were rich, you worked at least 6 days a week for a pittance. Commerce was far more predatory and not necessarily in the best interest of the general population, with the monopolies, the combinations, the rampant price fixing and so on. If you were not at the top, chance are you were at the bottom. There was not much of a middle ground. I think it was a fascinating period in history, but it is far easier to read about it than for most of the people who lived through it.
Presently, there are many instances where the tail is wagging the dog. Surely there is a middle ground somewhere...