Keynsian economics is dead

[Anaconda]

Quote from Thunderdog:

Maybe so, but that doesn't invalidate the need.

http://www.nytimes.com/2008/03/02/opinion/02dodd.html

What is your point?

Do you realize that with every government owned infrastructure there is a tax or toll associated with it? Be it federal, state or municipal, all of these projects are always backed by a revenue source.

So why exactly is there justification to borrow money to rehabilitate them? Oh yeah, cause those funds have long been embezzled. Because anyone with a clue involved in the process has known for while the great scam that has been going on with this nation and they just "want to get theirs"

 

[Anaconda]

Quote from Thunderdog:

Are we discussing the virtues and pitfalls of Keynesian economic theory or perhaps its inappropriate implementation? I think it is important to distinguish between the two.

Maybe you should search for the true roots of Keynesian economic theory. It's just propaganda.

 

[intradaybill]

Quote from Anaconda:

You are retarded

Ad hominen attacks is a clear sign of mental weakness and an indication of a psychotic individual.

You have made any valid point, you are attacking economic theories without understanding them and you offer no sound alternatives.

In other words, I repeat, you exhibit a psychotic behavior.

 

[Cutten]

Quote from Thunderdog:

Are we discussing the virtues and pitfalls of Keynesian economic theory or perhaps its inappropriate implementation? I think it is important to distinguish between the two.

There is no difference, at least not in the realm of government, law, politics etc - any applied school of knowledge, basically. Something must be judged on how it can be implemented in the real world. Communism is a good example. In theory, IF people are all "altruistic", communism might work really well. Since in the real world they are not "altruistic", communism is a total disaster when you try to implement it in reality. You cannot implement any system in theory, you have to implement it in the real world with all the constraints that entails. Thus all theories must be judged on their actual or prospective implementation.

If Keynesian economics works given certain theoretical conditions (which is extremely debatable), but those conditions are untenable in the real world, then it will be a failure no matter how sound its theoretical position. Same with free market economics. If voters will go socialist before a free market economics liquidation/recession can run its course, due to their economic ignorance and general fear, then even if you support free markets in theory, you have to recognise it is untenable since voters will reject it and lurch leftwards. Thus some intervention in serious recessions would be preferable, even for Milton Friedman or Murray Rothbard, because failure to intervene would result in socialism via the ballot box, whereas intervention would result only in somewhat watered-down capitalism.

 

[Cutten]

Quote from faure:

Okay let me put it another way, the building of a bridge is real production in the sense that something real is created, right? A bridge has been built but at the same time the cement factory has made cement, the steel company has manufactured steel, orders for machinery have to be placed at the machinery company. All these companies spend their money on suppliers. The money trickles down the system along with production of goods that the money brings.

The aim of all of this is to temporarily support the economy until private spending takes over. Then taxes are raised to pay back the government debt.

Building giant mud pies is also real production - after all, they are real mud pies that are created.

However, mud pies are generally regarded as entirely useless and worthless. Bridges may or may not be useful to varying degrees, but it depends on the location of the bridge. A bridge to nowhere has negative economic value, since it affects the environment. A bridge over a busy river has positive economic value. The only way to calculate that value is to see what people are willing to pay for it.

The activity involved in creating the mud pie or bridge is not how you judge the usefulness of the project. After all, that activity is funded simply by taking money from X (taxpayers, or investors) and giving to Y (the people who build it). No net new money is created by this activity. The only thing created is the mud pie or bridge (along with improved skills at mud pie or bridge building by the labourers & management). If the mud pie or bridge is worthless, then you just destroyed a huge amount of value - and you also crowded out legitimate value-creating activities. If it's worth a lot, then you created value.

Making lots of mud pies is a great value destruction, it makes the country poorer, not better off.

 

[Thunderdog]

Quote from Cutten:

There is no difference, at least not in the realm of government, law, politics etc - any applied school of knowledge, basically. Something must be judged on how it can be implemented in the real world. Communism is a good example. In theory, IF people are all "altruistic", communism might work really well. Since in the real world they are not "altruistic", communism is a total disaster when you try to implement it in reality. You cannot implement any system in theory, you have to implement it in the real world with all the constraints that entails. Thus all theories must be judged on their actual or prospective implementation...

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.

 

[TraderJoe08]

Quote from Cutten:

There is no difference, at least not in the realm of government, law, politics etc - any applied school of knowledge, basically. Something must be judged on how it can be implemented in the real world. Communism is a good example. In theory, IF people are all "altruistic", communism might work really well. Since in the real world they are not "altruistic", communism is a total disaster when you try to implement it in reality. You cannot implement any system in theory, you have to implement it in the real world with all the constraints that entails. Thus all theories must be judged on their actual or prospective implementation.

If Keynesian economics works given certain theoretical conditions (which is extremely debatable), but those conditions are untenable in the real world, then it will be a failure no matter how sound its theoretical position. Same with free market economics. If voters will go socialist before a free market economics liquidation/recession can run its course, due to their economic ignorance and general fear, then even if you support free markets in theory, you have to recognise it is untenable since voters will reject it and lurch leftwards. Thus some intervention in serious recessions would be preferable, even for Milton Friedman or Murray Rothbard, because failure to intervene would result in socialism via the ballot box, whereas intervention would result only in somewhat watered-down capitalism.

This shows that contrary to belief there are signs of intelligent life on ET.

I tried to explain this to one of my econometrics professors in college and i'm pretty sure he thought i was a neanderthal. Economics is not a hard science, it never will be.

It's a social science for the exact reason Cutten explained above. Humans do not react logically or in a predictable manner, thus every computer model about economic theory they build will eventually collapse.

Econometrics is garbage, yet an economist can't get a private sector job without knowing it.

Gotta love the sheeple.

 

[Anaconda]

Quote from intradaybill:

Ad hominen attacks is a clear sign of mental weakness and an indication of a psychotic individual.

You have made any valid point, you are attacking economic theories without understanding them and you offer no sound alternatives.

In other words, I repeat, you exhibit a psychotic behavior.

No, I'm just stating a valid assessment of your mental capacity. You are retarded.

 

[QQQShort]

Quote from Susannah:

Maybe it's just that it's all a cycle and none of the systems are perfect and have a tendency to break down.

I am of that opinion anyway, there's going to be flaws in everything and time's going to magnify them and eventually they'll ruin the whole system. Kind of like our bodies or a car or any other system.

Probably correct. Interesting that this basic point seems to have gone unnoticed.

 

[Anaconda]

Quote from Cutten:

Building giant mud pies is also real production - after all, they are real mud pies that are created.

However, mud pies are generally regarded as entirely useless and worthless. Bridges may or may not be useful to varying degrees, but it depends on the location of the bridge. A bridge to nowhere has negative economic value, since it affects the environment. A bridge over a busy river has positive economic value. The only way to calculate that value is to see what people are willing to pay for it.

Well written. People need to read this over & over until they understand the line of thinking.