Pick your poison, social unrest, or...

[Ricter]

We are a lot closer to Keyensianism than anything else. There's a ton of government spending, and the money supply has been (up until recently) vastly increasing.

Had a quick meeting, not sure what replies have come, so I'll just finish what I started on this reply.

Counter cyclical spending, like unemployment benefits and food stamps, rose during the recession, yes. Does anyone here think most of the recipients of those benefits did not spend them on rent, utilities and food? Then the sequester came along and cut government spending. As we were already recovering the effect of that can only be calculated as a drag on return to GDP trend, not observed as an actual contraction in GDP.

As for the growth in the money supply, you yourself have pointed out that the money has not gone to consumers. So it has not increased effective demand at that level.

Aside from the counter cyclical spending, which everyone agrees should be there as "a hand up" (that's why it's non-discretionary) we have not been Keynesian.

 

[Ricter]

Well tell me when the government EVER practices full keynesianim

Precisely.

The counter cyclical spending of this recession is only half Keynesian. Moves like a payroll tax cut would have been the other half.

Will government cut spending and raise taxes during the next peak in the business cycle? Probably not; heaven forbid we should run a surplus, "taxes are too high!"

 

[Max E.]

Precisely.

The counter cyclical spending of this recession is only half Keynesian. Moves like a payroll tax cut would have been the other half.

Will government cut spending and raise taxes during the next peak in the business cycle? Probably not; heaven forbid we should run a surplus, "taxes are too high!"

So then if you have a theory that looks good on paper, but fails miserably in practice, isnt it a failed policy?

 

[Ricter]

Taxing the upper income folks isn't going to make sales strong.

It will if the revenues are spent on things the consumer (two thirds of economic activity) will benefit from. Jobs in rebuilding infrastructure, and all the economic activity that accompanies that, for one example. Every business that sells to just that activity would see more sales. Not to mention the broad based benefits to all from better infrastructure.

 

[Ricter]

So then if you have a theory that looks good on paper, but fails miserably in practice, isnt it a failed policy?

You started by attacking Keynesianism as the problem.

 

[Max E.]

It will if the revenues are spent on things the consumer (two thirds of economic activity) will benefit from. Jobs in rebuilding infrastructure, and all the economic activity that accompanies that, for one example. Every business that sells to just that activity would see more sales. Not to mention the broad based benefits to all from better infrastructure.

But the money isnt going there now is it? Any money that being ciphoned out of the private sector at the expense of jobs is merely going into public sector unions, and their lavourish retirement packages.

You started by attacking Keynesianism as the problem.

It is the problem when the money that gets ciphoned out of the economy only ever goes to a "hypothetical" possibility of creating new jobs, but never really gets there. As has been said numerous times the problem is that the inefficiencies in the market (I.E. unpayable government pensions) never get fixed, and instead we keep bandaging problems like that, as opposed to the necessary austerity where we put government spending on a more realistic trajectory.

 

[gwb-trading]

It will if the revenues are spent on things the consumer (two thirds of economic activity) will benefit from. Jobs in rebuilding infrastructure, and all the economic activity that accompanies that, for one example. Every business that sells to just that activity would see more sales. Not to mention the broad based benefits to all from better infrastructure.

We already tried a federal "stimulus" to improve the infrastructure and "create" jobs. It did not work because it turned into a cronyism program that gave contracts to politically connected operators that built minimal infrastructure. Our roads and bridges are still a mess.

If you want to built infrastructure then you need to mirror the policies of the New Deal era where either the government hired workers directly for projects or the projects were built by private contractors after open bidding with payments only made for completing milestones.

 

[Ricter]

We already tried a federal "stimulus" to improve the infrastructure and "create" jobs. It did not work because it turned into a cronyism program that gave contracts to politically connected operators that built minimal infrastructure. Our roads and bridges are still a mess.

If you want to built infrastructure then you need to mirror the policies of the New Deal era where either the government hired workers directly for projects or the projects were built by private contractors after open bidding with payments only made for completing milestones.

I won't argue with that latter, improved proposal, it is very Keynesian.

 

[ipatent]

Keynesian economic management breaks down when undisciplined politicians keep their foot on the gas driving downhill, it makes it a lot tougher when its time to climb the next one.

 

[Max E.]

Keynesian economic management breaks down when undisciplined politicians keep their foot on the gas driving downhill, it makes it a lot tougher when its time to climb the next one.

I would twist what you were saying a little and say "Kyenesian economics HAS to break down because undisciplined politicians keep their foot on the gas only when going downhill, and are incapable of hitting the break when its uphill."