Keynsian Economics

[Kevin_Kennedy]

Now I just want to revisit these points.

I think it's entirely possible to verify that Keynes General Theory worked. I'll have a look and see if I can find some evidence.

As I understand it one of the central tenets of classical economics is the idea of the free market can regulate itself. Well we know that's a fail.

There's nothing command and control about Keynes that I can see. But then I haven't finished reading the General Theory yet. Command and control is a long way from stimulus spending.

The economy in my country seems to be reasonably robust in the wake of the GFC. Properly regulated financial institutions worked okay and our federal government instituted stimulus spending programmes which seem to have staved off a recession. Whether they will be seen as successful in the medium term remains to be seen but right now things look pretty good. Maybe after this latest collapse we may finally see some evidence about the validity of Keynesian theory.

We know that the free market has failed to regulate itself? When did we learn this? Have we ever tried it out?

The US did. It failed and nearly took down the rest of the world.

I know, I know, the argument is that the regulations, such as they were, were at fault. They were at fault alright, for being bloody useless. As I said, a pure free market is an abstract, it doesn't exist in reality, at least not in advanced industrial societies.

If the free market doesn't exist in reality how did it fail to regulate itself and nearly bring down the rest of the world?

 

[Diuretic]

We know that the free market has failed to regulate itself? When did we learn this? Have we ever tried it out?

The US did. It failed and nearly took down the rest of the world.

I know, I know, the argument is that the regulations, such as they were, were at fault. They were at fault alright, for being bloody useless. As I said, a pure free market is an abstract, it doesn't exist in reality, at least not in advanced industrial societies.

If the free market doesn't exist in reality how did it fail to regulate itself and nearly bring down the rest of the world?

It's close approximation did so. And now who would want to even think about experimenting with a totally unregulated economy after this debacle?

 

[Kevin_Kennedy]

The US did. It failed and nearly took down the rest of the world.

I know, I know, the argument is that the regulations, such as they were, were at fault. They were at fault alright, for being bloody useless. As I said, a pure free market is an abstract, it doesn't exist in reality, at least not in advanced industrial societies.

If the free market doesn't exist in reality how did it fail to regulate itself and nearly bring down the rest of the world?

It's close approximation did so. And now who would want to even think about experimenting with a totally unregulated economy after this debacle?

What close equivalent? Our Federal Reserve controlled economy doesn't in any way represent even a close approximation of what a free market would be.

 

[mascale]

Modern Economies rely on arithmetic to function. Arithmetic has rules. If everyone gets the same percentage pay raise, plus the same dividend and saving percentage rates on accumulated arithmetic, and so on: Then arithmetic happens, according to its rules.

Since incomes are reliant on paid prices, or extensions of arithmetic(?), such as credit or forebearances from arithmetic(?): Then, (just like in health insurance prices), a rise in prices can be helpful in creating even more income.

Mainly, insurance companies, doctors, teachers, and The University of California higher education system: Do not believe that prices ever rise. It's all just like it was a the beginning, and now and ever shall be(?). The President of the United States seems to think that prices actually tend to fall(?), who now even pays nothing for carfare.

Since prices tend to follow an equilibrium: Then a price rise for one is a price rise for all--who are affected. If the price of a set standard of living increases--then all are affected--If the percentage of the rise gets applied to the incomes, then some get more income, following arithmetic, and some get less income, following arithmetic.

The new trick is to not increase the relative distances of the all-affected from the standard of living. The trick is to keep the distances constant. If more and more can purchase less and less, then even people with even more and more have to pay, even more--to make-up for the prices unable to be paid by the people with lesser and lesser. The prices paid can still pay the lesser and lesser, but not those with the greater than lesser to begin with. More is needed pay their raised incomes. The lesser and lesser paid, will be lesser able to pay!

The alternative concept is to increase the liklihood of purchases, not to decrease the liklihood of purchases.

Anyone raises all incomes the amount of the rise of prices. In relative terms, the standard of living price is more affordable for the lesser paid, and is still affordable for the greater paid. Those people keep what they can have, and can even have more, just like before. The lesser paid can forgo less of something else, to reach into the goods and services pool of the set standard of living. Then even new standards become more affordable.

Then if the equal amount is indexed, to account for the decrease of the value of the units--More now being required to keep the distance between the incomes constant--then even more choices and options can be offered within the basic standard of living price--which is more than before.

Regulated purchasing power tends to diminish the need for further regulations.

"Crow, James Crow: Shaken, Not Stirred."
(A well-regulated "people(?)," being needed for the security of a truly free state, then the right to keep and bear. . . .well. . . .All kinds of "regulations(?)" can be changed!)

 

[Oddball]

Now I just want to revisit these points.

I think it's entirely possible to verify that Keynes General Theory worked. I'll have a look and see if I can find some evidence.

Good luck in finding irrefutable evidence when you cannot turn back the clock.

As I understand it one of the central tenets of classical economics is the idea of the free market can regulate itself. Well we know that's a fail.

Oh, really?.....Name the last time it was tried.....And don't give me any of that dreck about Robber Barons.

There's nothing command and control about Keynes that I can see. But then I haven't finished reading the General Theory yet. Command and control is a long way from stimulus spending.

An irredeemable fiat currency and central banks are central to Keynes' voodo. If that's not command and control, nothing is.

The economy in my country seems to be reasonably robust in the wake of the GFC. Poperly regulated financial institutions worked okay and our federal government instituted stimulus spending programmes which seem to have staved off a recession. Whether they will be seen as successful in the medium term remains to be seen but right now things look pretty good. Maybe after this latest collapse we may finally see some evidence about the validity of Keynesian theory.

That's your story, bub....Just remember that correlation does not equal causation.

 

[Toro]

Hey, I'm in Econ and we briefly went over Keynesian economics. I agree that most of Keynes' concepts we went over are believable, however, his concept about the obligation of society to provide employment to individuals in field that they are educated or have experience in. What are the prominent theories that are available about how society/government should provide jobs where there is a lack of demand? Roads can be built, parks can be monitored, street sign and cones can be manufactured but this leaves a whole myriad of other jobs that are determined directly by demand such as nursing, engineering etc...

That is a moral question, not an economic one.

 

[Oddball]

With a centralized worthless fiat currency, centralized "morality" (such as it would be) cannot be too far behind.

 

[Toro]

With a centralized worthless fiat currency, centralized "morality" (such as it would be) cannot be too far behind.

Ashcroft tried his best...

 

[The Rabbi]

Few theories are as thoroughly disproved as Keynsian economics. Only politicians still believe it because it confers power on the state. In much the same way that only academics today are Marxists.
Just this AM in the WSJ is an article by two economists on efforts to stimulate the economy and the "multiplier effect" of domestic spending. THey conclude that the multiplier in fact is a lot less than 1. Which means that stimulus spending does not stimulate the economy; in fact it serves to depress it..
Free market economics has been proven to work over and over, even in societies that have very little of it (like China in the 1970s).

 

[Oddball]

With a centralized worthless fiat currency, centralized "morality" (such as it would be) cannot be too far behind.

Ashcroft tried his best...

You really think a guy like him is the aberration?

Oh, Molly!!

 

[Richard-H]

Back to the original question (i.e. the obligation of government to maintian employment even against market demand).

I think that the primary problem with the worlds economy is the under-valuation of labor. Pretty much every physical item of value is created by labor. In other words ALL WEALTH IS CREATED BY LABOR!

Yet, we pay labor as little as possible, taking advantage of the most economically disadvantaged and creating a situation where anyone that has advanced to a pay level beyond that of labor will not and financially cannot work as a laborer.

We therefore eliminate the possibilty of the educated and/or trained unemployed taking labor jobs. This in turn leaves us with either creating unneeded jobs, retraining them or they go unemployed.

What if we simply paid labor a reasonable wage? Ut oh, we'd be cutting into profitability and no one would want to invest in labor intensive businesses...maybe....

Maybe labor intensive products should just cost considerably more than non-labor intensive products (like services).

Possibly, we WAY overpay the service sector. While providing a product of value, they really don't actually create wealth. So continuing to pay the extremely high prices that we do for services while underpaying for labor intensive products created an economy incentivized to not produce wealth.

The fact is that we base our wages on the creation and maintenance of a SOCIAL ORDER. Not on Capitalism in any real sense. Our society says: "Go to school, pay the big bucks or your SCREWED!"

A society consisting of all lawyer & accountants is an economic wasteland.

In the sense of being an economic system based on a social order we have become NAZIFIED - and it is a GROSS FAILURE.

Ironically, America was once the country of hard working laborers and in the late 1940 thru the 1960s, when the conditions for labor improved, our economy boomed. In the 1970s when college grads started making extreme wages compared to labor we started the slow but steady decline of our economy.

Maybe we should rethink the entire system of wealth distribution and of the real value of the faux-educationed vs. the value of labor. (And yes American education sucks to the point that most American college grads should NOT be considered educated anyway.)

You can send 'em to school but you can't make 'em think!

 

[Oddball]

Back to the original question (i.e. the obligation of government to maintian employment even against market demand).

I think that the primary problem with the worlds economy is the under-valuation of labor. Pretty much every physical item of value is created by labor. In other words ALL WEALTH IS CREATED BY LABOR!

Yet, we pay labor as little as possible, taking advantage of the most economically disadvantaged and creating a situation where anyone that has advanced to a pay level beyond that of labor will not and financially cannot work as a laborer.

We therefore eliminate the possibilty of the educated and/or trained unemployed taking labor jobs. This in turn leaves us with either creating unneeded jobs, retraining them or they go unemployed.

What if we simply paid labor a reasonable wage? Ut oh, we'd be cutting into profitability and no one would want to invest in labor intensive businesses...maybe....

Maybe labor intensive products should just cost considerably more than non-labor intensive products (like services).

Possibly, we WAY overpay the service sector. While providing a product of value, they really don't actually create wealth. So continuing to pay the extremely high prices that we do for services while underpaying for labor intensive products created an economy incentivized to not produce wealth.

The fact is that we base our wages on the creation and maintenance of a SOCIAL ORDER. Not on Capitalism in any real sense. Our society says: "Go to school, pay the big bucks or your SCREWED!"

A society consisting of all lawyer & accountants is an economic wasteland.

In the sense of being an economic system based on a social order we have become NAZIFIED - and it is a GROSS FAILURE.

Ironically, America was once the country of hard working laborers and in the late 1940 thru the 1960s, when the conditions for labor improved, our economy boomed. In the 1970s when college grads started making extreme wages compared to labor we started the slow but steady decline of our economy.

Maybe we should rethink the entire system of wealth distribution and of the real value of the faux-educationed vs. the value of labor. (And yes American education sucks to the point that most American college grads should NOT be considered educated anyway.)

You can send 'em to school but you can't make 'em think!

Wow....It's like a mental crossword puzzle of bromides, flawed premises and logical fallacy.

Is this, like, a test?

 

[The Rabbi]

It's hard to know even where to start with someone who thinks that "labor" is "underpaid." I mean, how do you even define underpaid? This has to be some 20-something working at Starbucks who thinks rules don't apply to him and just because he has a BA in Anthro from Reed College he ought to be pulling down big bucks for slinging lattes.

 

[Toro]

Back to the original question (i.e. the obligation of government to maintian employment even against market demand).

I think that the primary problem with the worlds economy is the under-valuation of labor.

The primary problem in the world's economy is not the undervaluation of labor. The primary problem is too much debt in the financial system that is crushing the real economy.

Pretty much every physical item of value is created by labor. In other words ALL WEALTH IS CREATED BY LABOR!

Yet, we pay labor as little as possible, taking advantage of the most economically disadvantaged and creating a situation where anyone that has advanced to a pay level beyond that of labor will not and financially cannot work as a laborer.

Most Americans are not "economically disadvantaged."

Wages are a function of productivity. The more productive you are, the more you will be paid (generally). If you are not productive, you won't be paid much. In China, workers are far less productive than they are in America. That is why they are paid far less.

We therefore eliminate the possibilty of the educated and/or trained unemployed taking labor jobs. This in turn leaves us with either creating unneeded jobs, retraining them or they go unemployed.

The educated and the trained should be working in what they are educated and trained for. There is no point forcing them into "labor" jobs. But what exactly is a "labor job?" What is a "nonlabor job?" Who has a job that doesn't require the effort of labor?

What if we simply paid labor a reasonable wage? Ut oh, we'd be cutting into profitability and no one would want to invest in labor intensive businesses...maybe....

We do pay a reasonable wage. Unfortunately, those less educated have generally been left over the past few generations. However, those who are educated have moved ahead.

Maybe labor intensive products should just cost considerably more than non-labor intensive products (like services).

If you can sell such a product, feel free.

Possibly, we WAY overpay the service sector. While providing a product of value, they really don't actually create wealth. So continuing to pay the extremely high prices that we do for services while underpaying for labor intensive products created an economy incentivized to not produce wealth.

Possibly. Or not. Generally, manufacturing wages are higher than service wages.

The fact is that we base our wages on the creation and maintenance of a SOCIAL ORDER. Not on Capitalism in any real sense. Our society says: "Go to school, pay the big bucks or your SCREWED!"

A society consisting of all lawyer & accountants is an economic wasteland.

In the sense of being an economic system based on a social order we have become NAZIFIED - and it is a GROSS FAILURE.

No argument about the lawyers though accountants are necessary evils.

Ironically, America was once the country of hard working laborers and in the late 1940 thru the 1960s, when the conditions for labor improved, our economy boomed. In the 1970s when college grads started making extreme wages compared to labor we started the slow but steady decline of our economy.

America was once also a country of farmers. Should we all go back to plowing the land? Of course, virtually nobody wants to, but details, details.

And the economy has not been a steady decline. It has been in a steady incline, at least until lately.

Maybe we should rethink the entire system of wealth distribution and of the real value of the faux-educationed vs. the value of labor. (And yes American education sucks to the point that most American college grads should NOT be considered educated anyway.)

You can send 'em to school but you can't make 'em think!

Sounds like someone has a bit of envy.

 

[midcan5]

Back to the original question (i.e. the obligation of government to maintian employment even against market demand).

Hoover did what conservatives still cling to today, it is why he lost and it is why FDR is considered a great president and Hoover another Bush. If government - we the people - does not do it who will. Consider third world nations as an example of poor and/or dishonest and/or malfunctioning governments and you easily get the point, strong supported government is an essential ingredient to stability and progress.

"Rather than call for the creation of federal relief programs, this 1931 advertisement placed by the President’s Organization on Unemployment Relief opts for local voluntary charity as a response to the Great Depression. President Herbert Hoover firmly believed that relief was a local responsibility, although even this step, which proved inadequate, went further than pre-World War I presidents, who stood by passively during financial panics. Few Americans expected the government to take drastic action when the Depression struck. Many turned instead to their employers, merchants, churches, landlords, and local banks, as well as to family networks, for assistance. As the Depression and unemployment deepened, however, it became clear that the “moral capitalism” of marketplace institutions was drastically inadequate and aggressive government action was needed." see my URLs above.

1934

"Congress authorizes creation of the Federal Communications Commission, the National Mediation Board and the Securities and Exchange Commission.

Congress passes the Securities and Exchange Act and the Trade Agreement Act.

The economy turns around: GNP rises 7.7 percent, and unemployment falls to 21.7 percent. A long road to recovery begins.

Sweden becomes the first nation to recover fully from the Great Depression. It has followed a policy of Keynesian deficit spending."

The GD time line is here.

Timeline of the Great Depression

 

[The Rabbi]

Back to the original question (i.e. the obligation of government to maintian employment even against market demand).

Hoover did what conservatives still cling to today, it is why he lost and it is why FDR is considered a great president and Hoover another Bush. If government - we the people - does not do it who will. Consider third world nations as an example of poor and/or dishonest and/or malfunctioning governments and you easily get the point, strong supported government is an essential ingredient to stability and progress.

"Rather than call for the creation of federal relief programs, this 1931 advertisement placed by the President’s Organization on Unemployment Relief opts for local voluntary charity as a response to the Great Depression. President Herbert Hoover firmly believed that relief was a local responsibility, although even this step, which proved inadequate, went further than pre-World War I presidents, who stood by passively during financial panics. Few Americans expected the government to take drastic action when the Depression struck. Many turned instead to their employers, merchants, churches, landlords, and local banks, as well as to family networks, for assistance. As the Depression and unemployment deepened, however, it became clear that the “moral capitalism” of marketplace institutions was drastically inadequate and aggressive government action was needed." see my URLs above.

1934

"Congress authorizes creation of the Federal Communications Commission, the National Mediation Board and the Securities and Exchange Commission.

Congress passes the Securities and Exchange Act and the Trade Agreement Act.

The economy turns around: GNP rises 7.7 percent, and unemployment falls to 21.7 percent. A long road to recovery begins.

Sweden becomes the first nation to recover fully from the Great Depression. It has followed a policy of Keynesian deficit spending."

The GD time line is here.

Timeline of the Great Depression

Remind me what kind of mickey mouse education you had?
Hoover did nothing of what conservatives today want. Hoover signed Smoot Hawley, arguably the biggest cause of the depression. His Fed reduced the money supply when they should have been increasing it.
The rest of the post is equally wrong and filled with inaccuracies.

 

[Oddball]

Midcant is our resident ignoramus on economics in general, and history re-writer of the Great Depression in particular.

 

[midcan5]

Midcant is our resident ignoramus on economics in general, and history re-writer of the Great Depression in particular.

The problem with Rabbye and you is you offer nothing substantive to the discussion, you could be and maybe are robots or just moonies. When you backup your wrong ideas that flow from a lack of education, reading, or simple stupidity, you can at least comment, till then you're in a league with the wackos whose knowledge is feed to them from the corporate tool system.

"Although it is not true that all conservatives are stupid people, it is true that most stupid people are conservative." John Stuart Mill

1936
The Supreme Court declares part of the Agricultural Adjustment Act to be unconstitutional.

In response, Congress passes the Soil Conservation and Domestic Allotment Act.

Top tax rate raised to 79 percent.

Economic recovery continues: GNP grows a record 14.1 percent; unemployment falls to 16.9 percent.

Germany becomes the second nation to recover fully from the Great Depression, through heavy deficit spending in preparation for war.

 

[The Rabbi]

No the problem is that you are a lying moron who picks and chooses. Why not quote this part instead:

1937

* The Supreme Court declares the National Labor Relations Board to be unconstitutional.

* Roosevelt seeks to enlarge and therefore liberalize the Supreme Court. This attempt not only fails, but outrages the public.

* Economists attribute economic growth so far to heavy government spending that is somewhat deficit. Roosevelt, however, fears an unbalanced budget and cuts spending for 1937. That summer, the nation plunges into another recession. Despite this, the yearly GNP rises 5.0 percent, and unemployment falls to 14.3 percent.

1938

* Congress passes the Agricultural Adjustment Act of 1938 and the Fair Labor Standards Act. (More)

* No major New Deal legislation is passed after this date, due to Roosevelt's weakened political power.

* The year-long recession makes itself felt: the GNP falls 4.5 percent, and unemployment rises to 19.0 percent.

So actually Roosevelt's actions lengthened the recession. Only increasing demand from Europe, due to WW2 and its preparation, and finally U.S. entry into the war actually ended the Depression.
Your claims about Hoover are completely false. Your claims about gov't taxation are woefully ignorant.

 

[midcan5]

No the problem is that you are a lying moron who picks and chooses. Why not quote this part instead:

Rabeye, I posted the link and if you read instead of reacting like an idiot, you would have known that. And yes, FDR was conservative in certain of his actions, still he did one hell of a job and Hoover failed, same as Reagan, same as Bush Sr, same as Bush Jr. Face it conservatives can only pout and whine, given power they fail.

"Why Conservatives Can't Govern" by Alan Wolfe
A Short History of Conservative Obstruction to Progress | Conceptual Guerilla