The Death of Keynesian Economics

[antagon]

that doesn't strike you as a sad commentary? Maybe even terminal?

No, not really.

Keynes advocated social programs as counter-cyclical policy to dampen economic volatility. Unemployment insurance and welfare increase when the economy goes into a recession, buoying demand and softening the downturn. That is embedded in every single developed country in the world. I don't think there is an economist alive - well a credible economist anyways - who would argue that we should get rid of income support programs during a recession.

That is only one of the several ways in which Keynes' philosophy is now endemic to our economy. Keynes opened up the door for monetarist and monetarism has infected almost every aspect of our economy. Even trickle down economics finds it's roots in Keynes' ideas.

i draw a line between keynesian, fiscal approaches and monetarist tactics, though. its the holistic/humanist vs. digital reductionist dichotomy played out in econ policy.

 

[william the wie]

I think everyone is ignoring the warning by Keynes that politicians follow economic policy laid out in the course of economics for poets course they took 20-50 years earlier further mangled by synopses of more recent advances.

 

[Bfgrn]

FDR US Unemployment 1932: 24.1%, 1933: 24.9, 1934: 21.7%, 1935: 20.1%, 1936: 16.9%, 1937: 14.3%, 1938: 19.0%, 1939: 17.2%. 8 year Average = 19.8%

Hitler Invades Poland WWII declared 9/1/39

1940 unemployment: 14.6%

So all we needed for FDR great results was for someone to start a World War.

Terrific.

Frank, everyone is entitled to his own opinion, but not his own facts. Your unemployment figures don't match the US Census Data, and specifically Census document HS-29 (available in PDF). BECAUSE right wing revisionists don't include everyone who got a job during the Great Depression via the Works Progress Administration (WPA) or Civilian Conservation Corps (CCC), or any other of Roosevelt's popular New Deal workfare programs.

So those American citizens, the millions of men and women who earned a living wage and were able to keep their self-respect and contributed mightily to the national infrastructure don't count in your right wing horror story.

So conservation projects that planted a billion trees, saved the whooping crane, modernized rural America, and built such diverse projects as the Cathedral of Learning in Pittsburgh, the Montana state capitol, much of the Chicago lakefront, New York's Lincoln Tunnel and Triborough Bridge complex, the Tennessee Valley Authority and the aircraft carriers Enterprise and Yorktown, and also built or renovated 2,500 hospitals, 45,000 schools, 13,000 parks and playgrounds, 7,800 bridges, 700,000 miles of roads, and a thousand airfields. And it employed 50,000 teachers, rebuilt the country's entire rural school system, and hired 3,000 writers, musicians, sculptors and painters, including Willem de Kooning and Jackson Pollock........DIDN'T HAPPEN...

You didn't bother to check the data set, right or did you just check 1932?

Hellllooooo!

Pollocks and de Koonings sell for millions, why did they need Gubbamint subsidies?

VanGogh sold one painting in his life, would he have been a better artist on a Gubbamint Cheese Diet?

Helllllllllllooooooooooooooo!

You are right Frank, I didn't, my bad. But you always forget some important details. One is: FDR did not create the economic mess he inherited, just like Persident Obama didn't either. In both cases, the private sector was not creating jobs or injecting the capital into the economy to sustain it, much less grow it. Any economist from liberal to conservative agree there are 3 avenues of injecting capital into a nation's economy: business, citizens and government. When business and the people are not, that leaves only one avenue.

What the census figures show is the pre-WWII New Deal era saw the second largest percentage drop in total unemployed in the 20th century, going from 12.8 million unemployed in Roosevelt's first year in office to 8.1 million unemployed at the end of his second term in 1940. That's a 36.7 percent drop - larger than the Clinton era (36.3%) and larger than the Reagan era (a mere 19%). At the absolute minimum, that would suggests the New Deal was a positive - not negative - economic force (and empirically more positive than, say, Reagan's free-market agenda).

But here's what else you always forget Frank, and where I always differ with you and people who call themselves 'conservative'. It's people Frank. Those unemployment figures are not numbers, they are people; American citizens, our grandfathers and grandmothers.

Conservatives back in 1932 were also critical of New Deal programs for the unemployed. They said we must not spend money on work programs or public assistance. They said the economy must be left alone, and it would recover in the long run. To which Secretary of Commerce Harry Hopkins shot back: "People don't eat in the long run, they eat every day."

Right wing solutions are always great, just as long as some group of human beings evaporate...

Art is not a treasure in the past or an importation from another land, but part of the present life of all living and creating peoples.
Franklin D. Roosevelt

 

[editec]

the entire Keynesian model failed in the 1970s when we had high inflation and high unemployment at the same time.

We didn't have Keynesian economics in the 70s.

ATtempting to reduce the root souce of the economic problems of that time down to Keynesian economic policies is ignorant.

What?

You going to ignore the oil crises?

Of course you just did.

How about coming off the Viet Nam conflict?

Something else you choose to ignore.

What were the Keynesian policies of the 1970s, anyway?

NiXXon's price freezes?

That's not a Keynesian economic policy.

Except in time of war, that's just a dumb REPUBLICAN policy that didn't work.

But it did cause STAGFLATION.

Seriously, learn some ******* history, would ja?

 

[code1211]

Bfgrn, even today counting unemployed is not an exact science and data sets may differ.

1932:
24.1
23.6

1933:
24.9
24.9

1934:
21.7
21.7

1935
20.1
20.1

1936
16.9
16.9

1937
14.3
14.3

1938
19.0
19.0

1939:
17.2
17.2 (Hitler invades Poland 9/1/39, rescuing FDR failed economic Plan)

1940:
14.6
14.6

My number are on top BFGR's are on the bottom, they differ in 1932, so again Bfgrn is huffing and a puffing but

"Girl you thought he was a man
But he was a muffin
He hung around till you found
That he didn't know nuthin

Girl you thought he was a man
But he only was a-puffin
No cries is heard in the night
As a result of him stuffin"

Pick a data set, any Great Depression data set and they all tell the same story, Hitler's Invasion of Poland pulled FDR's Communist loving chestnuts out of the fire.

Pickin' fly poop outta pepper.

 

[code1211]

the entire Keynesian model failed in the 1970s when we had high inflation and high unemployment at the same time.

We didn't have Keynesian economics in the 70s.

ATtempting to reduce the root souce of the economic problems of that time down to Keynesian economic policies is ignorant.

What?

You going to ignore the oil crises?

Of course you just did.

How about coming off the Viet Nam conflict?
Something else you choose to ignore.

What were the Keynesian policies of the 1970s, anyway?

NiXXon's price freezes?
That's not a Keynesian economic policy.

Except in time of war, that's just a dumb REPUBLICAN policy that didn't work.
But it did cause STAGFLATION.

Seriously, learn some ******* history, would ja?

Highlighted in Red above are the examples which I agree with that led to the down times of the 70's and early 80's. The war in Viet Nam was the result of the Tonkin Gulf Resolution run amock. Central authority exerting its will over the rights of the Constitutionally appointed alternatives.

Nixon while a Republican was not following Conservative principles in using central authority to freeze prices.

Did it cause Stagflation? We also left the Gold Standard at the same time. When the value of gold was suddenly allowed to float after years of constraint, we found that it was pretty bouyant. Still is. We're about 1000% higher right now than we were then.

 

[editec]

the entire Keynesian model failed in the 1970s when we had high inflation and high unemployment at the same time.

We didn't have Keynesian economics in the 70s.

ATtempting to reduce the root souce of the economic problems of that time down to Keynesian economic policies is ignorant.

What?

You going to ignore the oil crises?

Of course you just did.

How about coming off the Viet Nam conflict?
Something else you choose to ignore.

What were the Keynesian policies of the 1970s, anyway?

NiXXon's price freezes?
That's not a Keynesian economic policy.

Except in time of war, that's just a dumb REPUBLICAN policy that didn't work.
But it did cause STAGFLATION.

Seriously, learn some ******* history, would ja?

Highlighted in Red above are the examples which I agree with that led to the down times of the 70's and early 80's. The war in Viet Nam was the result of the Tonkin Gulf Resolution run amock. Central authority exerting its will over the rights of the Constitutionally appointed alternatives.

Nixon while a Republican was not following Conservative principles in using central authority to freeze prices.

Did it cause Stagflation? We also left the Gold Standard at the same time. When the value of gold was suddenly allowed to float after years of constraint, we found that it was pretty bouyant. Still is. We're about 1000% higher right now than we were then.

Yeah that's my point.

These silly pronoucments that one event or one POTUY or one Congress lead to an economic reality are dumber than a bag o' bricks.

But seriously, some of our fellow posters BELEIVE this shit.

And as long as our fellow citizens buy into this childish nonsense they are going to be TOOLS of propagandists.

And as long as enough of our fellow citizens can be so easily mislead?

Our nation's democracy republic cannot work out very well for most of us.

When a lie is stated enough times, and NOBODY challenges it, it takes on a MYTHICAL TRUTH and those of us with the horsepower to challenge that sort of LIE really ought to regardless of how we feel politically.

When for example, my fllow liberals tell us that this depression was BUSH II's depression, pointing out that that is not even remotely 1% of the truth is called for.

And any liberal who does not challenge that sort of LIBERAL LIE is really not a liberal, they're just a ******* partisan asshat.

Likewise when CONSERVATIVE LIES get passed off as truth.

They likewise ought challenged particualrly by REAL CONSERVATIVES.

It does NONE of us any good to allow half truths or outright lies to get a pass.

They're the stuff that makes totalitarian regimes work, not DEMCORATIC republics.

 

[Kevin_Kennedy]

the entire Keynesian model failed in the 1970s when we had high inflation and high unemployment at the same time.

We didn't have Keynesian economics in the 70s.

ATtempting to reduce the root souce of the economic problems of that time down to Keynesian economic policies is ignorant.

What?

You going to ignore the oil crises?

Of course you just did.

How about coming off the Viet Nam conflict?
Something else you choose to ignore.

What were the Keynesian policies of the 1970s, anyway?

NiXXon's price freezes?
That's not a Keynesian economic policy.

Except in time of war, that's just a dumb REPUBLICAN policy that didn't work.
But it did cause STAGFLATION.

Seriously, learn some ******* history, would ja?

Highlighted in Red above are the examples which I agree with that led to the down times of the 70's and early 80's. The war in Viet Nam was the result of the Tonkin Gulf Resolution run amock. Central authority exerting its will over the rights of the Constitutionally appointed alternatives.

Nixon while a Republican was not following Conservative principles in using central authority to freeze prices.

Did it cause Stagflation? We also left the Gold Standard at the same time. When the value of gold was suddenly allowed to float after years of constraint, we found that it was pretty bouyant. Still is. We're about 1000% higher right now than we were then.

It wasn't a real gold standard that Nixon took us off, but a gold exchange standard. FDR took us off a gold standard.

 

[loosecannon]

It wasn't a real gold standard that Nixon took us off, but a gold exchange standard. FDR took us off a gold standard.

I think that was only temporary.

 

[Kevin_Kennedy]

It wasn't a real gold standard that Nixon took us off, but a gold exchange standard. FDR took us off a gold standard.

I think that was only temporary.

FDR made it illegal for Americans to use gold for monetary purposes, and then proceeded to steal their gold. Non-compliance was met with a $10,000 fine and up to 10 years in prison. There was nothing temporary about it.

 

[loosecannon]

It was temporary

Gold Reserve Act - Wikipedia, the free encyclopedia

 

[CrusaderFrank]

Bfgrn, even today counting unemployed is not an exact science and data sets may differ.

1932:
24.1
23.6

1933:
24.9
24.9

1934:
21.7
21.7

1935
20.1
20.1

1936
16.9
16.9

1937
14.3
14.3

1938
19.0
19.0

1939:
17.2
17.2 (Hitler invades Poland 9/1/39, rescuing FDR failed economic Plan)

1940:
14.6
14.6

My number are on top BFGR's are on the bottom, they differ in 1932, so again Bfgrn is huffing and a puffing but

"Girl you thought he was a man
But he was a muffin
He hung around till you found
That he didn't know nuthin

Girl you thought he was a man
But he only was a-puffin
No cries is heard in the night
As a result of him stuffin"

Pick a data set, any Great Depression data set and they all tell the same story, Hitler's Invasion of Poland pulled FDR's Communist loving chestnuts out of the fire.

Pickin' fly poop outta pepper.

While I'm not sure I see your point, 'mI fairly certain you don't either

 

[Kevin_Kennedy]

It was temporary

Gold Reserve Act - Wikipedia, the free encyclopedia

Nobody received back the gold that was stolen from them by the government, and a true gold standard was never put back into place. Doesn't sound temporary to me.

 

[antagon]

It wasn't a real gold standard that Nixon took us off, but a gold exchange standard. FDR took us off a gold standard.

the grace of god took us off the gold standard.

 

[Foxfyre]

It's really very simple.

Who manage's the people's money better?

The people who make the money or the government whom confiscates it and allocates it the way it sees fit?

Or as another member phrased it, who spends our money better? The government who prints it or the people who collect and hoard it?

Your question is reasonable and one that all patriots should think through carefully.

The other question is ad hominem is one that usually comes from the 'Statist' or "Political Class' mentality that the government technically owns everything and should allocate what the citizens should have or be allowed.

Using the Adam Smith explanation as expanded by Walter Williams in my previous post, 'collecting' is necessary in order for the people to look to their own security and 'hoarding' is what responsible people do to ensure that security. In more charitable language it is 'saving for a rainy day' or in Biblical language: it is setting up stores in preparation for the lean years that are certain to come.

As no goverment can possibly be smart enough, educated enough, or skilled enough to manage society or its resources as well as the people themselves will do simply living their lives, the more resources left with the people to do that, the better off the people will be. The government serves best by securing the people's unalienable rights and then leaving them to live their lives.

 

[Kevin_Kennedy]

It wasn't a real gold standard that Nixon took us off, but a gold exchange standard. FDR took us off a gold standard.

the grace of god took us off the gold standard.

Unlikely.

 

[loosecannon]

It was temporary

Gold Reserve Act - Wikipedia, the free encyclopedia

Nobody received back the gold that was stolen from them by the government, and a true gold standard was never put back into place. Doesn't sound temporary to me.

I keep trying to explain this to people on this board and they don't get it. You have a limited right to own property, but in every nation of the world you have no rights to own money. And when gold is used as a currency you lose your right to it.

Currencies are the property and domain of nation states.

Right now the government has granted you the conditional authority to own and use gold coin as currency, and they can take that right away at any time.

Same as it has always been.

 

[Kevin_Kennedy]

It was temporary

Gold Reserve Act - Wikipedia, the free encyclopedia

Nobody received back the gold that was stolen from them by the government, and a true gold standard was never put back into place. Doesn't sound temporary to me.

I keep trying to explain this to people on this board and they don't get it. You have a limited right to own property, but in every nation of the world you have no rights to own money. And when gold is used as a currency you lose your right to it.

Currencies are the property and domain of nation states.

Right now the government has granted you the conditional authority to own and use gold coin as currency, and they can take that right away at any time.

Same as it has always been.

My money is my property, and there is no limit to owning property. No one, governments included, has the right to infringe on anybody's right to own their property.

 

[Foxfyre]

Nobody received back the gold that was stolen from them by the government, and a true gold standard was never put back into place. Doesn't sound temporary to me.

I keep trying to explain this to people on this board and they don't get it. You have a limited right to own property, but in every nation of the world you have no rights to own money. And when gold is used as a currency you lose your right to it.

Currencies are the property and domain of nation states.

Right now the government has granted you the conditional authority to own and use gold coin as currency, and they can take that right away at any time.

Same as it has always been.

My money is my property, and there is no limit to owning property. No one, governments included, has the right to infringe on anybody's right to own their property.

Yes, and if we ever get wobbly on that principle we will lose America as we have known it. Loosecannon intends well I'm sure, but his philosophy is pure Marxism--nobody really owns anything but must share everything equally. Of course Marx furthered a notion that a utopia could be developed in which a society would develop in which that would happen naturally. But in the process, it would be necessary for a totalitarian government to seize it all, destroy the capitalists, and then redistribute.

Several nations have installed the totalitarian governments and destroyed the capitalists. But then they never get around to giving up all that self serving power so all they eventually really distribute is less for all and more misery for everybody.

 

[Flopper]

The election results in 2010 did more than take the Speaker gavel from the hand of the most dangerous woman on the planet, it was the death knell of the Keynesian economic theory.

The track record of JM Keynes "Increased government spending to stimulate the economy" has been a total, utter failure here in the USA every time its been tried.

Presidents Hoover and FDR tried it and they took a recession and turned it into the greatest economic decline since Atlantis sunk under the waves. Increased government spending yielded a decade long decline and 20% average unemployment.

In 2008 Obama tried his version and the Stimulus and $1.3 Trillion deficits and the $3 trillion the Fed has pumped out have done nothing positive for the economy; they have only exacerbated the problem. Do you understand that we've poured out almost $5 trillion since the start of 2009 to help the economy and it's not done a single positive thing?

Progressive have lied to use for generation about how the New Deal saved America from Capitalism. Now that they've lost their media monopoly we see the truth: Government Spending = Epic Fail.

It cost the Democrats Congress, it should Krugman his Noble Prize and we should laugh hysterically next time someone suggest we need "more government stimulus" to help the economy.

We just need to get through this period with our nation still intact, then we can laugh.

When you refer to Keynesian economic theory, I suppose you are referring to the classic Keynesian theory on the 1930's. Modified models of Neo-Keynesian theories have been the mainstream economic theory since the 1990's. One can claim the Keynesian theories have not been proved but the same claims can be made for supply supply side economic theory.

It is absurd to claim that an economic theory is invalid due to election results. I suppose you would claim that the election results have also proved the theory of evolution, global climate change and the big bang theory bogus.