View Poll Results: Do you support Keynesian economics?

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Thread: Do you support Keynesian economics?

  1. #31
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    Re: Do you support Keynesian economics?

    Quote Originally Posted by cpwill View Post
    tax cuts can work. increased government expenditures do not. tax cuts work best when paired with spending cuts to match.... but our political parties seem to generally lack that kind of spine.
    The reasons why tax cuts don't necessarily work is because investors can invest their money overseas into cheaper foreign markets. Which is great for foreign economies but not so much for our own.

    But there's a way around that. I think a great way to deal with this would be a "human rights tax" on imported goods. If we put a tariff on all goods imported from nations whose labor force is not treated in a way that is on par with that of the U.S. then one of two things will happen.

    1) Those nations with incredibly cheap labor will be forced to socially modernize their treatment of their labor force to such a level that the American labor force can compete with them without having to lower American standards for laborers

    2) American consumers will be forced to purchase goods only from nations that are curently socially modern with regards to their labor force or focus more on internal manufacturing

    Of course, this is going to mean an increase in the price of consumer goods, which means people will be able to buy less crap. But then again maybe having people buy less crap but their money going to decently paid people domestically is better than having people buy more crap and that wealth going overseas to cheap and abused laborers.
    Also, we need to legalize recreational drugs and prostitution.

  2. #32
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    Re: Do you support Keynesian economics?

    Quote Originally Posted by samsmart View Post
    The reasons why tax cuts don't necessarily work is because investors can invest their money overseas into cheaper foreign markets. Which is great for foreign economies but not so much for our own.

    Andrew Mountford (of the University of London) and Harald Uhlig (of the University of Chicago) have used sophisticated statistical techniques that try to capture the complicated relationships among economic variables over time; they conclude that a "deficit-financed tax cut is the best fiscal policy to stimulate the economy." In particular, they report that tax cuts are about four times as potent as increases in government spending.

    Perhaps the most compelling research on this subject is a very recent study by my colleagues Alberto Alesina and Silvia Ardagna at Harvard. They used data from the Organization for Economic Cooperation and Development to identify every major fiscal stimulus adopted by the 30 OECD countries between 1970 and 2007. Alesina and Ardagna then separated those plans that were in fact followed by robust economic growth from those that were not, and compared their characteristics. They found that the stimulus packages that appeared to be successful had cut business and income taxes, while those that evidently did not succeed had increased government spending and transfer payments....


    But there's a way around that. I think a great way to deal with this would be a "human rights tax" on imported goods. If we put a tariff on all goods imported from nations whose labor force is not treated in a way that is on par with that of the U.S. then one of two things will happen.

    1) Those nations with incredibly cheap labor will be forced to socially modernize their treatment of their labor force to such a level that the American labor force can compete with them without having to lower American standards for laborers

    2) American consumers will be forced to purchase goods only from nations that are curently socially modern with regards to their labor force or focus more on internal manufacturing
    3. the economy will collapse further as the price of goods spikes - with the poor taking the brunt of the hit. we will start to see large job losses, the market will plunge, and growth will disappear.

    trade wars are wars that governments wage on their own people.

  3. #33
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    Re: Do you support Keynesian economics?

    Quote Originally Posted by cpwill View Post
    Goodness Gracious no. The History of that theory is atrocious.



    1920: Stock Market Collapse, Unemployment Spikes. Government Response: Cut Spending Reduce Taxes. Effect: Rapid Economic Growth, Unemployment drops to historically low levels.

    1930: Stock Market Collapse, Unemployment Spikes. Government Response: Raise Spending Raise Taxes. Effect: Unemployment spikes higher, the economy shrinks for four straight years, a decade of double-digit unemployment. Market does not recover until 1953.

    Late 1940's: Extremely High Inflation threatens, as does the loss from the necessary massive restructuring from a war to a peace economy. Government Response: Drastically Slash Government Spending. Effect: Unemployment stays at historically low levels, economic growth accelerates.

    WORTH NOTING: this is the single best example of the utter failure of keynesian economics. Keynesians were UNANIMOUS that the reduction in government spending combined with the demobilization of the military would result in mass unemployment. The Government reduced spending by 40%. Millions of men left government service.

    and yet 1946 was the single best year for the private economy in United States History. Production shot up a mind-boggling 30%. AG Hines was predicting we would collapse back into the Great Depression - Unemployment predictions from Keynesians across the country ranged between 6 and 10 million men out of work by winter of 1946.... yet unemployment stayed below 4%. Paul Samuelson predicted we would fall behind the Soviet Union (though, to be fair, he kept predicting that. and just stubbornly kept pushing back his "we will fall behind" date as the predicted times came and went and we remained dammably ahead. as late as 1989 he was holding up the Soviet Union as proof that Socialist Command Economies can grow and "thrive").

    After the repeated failures of the 1930's (which they blamed on 'greed'), the Keynesians put themselves out into a major falsifiable position on a prediction that - if their assumptions were correct - could not possibly fail..... and were 100% completely utterly humiliatingly hilariously wrong.

    Late 1960's: Undaunted by their failure, Keynesians claim that the growth of the 50's and early 60's prove that they have now mastered the business cycle - there will never again need be a recession in the United States of America because they have the power to fine-tune them out via the power of Government expenditures. Arthur Okun (Chairman of the Council of Economic Advisers to the President) wrote an entire book about how recessions were no longer "necessary" and that booms could now be perpetual thanks to the magic of Keynesianism. Result: one month after the book is published, the US goes into recession. Keynesians attempt to bring their brilliance to bear - Result: the 1970s and stagflation. CPI rose about 160% from 1965 to 1980. Unemployment rose and remained high. Inflation-adjusted, the DOW fell fully 80% from it's peak (put that in perspective - the giant market crash that we just went through was smaller).

    STAGFLATION: under Keynesianism, of course, is impossible. They had never considered the possibility that it could happen - because their assumptions mean that it can't. Inflation is supposed to improve employment by reducing real wages which remain sticky in inflated dollars, and more money means more growth.... so stagflation can't happen.... and the fact that it does.... well, just ignore the fact that it does, because otherwise the model doesn't work.

    2001 - Paul Krugman writes about the need to lower interest rates in order to stimulate housing. Bush tells us how we can avoid a recession by jump-starting the economy in 2008. Obama tells us we can keep unemployment below 8% in 2009. Obama tells us that unemployment will peak at around 9% if we don't pas the stimulus.



    you know what the definition of "insanity" is? It's doing the same thing over and over and expecting different results.
    How can you be against something which you know little about? Keynesian economics is not about government spending; it is concerned about the role of demand within the macro economy.

    Lowering taxes to stimulate aggregate demand is in fact quite Keynesian.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

  4. #34
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    Re: Do you support Keynesian economics?

    Quote Originally Posted by cpwill View Post
    tax cuts can work. increased government expenditures do not. tax cuts work best when paired with spending cuts to match.... but our political parties seem to generally lack that kind of spine.
    All the available macro literature speaks differently.

    How is Europe faring with austerity?
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

  5. #35
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    Re: Do you support Keynesian economics?

    Quote Originally Posted by obvious Child View Post
    Well, we tend not to practice it. Like deficit spending during boom years. That certainly is not Keynesian economics.
    I'm talking about the bust times too.
    The stimulus spending tends to be political pay offs, rather than actual good stimulus.
    I was discovering that life just simply isn't fair and bask in the unsung glory of knowing that each obstacle overcome along the way only adds to the satisfaction in the end. Nothing great, after all, was ever accomplished by anyone sulking in his or her misery.
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  6. #36
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    Re: Do you support Keynesian economics?

    Quote Originally Posted by CaptainCourtesy View Post
    Exactly like lazze-faire economics.
    Difference is, lazze faire doesn't require a central authority to prime the pump.
    That's the biggest down side of Keynesian economic policy.
    They don't stop priming it, for their cronies and themselves.

    I'm in favor of positive non intervention, not pure lazze faire.
    Last edited by Harry Guerrilla; 06-04-11 at 10:59 PM.
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  7. #37
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    Re: Do you support Keynesian economics?

    Quote Originally Posted by Goldenboy219 View Post
    How can you be against something which you know little about? Keynesian economics is not about government spending; it is concerned about the role of demand within the macro economy.
    sort of - and I have some quibbles with how they approach demand as well. here, however, I am specifically concerned with the notion that government can somehow magically increase "aggregate demand" and boost the economy by taking money from more productive uses and putting it to less productive uses.

    Lowering taxes to stimulate aggregate demand is in fact quite Keynesian
    and see that's where we split.

  8. #38
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    Re: Do you support Keynesian economics?

    Quote Originally Posted by cpwill View Post
    sort of - and I have some quibbles with how they approach demand as well. here, however, I am specifically concerned with the notion that government can somehow magically increase "aggregate demand" and boost the economy by taking money from more productive uses and putting it to less productive uses.



    and see that's where we split.
    I don't see what the disagreement is here. Keynesians recognize the stimulative ability of lowering taxes.
    Nobody who wins a war indulges in a bifurcated definition of victory. War is a political act; victory and defeat have meaning only in political terms. A country incapable of achieving its political objectives at an acceptable cost is losing the war, regardless of battlefield events.

    Bifurcating victory (e.g. winning militarily, losing politically) is a useful salve for defeated armies. The "stab in the back" narrative helped take the sting out of failure for German generals after WWI and their American counterparts after Vietnam.

    All the same, it's nonsense. To paraphrase Vince Lombardi, show me a political loser, and I'll show you a loser.
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  9. #39
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    Re: Do you support Keynesian economics?

    Quote Originally Posted by Goldenboy219 View Post
    All the available macro literature speaks differently.
    see post # 32

    How is Europe faring with austerity?
    last I checked Europe isn't slashing tax rates.

    Canada is, however - specifically they're cutting their corporate tax rate. Wonder how Canada is doing.

  10. #40
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    Re: Do you support Keynesian economics?

    Quote Originally Posted by StillBallin75 View Post
    I don't see what the disagreement is here. Keynesians recognize the stimulative ability of lowering taxes.
    because they think it increases aggregate demand. demand for them is the precursor position. we support similar positions with very different assumptions about supply and production v demand - and in particular they want deficit-funded tax decreases (which I will agree are much better than deficit-funded spending increases); whereas I would say you need to slash both if you want to optimize your result. I would argue that you don't cut taxes on productive behavior in order to "increase demand", you do it to "increase productive behavior".

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