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Do you support Keynesian economics?

Do you support Keynesian economics?


  • Total voters
    23
  • Poll closed .

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....​

Of those countries, how much of their economy was invested into the American economy?

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.

As opposed to the alternative, which is reducing labor regulations and industry wages as low as what is paid in other countries - with the poor taking the brunt of the hit. We will see increases in employment but reduction in the quality of life for those wage earners which will add more pressure to our health care system and possibly to an increase in crime as low wage earners either commit crimes to increase their economic lot in life or as they rely more on illegal drugs to cope with the stresses of working long hard hours for little pay.

One way or the other someone's going to get the **** end of the stick. And if you notice my idea is only a trade war against those nations who treat their citizenry in an abusive way - no trade wars will happen with those nations who treat their laborers fairly and humanely. Therefore, the global trade of goods will still flow, brunting the negative impacts you mentioned.
 
Of those countries, how much of their economy was invested into the American economy?

what?

:shrug: trade and mutual investment between the industrialized nations is far and away larger than trade between industrialized and non industrialized nations.

not really sure how that in any way counters the fact that when you study their history of attempts to stimulate their economy, the attempts that are built on the notion of increasing government expenditures are the ones that fail.... just like ours currently is....

As opposed to the alternative, which is reducing labor regulations and industry wages as low as what is paid in other countries - with the poor taking the brunt of the hit. We will see increases in employment but reduction in the quality of life for those wage earners which will add more pressure to our health care system and possibly to an increase in crime as low wage earners either commit crimes to increase their economic lot in life or as they rely more on illegal drugs to cope with the stresses of working long hard hours for little pay.

1. the vast majority of workers in America earn above the minimum wage - and the vast majority of minimum wage earners are entering the workforce, and don't stay there. that is because their labor is worth more. If the government were to completely get rid of the minimum wage tomorrow; with the exception of a few marginal people currently making minimum, people wouldn't see their paychecks drop. so the notion that the government can "lower industry wages" is a non-starter.

another issue is whether or not wages are the measurement you should be using. they are not - for the simple reason that wages are not the cost of employment. wages versus production is the cost of employment. If I hire a Somali kid at $1 and hour and he makes me $5 an hour worth of production, then he is actually more expensive than the American I hire at $10 an hour who makes me $75 an hour worth of production. That measure is actually already tipping back in our favor:

...Wham-O Inc., brought 50 percent of its production back to the United States last year. Wham-O is just the first sign of a developing trend, as firms such as NCR, General Electric, and Caterpillar are bringing jobs home from China. Moreover, many other firms are opting to expand production in the United States, rather than build new facilities in China.

According to a new report from the Boston Consulting Group (BCG), rising manufacturing costs in China are reducing that country’s allure as a location for transplanted American industry. Average Chinese wages remain only 31 percent of what American workers earn, but that figure is expected to rise to 44 percent by 2015. Moreover, the more expensive workers along coastal China will close the gap to an estimated 69 percent by mid-decade. And although Chinese labor remains much cheaper than American labor, it is also less productive. According to BCG senior partner Harold L. Sirkin, once productivity is factored in, Chinese and American labor costs will converge by 2015...

but you are absolutely 100% correct that we need to reduce regulation.

Lafayette College economists Mark and Nicole Crain have estimated that Americans were spending more than $1.7 trillion annually just to comply with federal regulations—and that was before Mr. Obama took office.

The best measure of the overall regulatory burden comes from Wayne Crews of the Competitive Enterprise Institute in his annual "Ten Thousand Commandments" scorecard. Mr. Crews recently reported that there are more than 4,000 new regulations now in the pipeline, and he notes that in 2010 the bureaucrats set an all-time record by churning out 81,405 pages in the Federal Register, where new and proposed rules are published... And all of this comes before the hundreds of huge rule-makings still to come under the Dodd-Frank and ObamaCare laws. Dodd-Frank alone requires 243 new regulations, according to the analysts at the Davis-Polk law firm...

One way or the other someone's going to get the **** end of the stick.

On a macro level, this is not true. Mutually Beneficial Trade is mutually beneficial.

And if you notice my idea is only a trade war against those nations who treat their citizenry in an abusive way - no trade wars will happen with those nations who treat their laborers fairly and humanely. Therefore, the global trade of goods will still flow, brunting the negative impacts you mentioned.

trade wars against abusive nations is a foreign policy tactic - not an economic one. Like a shooting war, we would need to accept that Americans will hurt and our goal is to make them hurt more.
 
no, they have a greater effect, because it matters who is doing the spending. economic decisions made by producers and consumers looking for the best return/product for the lowest price tend to make better economic decisions than those that are made by congresscritters seeking reelection.



okay. when government spends money that it gets through debt - where did that money come from?



and again, Goldenboy's literature, indicates that:

Here is your problem; you are taking a study that analyzed the economic environments of post war OECD countries that emerged from WWII with considerable debt burdens. It is only natural (IMO) to see these said economies respond to tax cuts with real growth. Therefore, i agree with a great deal of the statements in this paper (the one which you failed to link).

With that said, this paper does not analyze the zero interest rate environment (partly because it has never occurred on a global level until lately), and therefore your attempt to pigeon hole it as the end all proof that fiscal spending is always unnecessary fails miserably. It is this "all or nothing"/"black or white" take on the political economy that discredits a great deal of what you post.

Going back to how this relates to Keynesianism (and not the normative economic tangent), the policy response when interest rates are at or above normal levels would be to decrease taxes, which in turn provides both an income effect and a deceleration of prices (inflation falls). It should also be mentioned that government spending as a % of GDP accelerated during the same time tax cuts were in place, and it will not show up in the data because it is not counted as fiscal stimulus in the form of spending. Therefore, we are in agreement on tax cuts vs spending increases as a means of fiscal response when interest rates are not at the zero bound.

But when they are, things change tremendously; the first being the response to tax cuts. You see, in a zero interest rate environment, personal saving increases exponentially (d-59). While that is certainly beneficial farther down the road, it is a strain on real output growth. Cutting taxes in a zero interest rate environment is non-optimal for the reason i just mentioned, because any real increases in income (as a result of tax cuts) have a greater propensity to be saved rather than spent. Depending on the nature of the tax cuts (are they permanent or not), they can be entirely saved. Lower taxes are also known to decelerate inflation; but in a zero interest rate environment such a desire is counter-productive.

In the end, you displayed a great deal of ignorance in regards to Keynesian macro economic theory and your critiques are based entirely on ideology. The next time you are going to throw your hat into the "im against it" camp, make sure it's because of something you have come to believe after you have objectively analyzed it, and not because your favorite radio and political personalities are against it.

Further readings:

1
2
 
If the uses were so productive in late 2008, early 2009, then why were businesses failing? We witnessed a slew of the largest bankruptcies in history and here you stand making an arbitrary comment about productive uses.

a slew of government policies (for example, the preferential tax treatment of debt) encouraged mass malinvestment in 21st century Tulip Bulbs. :shrug: the bubble popped. this is one of the pieces of keynesianism that I will admit really makes me facepalm - this drive to Just Keep The Bubble Going No Matter What Keep The Bubble Going.

sometimes you need a period of creative destruction in the marketplace. changes in technology, changes in policy... or bubbles popping. attempting to shore them up and prop up the fall or somehow reinflate the bubble are doomed to failure and will create more harm in the meantime.

It's like a doctor tells you you have lung cancer, and the response is to refuse care and increase smoking because smoking makes you feel good.

Tax cuts to stimulate demand are Keynesian; if you support such policies then you are in fact supporting Keynesianism.

no, because the Keynesian approach is to "cut taxes" in such a way to increase demand - so for example ya'll will support one-time-only "Tax Rebates" that have little if any effect in an indebted and troubled economy such as our own. Cutting Taxes to increase productive behavior requires permanent reduction in tax rates and permanent tax code simplification to reduce compliance costs and and the efficiency reductions that you can see in shelters.
 
a slew of government policies (for example, the preferential tax treatment of debt) encouraged mass malinvestment in 21st century Tulip Bulbs. :shrug: the bubble popped. this is one of the pieces of keynesianism that I will admit really makes me facepalm - this drive to Just Keep The Bubble Going No Matter What Keep The Bubble Going.

It's hard to argue with people who treat demand and capital as homogeneous units. Such simplistic analysis necessarily falls short.
 
I believe that business operates best without Governmental intrusion and few regulations and controls, and we would all be better off without Keynesian economics.
 
It's hard to argue with people who treat demand and capital as homogeneous units. Such simplistic analysis necessarily falls short.

what I don't get is their insistence on trying to reflate the bubble. as though that were what we wanted.
 
what I don't get is their insistence on trying to reflate the bubble. as though that were what we wanted.

They insist on deflationary spiral which is just theoretically and empirically false. They ignore the growth during the so-called Long Depression and the many times the US went through deflation during the panics in the 19th century and the quick correction that came as a result.
 
Do you support Keynesian economics?

Yes
No
Don't know
Don't care

If you want Keynesian economics, just go where you can get it--Russia, China, North Korea, etc.

If you hate individual liberty that much, you DON'T belong in America.
 
Wow... I will state this once: If you think that Keynesian economics works, has worked, or will work in the future, you know NOTHING about economic policy.
 
Tax cuts without corresponding spending cuts for the government quite often have the same stimulative effect as when a government increases spending.

It is the spending over and above what normal incomes would support that is stimulative. Whether the money for the extra savings come from savings or from debt, it is stimulative, it doesnt matter if it is the government or private individuals doing the spending.

As for which is more effective of course is determined by what is done with the extra money put into the economy. Spent on infrustructure, it can provide both a short term and a long term boost to the economy, spent on foreign non durable goods, it will have less of an effect on that countries economy, put into a savings account or used to pay down debt, it will have no effect on the short term economic activity

Now, this is Keynesian. I don't think ignoring Keynesian theory because of the track record is correct. Governments (politicians) tend to do whats best in the short term (the election cycle), so of course they're going to disregard huge parts of Keynesian theory, and plow on ahead. Austrian theory also has the same problem, it isn't put in place correctly. As we couldn't really expect to see either put in perfectly, a mix of both is essential.

I agree with the Austrians that you can't just look at labor and goods and everything as discrete; there are a lot of marginal values, and when dealing with people especially, you're bound to be imprecise. If you take elements of Austrian theory, along with Keynesian theory, you get a winning formula (and the right mixture keeps changing with the times).
 
Now, this is Keynesian. I don't think ignoring Keynesian theory because of the track record is correct. Governments (politicians) tend to do whats best in the short term (the election cycle), so of course they're going to disregard huge parts of Keynesian theory, and plow on ahead. Austrian theory also has the same problem, it isn't put in place correctly. As we couldn't really expect to see either put in perfectly, a mix of both is essential.

I agree with the Austrians that you can't just look at labor and goods and everything as discrete; there are a lot of marginal values, and when dealing with people especially, you're bound to be imprecise. If you take elements of Austrian theory, along with Keynesian theory, you get a winning formula (and the right mixture keeps changing with the times).

I agree,

Keynesian economics works well at a high level (federal government) if followed correctly regarding surplus's and deficiets (that governments should tend to run a surplus), but when it comes to monetary policy and economics regarding the majority of economic spending austrian can work well. The main issue with austrian economics is that it is purely an economic theory totally disregarding the sociological impacts of such policies
 
The main issue with austrian economics is that it is purely an economic theory totally disregarding the sociological impacts of such policies

And in an ideal theory, that's where Keynesian stimulus could be applied. It doesn't make perfect economic sense to prevent millions from dying of starvation, but it does from a practical sense. This stuff is common sense, it astounds me that so many people are so absolute.
 
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....[/i][/indent

DO NOT CITE STUDIES YOU HAVE NOT READ

That study is so flawed it's ridiculous that they put it out. For economists, they basically failed to do their job. When a study explicitly states that no economic data other then tax cuts and spending was discussed, it should be immediately be rejected.

Your asinine study would say the Dutch finding of oil had no impact on their economy since it wasn't a tax cut or spending cuts. Does the term "DUTCH DISEASE" mean anything to you?
Your stupid study would say the internet had no impact upon the economy of the US between 1996-2001 because it wasn't a tax cut or spending cuts.
Your steaming pile of dog **** study would say that hydrocarbons play no role in the economy of Saudi Arabia due to not being a tax cut or spending cuts.
 
To the people that think business would run a lot better without regulation?? You are right.. They would.. Any guess how long you and your family would live after that??

Do you like the fact that clean drinkable water is on tap in your home?? I am sure it would cost a lot less if they didn't clean the water, filter it, process it, and other stuff..

Do you like going to a restaurant knowing that the food you will be served is not spoiled, stale, or rotting?? Cost money for a resaurant to run a freezer.. Would you like to find hair in your food?? Maybe bones from some other animal??

What about the food at the grocery store?? Again cost money to have all those freezers to keep things fresh.. Packaging is a real pain in the ass.. Especially those tamper proof things?? Do you like know that someone didn't lace your mayo with some poison??

Sure.. Regulations are not all that nice to companies.. But they are nice for us.. I happen to like knowing that my food is safe.. That my hospital has to observe certian standards in care and cleanliness.. I like know that cooks must wear hats or a hair net, wash their hands frequently..

Regulations are needed and required.. And in some areas we simply don't have enough.. If you think for one minute that companies will just do all this stuff to be nice.. You are smoking some serious crack or you are simply beyond stupid..

Banks would lure people in with a low interest credit card, then about a year or so send them a letter stating.. 'After review of your credit score, we will be increasing your intrest rate to xx%' Even though your credit hasn't changed and you were never late on a single payment to this bank.. It was entrapment and it made the banks billions.. Thankfully this practice is now illegal.. Yes.. Some people can and did opt out of the intrest hike, but lost the credit card and just had to pay the debt.. Many people didn't and paid the higher interest..

So you tell me?? What about airlines?? Do they need regulations?? I am sure plane tickets would be much cheaper if planes weren't manufactered to such standards?? Cars?? No more air bags.. No more seat belts.. No more millions spend on crash testing..

Wow!! You people are really smart!! If you want to live in a regulations free zone.. Try Africa.. We need regulations.. Lots of them!!
 
DO NOT CITE STUDIES YOU HAVE NOT READ

That study is so flawed it's ridiculous that they put it out. For economists, they basically failed to do their job. When a study explicitly states that no economic data other then tax cuts and spending was discussed, it should be immediately be rejected.

not at all; the high incidence of such attempts effectively allows for individual outliers created by unique outside factors. you're just upset because your stupid ass ideas don't work in real life.
 
not at all; the high incidence of such attempts effectively allows for individual outliers created by unique outside factors.

That was nonsensical. You just called a completely external rise in commodity prices due to tax cuts. That's not intelligent.

The explicitly rejecting of external factors suggests that the study is effectively worthless. The idiotic logic of the study would declare that dutch diease does not exist as an impact on an economy because it's not a fiscal issue. That's 100% certified stupidity.

Please take more time to form coherent thoughts.

you're just upset because your stupid ass ideas don't work in real life.

I'm not the one citing a study which requires economic data to exist in a vaccuum. You are.

Your dumb ass study argues that commodity exports play no role in economic growth. What kind of retarded **** is that?

You don't have a rebuttal because you don't have an argument. To defend your study would be to defend the arguement that non-fiscal factors play a large role. Which would immediately destroy your own study. Hence why you're resorting to that rather worthless reply.
 
To the people that think business would run a lot better without regulation?? You are right.. They would.. Any guess how long you and your family would live after that??

Do you like the fact that clean drinkable water is on tap in your home?? I am sure it would cost a lot less if they didn't clean the water, filter it, process it, and other stuff..

Do you like going to a restaurant knowing that the food you will be served is not spoiled, stale, or rotting?? Cost money for a resaurant to run a freezer.. Would you like to find hair in your food?? Maybe bones from some other animal??

What about the food at the grocery store?? Again cost money to have all those freezers to keep things fresh.. Packaging is a real pain in the ass.. Especially those tamper proof things?? Do you like know that someone didn't lace your mayo with some poison??

Sure.. Regulations are not all that nice to companies.. But they are nice for us.. I happen to like knowing that my food is safe.. That my hospital has to observe certian standards in care and cleanliness.. I like know that cooks must wear hats or a hair net, wash their hands frequently..

Regulations are needed and required.. And in some areas we simply don't have enough.. If you think for one minute that companies will just do all this stuff to be nice.. You are smoking some serious crack or you are simply beyond stupid..

Banks would lure people in with a low interest credit card, then about a year or so send them a letter stating.. 'After review of your credit score, we will be increasing your intrest rate to xx%' Even though your credit hasn't changed and you were never late on a single payment to this bank.. It was entrapment and it made the banks billions.. Thankfully this practice is now illegal.. Yes.. Some people can and did opt out of the intrest hike, but lost the credit card and just had to pay the debt.. Many people didn't and paid the higher interest..

So you tell me?? What about airlines?? Do they need regulations?? I am sure plane tickets would be much cheaper if planes weren't manufactered to such standards?? Cars?? No more air bags.. No more seat belts.. No more millions spend on crash testing..

Wow!! You people are really smart!! If you want to live in a regulations free zone.. Try Africa.. We need regulations.. Lots of them!!

Wow, you really have no clue, do you? Companies exist to serve their customers. If they don't serve their customers properly, they go out of business and/or get sued.

If you think government exists to protect us from companies, that's also totally wrong. Government regulations exist to make it more difficult for small businesses to compete with the giants because of all the red tape and extra costs involved in starting up a business.

What research have you actually done to back up your position? Any?

Do you work for a company? Would you say that your company tries to screw its customers?

Governments forcing companies to act a certain way is useless, even when it's safety related. If an airline, for example, had a plane go down because of a poor safety inspection, the company would have a huge mess on their hands. They don't need to be fined on top of that because they'd already be in a helluva lotta trouble with their customers. "What? Delta's plane crashed because of a poor safety inspection?! Screw that, I'm flying Southwest!"

The same goes for any other service or product, including energy and water. Do you think the water company is out to NOT screw its customers just because it's owned by the government? If anything, they're more inefficient because they don't have any competition. As you should've learned from economics 101, competition is the key to efficiency and lower prices. When the government has a monopoly on an industry, it might as well be just as bad as a monopoly by a private company. They care less about customer service because they know consumers don't have any other options. If it's a necessary service (or virtually necessary, as I guess you could survive without water), the consumers have no choice but to give that company their money. And the company can charge whatever they want.

Consumers are the ultimate driving force in the economy and they determine where all of the money goes. Because of the abundance of a country like America, the multiple options we have when going out to buy anything is tremendous. To argue that companies would prefer to screw their customers rather than win them over with great customer service, quality products, and cheap prices is utterly ridiculous and goes against all logic.
 
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I don't know. Someone recommend me some books please.
 
If you want to learn about the basics of Austrian economics relatively quickly, I highly recommend "Meltdown" by Thomas E. Woods. The Austrians (and they're not really Austrians, by the way) have predicted just about everything that's happened in the economy since the Great Depression, including the recent housing collapse (see Peter Schiff's Mortgage Bankers speech in Nov. '06).

Tom Woods also has an excellent resource page on his site. Many of the books listed you can download/read online as PDFs. "Economics in One Lesson" by Henry Hazlitt and "The Case Against the Fed" are a couple of my favorites.
 
Wow, you really have no clue, do you? Companies exist to serve their customers. If they don't serve their customers properly, they go out of business and/or get sued.

If you think government exists to protect us from companies, that's also totally wrong. Government regulations exist to make it more difficult for small businesses to compete with the giants because of all the red tape and extra costs involved in starting up a business.

What research have you actually done to back up your position? Any?

Do you work for a company? Would you say that your company tries to screw its customers?

Governments forcing companies to act a certain way is useless, even when it's safety related. If an airline, for example, had a plane go down because of a poor safety inspection, the company would have a huge mess on their hands. They don't need to be fined on top of that because they'd already be in a helluva lotta trouble with their customers. "What? Delta's plane crashed because of a poor safety inspection?! Screw that, I'm flying Southwest!"

The same goes for any other service or product, including energy and water. Do you think the water company is out to NOT screw its customers just because it's owned by the government? If anything, they're more inefficient because they don't have any competition. As you should've learned from economics 101, competition is the key to efficiency and lower prices. When the government has a monopoly on an industry, it might as well be just as bad as a monopoly by a private company. They care less about customer service because they know consumers don't have any other options. If it's a necessary service (or virtually necessary, as I guess you could survive without water), the consumers have no choice but to give that company their money. And the company can charge whatever they want.

Consumers are the ultimate driving force in the economy and they determine where all of the money goes. Because of the abundance of a country like America, the multiple options we have when going out to buy anything is tremendous. To argue that companies would prefer to screw their customers rather than win them over with great customer service, quality products, and cheap prices is utterly ridiculous and goes against all logic.

I can give you an example of a company that is screwing over its consumers, who don't even realize it. Note, I'm not suggesting government regulation of it, I'm pointing out that there are companies that screw over their consumers. It happens often enough, mainly when the consumers don't realize it, and it therefore it doesn't hurt the company to do it.

MTV is slowly contributing to the degredation of morals, values and ethics of teenagers around the country. Yet they continue to watch it, and in increasing numbers no less. If you've seen some of the shows they play, you know what I'm talking about. Its pure trash, that people idolize, and attempt to recreate in their own lives. And thus, consumers get f**ked by a company, and ask for more.
 
Yeah, well, that's what happens when we have free speech. The degradation of society can occur through any format, really, including government. Frederic Bastiat wrote about it in "The Law," which if you haven't read, is probably the shortest, most enlightening book I've ever read. Highly recommended.
 
MTV is slowly contributing to the degredation of morals, values and ethics of teenagers around the country. Yet they continue to watch it, and in increasing numbers no less. If you've seen some of the shows they play, you know what I'm talking about. Its pure trash, that people idolize, and attempt to recreate in their own lives. And thus, consumers get f**ked by a company, and ask for more.

Yeah, that's not at all self-evident. MTV is trash, but people enjoy trash. You have a long way to go to prove that MTV is destroying morals, values, and ethics. MTV is the opportunistic infection of the disease that is high time preference caused by the expectation that government will always be there to provide no matter what mistakes you make. Father an illegitimate child? You get welfare. Commit a crime? You go to prison and get 3 meals a day. It's a revolting system we have created.
 
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