Well, I think that's a bit like figuring out that the moon landing was faked (it wasn't), since that's not really what Keynesian economics is about. Things like tax policy do that better.
Well, I think that's a bit like figuring out that the moon landing was faked (it wasn't), since that's not really what Keynesian economics is about. Things like tax policy do that better.
That is what Keynesian policies are about. Having the government take the place of depressed consumer spending. That money does not come out of think air, it comes via higher taxes or new debt. There is no free lunch.
You pile on too much debt you kill growth as someone as to pay the bill for debt.
The best way to solve government debt problem is via economic growth, so that way you dont have to raise anyone's taxes.
I've never really gotten what the issue is? 75% of our nation's debt is internally owed, so when our future generations have to 'pay it back', they have to pay it back to themselves. That's not exactly a big problem.
That's reasonable, also replacing lower business spending.
Well, of course, but the question is how you get that growth, and at the same time the government programs you want, on a sustainable basis, avoiding crashes, with low unemployment... Frankly, while growth has benefits, I'm ok with less growth if there are other benefits that make up for it. If we really just want high growth, bring back slavery.
The government plays an important role in the economy, not only in its size but in its areas of spending.
Get rid of that, and you see the private sector revert to the sort of highly concentrated wealth that has a lot more to do with protecting the wealthy than the good of society.
Go too far in the government direction and you get too little prosperity and too much corruption.
Its not? Funny how things change when parties change. Now government debt is not a problem.
But I do generally agree with your statement, but debt does have to be paid back. However alot of that of debt is intergovernmental debt and that can just be paid via reduced benefits.....
I think you have a point, but there is a price, it's not just free money. One analogy I've heard is a married couple loaning each other money to blow and giving each other IOU's.
They can't just make up the money because they owe it to each other. The government owes itself vast amounts for things like Social Security trust fund savings.
The debt is less money available for other programs, it ultimately has a price paid for in the value of the currency.
I can tell you how yo can avoid growth and that is the stimulus plan with most of the back loaded. YOu can talk about the best and worst ways to deliver stimulus, but the worst way is doing most of it in future, if the problem is now. And as I recall, this bill had to be passed now.
If the stimulus buys the country things it needs which the people benefit from, that is not so bad. But if it only pays for social programs that do not produce anything, it is not so good. And so far we are getting far more of social spending that infrastructure spending.
Every dollar the govt spends, it crowds out of dollar private spending. This is generally not a good thing.
Government probably does more to protect to wealthy than anyone. After all it is the wealthy that can buy access to govt. We need better govt, not larger govt.
I find the whole idea of intergenerational debt a bit silly. Our children will have the sum total of the products they produce as a society with which to support themselves, just as we have the sum total of the products we produce today. We don't have to build tanks today and send them back to 1945 to make up for the debt our grandparents took out. Internally owed debt is mostly just a math game. It's not like the government borrowed money from thin air and suddenly created productivity out of nothing.
Now there is an issue with foreign owed debt, as that actually IS something where we have gotten 'free productivity' that will need to be paid back, but that represents a small fraction of our total debt.
Actually, it often is. A lot of private dollars go nowhere but to enrich the rich, and the government's dollars often go for priorities set by the society democratically.
Imagine if I said you can cut government spending by 25% next year - but every dollar cut has to go to the top 1%, for them to spend to acquire more of the nation's resources.
That gives you some idea of the contrast betweeen the private and public dollars, why it's not as bleak as you view it. There's a price for civilization and an advanced economy.
Use common sense on this. The wealthy without any constraint purely pursuing their own interest is more in their interest than an elected government balancing interests.
But I agree with you, I think government is plenty big and really too big, if we could get its activities shifted to the right things. The problem is when the first cuts are the wrong place.
Praxis1452
Platinum Member
- Jan 31, 2006
- 2,197
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It's a pretty limited view to say that government is the price to pay for an advanced economy. Definitions of an advanced economy are ambiguous and pretty subjective. The same goes for civilization.
I will agree that there is a price to attempt equality, or rather there is a price to move away from vast inequality. Either way.
I think you view corporations as too evil. I think corporations are fairly simple, they are for their profit, though some still have minor altruistic motives. Much clearer and understandable/less confusing than a government that tells you what is good for you, or sacrifices you for others. And the huge rule that business/industry has in government affairs also negates the neutrality/benefit of government on the poorer people. Sure they get the vote, but it doesn't often mean much.
speaking for myself, i was in favor of stimulus both times, but didn't like the method, since i view tax cuts to be worthless as far as stimulus goes
this had nothing to do with reagans tax cut. the recession of 1982 was caused by the fed to kill stagflation, and it did so successfully. once fixed the economy started running again fairly quickly, just like most pre-reagan recessions. Having an economic rebound after a recession didn't really become a problem until after reagans term.
speaking of stimulus.....I have yet to see anything reflected in my weekly pay....its the same now as it was last year......I thought were were supposed to see an increase in the neighborhood of $400.00 a year or about $7.00 a week.
what the hell?.........4th of July is coming up and I need to stock a cooler with booze and ice.
what the hell?.........4th of July is coming up and I need to stock a cooler with booze and ice.
StageLeft
No Lifer
- Sep 29, 2000
- 70,150
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Japan was mentioned once in this thread and summarily ignored, but as we know, they've been in basically a flat economy for a couple of decades now. Their stock market and housing prices went to astronomical levels and around 1990 just shut right down, crashing like Oprah on a diet, and have not recovered since, not even during this recent boom. They have been trying to stimulate every since, including zombie banking. Here is an article on it:
Link
You could say and it would be fair that the US isn't Japan, but then it isn't Australia, either.
Link
You could say and it would be fair that the US isn't Japan, but then it isn't Australia, either.
Yes mates, it's not so bad at home as away!
Australia has had infrastructure bottlenecks wisely "placed" by the government control of roads, heavy rail and ports. It has been good for ore prices and has help many other less cost effective mining and agricultural producing countries remain relatively viable against the Aussie producers. Rains have also returned for northern farming states, lets hope they hang around awhile.
The unemployment is mostly suffered in the older states like NSW and VIC, here in Qld we have only 4.7% unemployment- But I will remind you yanks we have a lower valued dollar and our our average annual earnings are probably a good 25% less then what you get, with higher costs for housing and food then over there. Youth unemployment has suffered the most.
I believe it's a bit of a talking up of the world recession as we are "cheap and easy" for eastern markets and don't reflect the the same problems as northern Atlantic economies have even though our government "talks the talk", our banks here have pretty strict rules for lending so our problems were more so contained to commercial building, retailing and stock market sectors- same as our last recession, that we had to have.
It would be a major culture shock for an American to live here, especially Brisbane, Adelaide, Perth or Darwin.
That doesn't follow, but I'm not bothering now to explain how not all deficint spending is equal.
Reagan had a lot of policies to condemn; I actually support is having some deficit spending when he took office, as needed fix stagflation, but he did a lot more than that.
Actually, if you google on Obama unemployment 8%, you should find the references I did to that he did make that prediction that turned out to be wrong.
Credit where it's due, I point out PJ screwing up frequently, but he got that fact correct, it was an accurate criticism.
On the other hand, his position on 'predictions' seems to vary on whether they help him.
- Mar 20, 2000
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which is why the real answer is pro growth. and we should do that during times of plenty (which is why borrowing in an expansion can still be a good idea).
the stimulus, as a shock to the system (basically the whole keynesian argument), gets the economy to stop running at 75% and start running 90+%, then it's worthwhile as the taxes collected should be enough to pay for it.
so, in desperate economic times, stimulus to shock the system back up into the growth level, and during growth times we should have pro-growth measures as long as we're paying our cost of capital.
Seems to me that it's a fair summary to say:
We learned a lot of valuable lessons about stabilitizing the economy under FDR with his experimentation; but because those lessons did not maximize profits for some, there were pressures to change the rules, and those changes gradually happenes because the people who stood to make money could out-donate the public,and those changes allowed some big problems to develop.
Keynes isn't the last complete word by any means, but he's right and he's part of good policies.
What we really have is a political problem that allows narrow interests to get their way over the public interest.
- Oct 30, 2000
- 42,589
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