Skip to main content

A contrarian/libertarian explanation of Keynesian ecoomics....

... from Coyote:

By the way, if you are confused about Keysian stimulus, here it is in a nutshell: The economy is contracting some as people deleverage from over-spending and an asset bubble. I mean, that’s certainly what we are doing in the Coyote den, setting goals for both de-leveraging the business and our household. But folks are worried, because while this has happened many times, one of those times we had a depression. So the government does not want you to deleverage. It wants you to spend and spend. But it knows you won’t, and that it has not yet accumulated enough power to force you to. So it will borrow and spend for you. Government stimulus means that when you are trying to save and reduce debt, government is going to run up debt in your name.

By the way, for those wondering how well this works, the last time we tried it was during the aforementioned depression, and the depression lasted another 8-10 years.


Here's the same concept, explained by neo-Keynesian guru Paul Krugman:

Some background: one of the high points of the semester, if you’re a teacher of introductory macroeconomics, comes when you explain how individual virtue can be public vice, how attempts by consumers to do the right thing by saving more can leave everyone worse off. The point is that if consumers cut their spending, and nothing else takes the place of that spending, the economy will slide into a recession, reducing everyone’s income.


What's missing in Keynesian economics is the possibility that rather than trying continually to pump life into the existing, credit-driven economic system (which requires us to keep pumping out vast amounts of consumer goods beyond any reasonable capacity for morally conscionable consumption), maybe somebody somewhere ought to be thinking about the new economy trying to be born.

Krugman--by his own admission--is attempting to recreate and extend the 1950s economy he sees as resulting from the New Deal and World War Two. There is precious little evidence in this writing that he really has any futurist understanding of places either the American or world markets may be taking us.

Barack Obama is at least partly right when he says, ”But at this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe.”

Only government either possesses or can commandeer the resources necessary to attempt either to keep a particular type of tottering economic system on its feet when most of the conditions which created it have changed.

Only government either possesses or asserts the power to turn back time six decades for a do-over of the New Deal.

Comments

Tyler Nixon said…
Well said. Nothing like fresh thinking from the dead hand of the 1930's to guide 21st century economic interventionism by a government probably far more massive than even FDR ever would have envisioned. Krugman is a guru in his own mind. His tripe is little more than the peddling of dried-up snake oil, fanning crisis thinking to justify his national statist ideology.
Brian Miller said…
The hilarious irony is that the 1950s economy is dead and gone -- the tottering rotten corpse they're trying to keep shambling forward is an economy with most of its industrial base rotted away.

The 1950s manufacturing economy had big factories in Kensington, high wages, shorter work weeks, affordable housing, low taxes, and save-n-spend.

The present system they're trying to prop up has destroyed neighborhoods in Philadelphia and other big cities, huge slave-labor plants in China, low and falling wages, long work weeks, insanely expensive housing, skyrocketing taxes, and borrow-n-spend just to meet necessities for most working-class people.

The sooner it dies, the sooner the working people of this country will get a shot at the American Dream again. (And no, that "dream" is not 40 years of debt slavery in exchange for an overpriced and poorly constructed house built by illegal immigrant labor out of glue and sawdust -- regardless of what Barney Frank would argue).

Popular posts from this blog

Comment Rescue (?) and child-related gun violence in Delaware

In my post about the idiotic over-reaction to a New Jersey 10-year-old posing with his new squirrel rifle , Dana Garrett left me this response: One waits, apparently in vain, for you to post the annual rates of children who either shoot themselves or someone else with a gun. But then you Libertarians are notoriously ambivalent to and silent about data and facts and would rather talk abstract principles and fear monger (like the government will confiscate your guns). It doesn't require any degree of subtlety to see why you are data and fact adverse. The facts indicate we have a crisis with gun violence and accidents in the USA, and Libertarians offer nothing credible to address it. Lives, even the lives of children, get sacrificed to the fetishism of liberty. That's intellectual cowardice. OK, Dana, let's talk facts. According to the Children's Defense Fund , which is itself only querying the CDCP data base, fewer than 10 children/teens were killed per year in Delaw

With apologies to Hube: dopey WNJ comments of the week

(Well, Hube, at least I'm pulling out Facebook comments and not poaching on your preserve in the Letters.) You will all remember the case this week of the photo of the young man posing with the .22LR squirrel rifle that his Dad got him for his birthday with resulted in Family Services and the local police attempting to search his house.  The story itself is a travesty since neither the father nor the boy had done anything remotely illegal (and check out the picture for how careful the son is being not to have his finger inside the trigger guard when the photo was taken). But the incident is chiefly important for revealing in the Comments Section--within Delaware--the fact that many backers of "common sense gun laws" really do have the elimination of 2nd Amendment rights and eventual outright confiscation of all privately held firearms as their objective: Let's run that by again: Elliot Jacobson says, This instance is not a case of a father bonding with h

The Obligatory Libertarian Tax Day Post

The most disturbing factoid that I learned on Tax Day was that the average American must now spend a full twenty-four hours filling out tax forms. That's three work days. Or, think of it this way: if you had to put in two hours per night after dinner to finish your taxes, that's two weeks (with Sundays off). I saw a talking head economics professor on some Philly TV channel pontificating about how Americans procrastinate. He was laughing. The IRS guy they interviewed actually said, "Tick, tick, tick." You have to wonder if Governor Ruth Ann Minner and her cohorts put in twenty-four hours pondering whether or not to give Kraft Foods $708,000 of our State taxes while demanding that school districts return $8-10 million each?