This is the first time the ideas of Keynes have been tried, so says National Government Radio.
Source link: http://blog.mises.org/9346/first-time-for-keynes/
First time for Keynes?
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I read that this morning too and scratched my head. Did they forget about an entire decade?!
This is a feeble ploy to cover up the consistent failure of Keynesianism.
“first time the ideas of Keynes have been tried…says…Government Radio.”
Lol @ contradiction in sentence.
Funny how in the end of the article they start about how economics is not like other sciences where you can`t perform `controlled experiments`, and therefore no theory can be actually `proved`.
Does it not follow that economics IS not like other sciences and all their `Keynesian multipliers` and `how much` the economy should be producing are basically bullshit?
Seems like it really is hard for some people to follow a thought to its logical conclusion, especially if there`s some big cognitive dissonance there.
Everything old is new again.
“Yes, Roosevelt expanded government spending, with an alphabet soup of programs. But he never spent as much money as Keynes said he should have.”
Probably the number one problem with hypothesis testing methodology in economics. There’s a million reasons that could invalidate the current “experiment”, leading us to beleive that the theory is still true.
Perhaps this experiment will fail because of lack of faith?
Second of all, Keynesianism never really died. In fact the post 1971 monetary regime is probebly what Keynes would have wanted. Governments managing the money supply, controlling interest rates and expanding credit – and trying to “turn stones into bread” in the process.
Since economics can’t be proven, according to this article, why is Keynes theory the right move for Obama?
If a theory can neither be proven nor disproven (and the Keynesians evidently don’t consider the stagflation of the 70s or the high unemployment of the late 30s as disproofs) then it can only be called a religion. In religions it is common for adherents to debate what their prophet really meant because the scripture is the only evidence they have (since neither proof nor disproof is possible). It is also common in religions to have appointed authorities who pronounce on what the scriptures mean. Keynsian economics has both these traits, with Keynes as the prophet and people like Krugman as the priests.
I think Martin Hollis makes this point, that positivist econ is pretty much like mysticism.
What really caught my eye was this:
“The Keynesian formula is straightforward. First, you estimate how much the economy should be producing — given all the people and factories and offices. Blinder’s guess is $15 trillion. Then you look at what the economy is actually producing. He puts that at $14 trillion.”
Now correct me if I am wrong but that calculation would only work if one assumes that those increasingly inflated dollar figures actually represent tangible goods that the U.S. economy should be producing or should have produced for which others can readily purchase for their own consumption. The calcluation also seems to make the assumption that the U.S. is the manfacturing powerhouse that it once was decades ago and we all know that is not the case. It is a given that the U.S. is largely service oriented. True one can purchase a service such as a dry cleaner but what if you don’t have any shirts to dry clean? That service is not useful to you until you obtain a shirt. So, where do you get your shirt? Usually from some foreign nation that actually makes the shirt (a good) that you want to buy.
Given all of those apparent assumptions I think it is very logical to conclude that those figures grossly over estimate the goods actually produced in the U.S. and will lead to higher and higher rates of inflation because of it.
Hello everyone. I’m new here. In light of all of all the economic worries recently and m deepening confusion of it all I decided I needed to learn something. I read Ron Paul’s book “A Manifesto” and I enjoyed very much what he wrote on the economy. I want more and I’d like to ask the bloggers here what’s the best literature to read for a beginner to the Autrian School who doesn’t have much background in economics. Appreciate the help, thanks.
Prettyskin:
That’s the 650 billion dollar question isn’t it?
to all:
Why can’t a theory at least be proven with hind sight?
What does the Keynes “math” have to say about what should have happened with Roosevelt? We know what he did, we know how much he did it with, and we know what the results were. If the theory is truly a theory, then it should be able to predict a correct outcome on historical data.
Then there is Zimbabwe. Another test case. We could come up with them all day long.
What about a simulation? Oh, nevermind, you can’t code for “Animal Spirits”…..
Wouldn’t this multiplier function all the time? Or does it rely on the intent of the government when it spends?
Really, the Gov. spends all the time. Couldn’t the effects of this spending be tracked and compared to theoretical calculation?
Oh, yeah, I forgot again. “Animal Spirits” are incalculable.
Heuristic: I think you are right. The more I look at it like that, the more it looks like religion not science. It’s actually a rather sobering thought. I don’t feel comfortable with the idea that they’re playin’ ouja with our future. But not being able to prove anything makes the entire theory no better than a crap shoot.
Roll the bones. Put a trillion or so on 8 hard, throw ‘em and pray it ain’t a 7. Great way to “fix” the economy.
And this number they came up with. 650 Billion is about 2 grand each if they just cut us all a check.
I would put mine in the bank. Then the bank gets it. Why do we have to give it to some body we don’t know, and then we have to work for them to give it to us? Excuse me, but isn’t at least 2 big ones of that mine already? It was my share of the burden, let me spend the play dough!
Or is there some other “unseen” force that requires the moola to be Washed and Blessed by the Anointed few before I get my grubby plebeian hands on it? Perhaps they say a prayer to the Animal spirits or something and that is how the “Multiplier” works. Fishes and loaves kinda thing.
I don’t know. Sounds like BS to me. What can you expect from D.C.? Rational thought? Nah! Nobody gets elected for that!!
My wife just came up with something else. If the problem is world wide, why aren’t the calculations on the the GDP for the WHOLE economy world wide?
Joe made a really good point:
That the spending we do here in the US is for mostly foreign goods! How is a domestic stimulus supposed to be effective if all of our trading partners aren’t doing the very same thing, at the same time? Where is the science in that?
January 31, 2009
Keynes Predicts The Fate Of The Keynesians!
npr – national propaganda radio
At least it is now clearly and unequivocally stated by npr that the scheme about to be hoisted upon America is Keynesianism.
So, every bit of its politically motivated thievery can be directly attributed to Keynesianism. And every assault on savings and capital can be tied directly to Keynesianism.
And the advocates of these schemes can now have ‘Keynesian’ stamped upon their brows!
As Keynes said “We’re all dead in the long run,” which means that these zombies of Keynesianism will crumble to dust as the dawn of classical liberalism breaks over the horizon.
to jason:
others will have their recommendations, but i liked jim cox’ “The Concise Guide To Economics”
(“literature” link, or get it in pdf via scribd).
hazlitt’s “economics in one lesson” or gene callahan’s “economics for real people” are good primers.
faustino ballve’s “essentials of economics” is slightly more advanced than the above.
Wow, NGR is really selling shameless propaganda here:
“Keynes, a British economist who died more than 60 years ago, inspired President Barack Obama’s plan to save the U.S. economy with a massive round of government spending.”
They’re acting as if our Savior already saved America. Now everyone go thank God for sending His Holiness BO to the United States.
The Mormons might think the second Jerusalem is somewhere in Missouri, but it’s pretty clear that leftists believe it’s in Washington D.C. right now!
I heard this story as it was being broadcast for the first time on NPR. UNBELIEVABLE !!
This should be put in some media textbook as an example of the practice of free-form fact use. How anyone could ignore that Keynesianism has been the primary thought behind US economic policy for the last 40 years or so is beyond belief.
And because most people are only marginally familiar with the most basic terms of economics, this reporting is accepted as complete and relatively unbiased.
Our complete lack of economic education and simple awareness of fundamental financial issues is coming home to roost.
“Throw money at it.” Whose money, what money?
Can anyone point me in the direction of good analysis (this site is VERY helpful) of the long-term implications of our failure to let the markets provide a solution? Example: So what if the banks are nationalized? (It’s already happened in my opinion-market caps are off 74%+ in 18 months and the feds have injected hundreds of billions).
What happens next if “bailouts” don’t work? (I don’t think papering over this will fix it) What are the risks? Does our currency collapse? Do our financial markets completely fail?
It has also been the general thinking that we have tried free market economics and it has failed. I think Keynsian socialists may suffer from insanity. According to Einstein, insanity is “doing the same thing over and over again and expecting different results.” I think that describes socialists (in all their forms) in a nutshell. Every socialist or communist, going back to Plato, thinks that his or her “strain” is the best and if they were only able to institute their ideas (which have never been tried) they could create the perfect society.
I heard this segment while driving and I almost crashed my car. What vapid drivel.
Tragically, we have the same problem of MalEducation here in Canada.
I have been trying to promote the taping of only one, hopefully more, but at the very least one dedicated instructive episode on our public TV here in Ontario (“TVO” = TeleVision Ontario, I guess) to present Austrian Economics to Canadians.
This is because I believe the world’s nations are ALL on the same sinking Keynesian ship. Is it not a strange feeling to see how coherent and logical Austrian Economics is personally, but know that most people have no idea that this school of economics even exists? How could one man Keynes have misled everyone for so long?
There is so little knowledge of the harm we are currently doing with a very similar mindset in all the Treasury Departments and Central Banks worldwide. It is not just Ben Bernanke, Tim Geithner, Hank Paulson, and most politicians who are misled and are misleading The Prople in America. This is a grievous problem everywhere.
Please see http://www.tvo.org/cfmx/tvoorg/theagenda/index.cfm?page_id=3&action=blog&subaction=viewpost&blog_id=323&post_id=11746
If you watch the video of the last show on economics on The Agenda (which covers a lot of different political-social topics very well) you will see smart people talking about the problems of all the world’s nations, but there is always a “Keynesian Undercurrent” or underpinning or undergirding to the thinking of the participants.
It is as though the Frame of Reference is always Keynesian in nature. This seems to blind the participants to exploring much anything beyond the elephant’s trunk.
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