Is Keynianism dead?
Danny Lemieux on Aug 05 2011 at 12:00 pm | Filed under: Uncategorized
The Wall Street Journal, having reluctantly arrived at the same conclusions that we Bookwormroom groupies had already formulated, feels that Keynesianism has been totally, totally discredited by recent events
“The economies of Europe and the United States have arrived at the moment when they no longer have any conceivable hope of being able to pay for the huge public commitments they’ve amassed the past 40 years.”
Will this be the end of Keynesian ideology?
Hardly!
After all, look around the globe and we still see many, many people, including many in academic positions, still ideologically fixated on long-discredited beliefs ranging from astrology, rain dances (weather manipulation by humans), alchemy (e.g., transforming government programs into gold), witchcraft (Women’s Studies), Marxism, eugenics, etc, etc.
Keynesianism, like Marxism, represents an ideology of hope that goes against fundamental human nature (economics, after all, is a social science). Fallible human beings easily forget. When the people forget the lessons of these recent years in a generation or so, watch for Keynesianism once again to raise its head and lead us to disaster in the name of “hope”.
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20 Responses to “Is Keynianism dead?”
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Danny, Keynesianism is a lot like Marxism: It’s an “if only” proposition. I remember how abc would tell us that “if only” the world would follow his prescriptions, we could stimulate our way into a new prosperity. Zach repeats the same meme, blithely telling us how simple it would be to get out from under, starting with yet more expenditures of wealth our kids won’t be creating until 2030.
See, “if only” people would follow the formula, we could have peace and plenty. The fly in the ointment is reactionary human nature. If you’re a Marxist, you solve that with mass repression. If your Keynesian, you solve it by destroying the economy in order to save it. Do you recall the wounded soldier in “Catch 22,” swathed head-to-toe in bandages, who had a tube at both ends? One tube went into his mouth to drip nutrients, while another tube carried waste away from his crotch. Every week a bored nurse would come in and switch the tubes. That’s Keynesian economics.
Keynesianism is not ebbing and will not die because it just ’feels’ right. It pulls at the heartstings of charity and altruism, that instinctive need for approval and loved. Capitalism and working for one’s daily bread just doesn’t have that ‘other’ orientation despite the deeper idea that what is good for me is also good for you. It’s hard to imagine that doing for others is the truly selfish approach; just because my helping others makes me feel good doesn’t mean it makes the others feel good.
CM, I am going to have to go into more therapy to get over the trauma of your Catch 22 analogy. Spot on, though!
Is Keynesianism dead? We can only hope so – every economy it gets near that takes it seriously dies. We can only hope!
The people supporting Keynesianism have been bought and paid for. This is their job, their livelihood, thieir career. They no longer have minds, let alone integrity. Until they are blown out of the scene or die of natural causes they will continue the same line. Why do some expect that they will come to their senses when they have no sense.
S&P downgrades U.S. credit rating for first time
The move came even though the Treasury Department said that it had found a math error in the firm’s calculations of deficit projections, according to a person familiar with the matter.
http://www.washingtonpost.com/business/economy/sandp-considering-first-downgrade-of-us-credit-rating/2011/08/05/gIQAqKeIxI_print.html
Math or Maxism. No, it’s not a multiple choice. Monday is gonna be an ugly day.
Tough love, Sadie. Only external forces — if not voters then the market — will bring the spenders to heel.
Greetings:
Zombie Economics, they be. They’ll be back.
Tough love and Tough sh*t for the rest of us!?
I smell QEIII in the air and the stench will be delivered by November when the Super Congress of 12 meets behind closed doors. It’s a damn stink bomb!
As a result of its mounting losses, the US Postal Service said it would not be able to make a legally required $5.5 billion payment in September to a health-benefits trust fund.
http://news.yahoo.com/us-postal-warns-could-default-222059604.html
Where will the $5.5 billion come from?
Capt. Malcolm Reynolds: Y’all got on this boat for different reasons, but y’all come to the same place. So now I’m asking more of you than I have before. Maybe all. Sure as I know anything, I know this – they will try again. Maybe on another world, maybe on this very ground swept clean. A year from now, ten? They’ll swing back to the belief that they can make people… better. And I do not hold to that. So no more runnin’. I aim to misbehave.
Sure it’ll come up again. Sure as we know anything, we know that economics is a discipline enamored with intellectual fallacies. No amount of reality seems to be able to shake their faith in their own ignorance. It is for that reason that we must develop a heartfelt skepticism of economics and their theories. It isn’t that we can’t believe the “experts.” It’s just we should demand evidence, especially when their illusions are to be forced upon us through politics or government action.
So teach the children well, economics is the dismal science and if it is let off its leash, it will create a dismal future.
JKB, you put it about as well as it’s ever going to be. Thank you.
Danny Lemieux: Will this be the end of Keynesian ideology?
No, because Keynesianism wasn’t properly applied. The stimulus was too small and misdirected, as Keynesians said at the time. More importantly, it wasn’t used in the lead up to the debacle, when the U.S. and other countries should have been tempering the economy, and setting money aside. You do understand that Keynsianism is countercyclical? Running up debt on social programs during the boom years is not Keynesianism.
Charles Martel: Zach{riel} repeats the same meme, blithely telling us how simple it would be to get out from under, starting with yet more expenditures of wealth our kids won’t be creating until 2030.
It’s rather difficult to understand why you still misrepresent our views. It’s not as if we haven’t stated it multiple times on this forum. Perhaps you can remember when we said that closing the deficit gap would require modest tax increases and substantial cuts. Or when we pointed out the hierarchy of financial problems facing the U.S. and other developing nations:
Short term: unemployment
Mid term: deficits
Long term: entitlements
No, the cost should be borne by *you*, not your children. That means getting people to work, and then making necessary adjustments to the budget so that expenditures meet revenues. This is not a problem that is beyond the reach of the U.S., but the political system seems to be dysfunctional. According to polls, most Americans want Social Security and Medicare. To sustain these programs will require some changes to the programs, but will also require increased revenues. Those who refuse to consider revenues would drastically limit or dismantle these programs. The U.S. simply has to decide how much of a social safety net they want, and then pay for it.
SADIE: S&P downgrades U.S. credit rating for first time
Yes, that’s what happens when you break your economy, then rattle the markets by publicly discussing whether or not you will pay your bills until the last possible day.
Keynesianism is just one face of 11B40′s “zombie-ism”. You can shoot that one in the head and dispose of it, but there will just be another zombie, of a similar ilk, coming after you, right behind it.
It’s like eating tofu to express vegetarianism. You can discard the tofu (finally!) but simply switch to aragula instead. You haven’t abandoned your basic position of refusing to eat the meat that is perfectly fine for you. You’re still stuck on stupid.
So Keynesianism as a noun may well die, and its specific positions be repudiated. But the concept of relying on the government to manipulate the money supply, and the economy, to our benefit, will never die. It has always been there, and will always be there, as a part of the endless debate. Just with a new face, as in a particular commenter’s desire to insist always on the benefits of their “managed economy”, in which the intellectual elite bureaucrats always know far better than the rest of us what is good for us.
I read this somewhere and filed it away. You can insert one “ism” for the other and it would still have merit.
Socialism is a whore with an intellectual venereal disease. How can socialism continue to be attractive when the aftermath of her infection is still visible in Russia and eastern Europe? Those who are attracted by socialism are looking at her painted face, not at the open sores still visible on her body.
Just as I said at the start of this thread, Kenynesianism, like Marxism, is an “if only” thing. If only the nostrums of the Keynesians had been applied years ago as a countercyclical preventitive to the ensuing economic meltdown! If only Lenin had eased up on the terror and mass murders to establish a more motivated workforce! If only the stimulus had been bigger and better directed!
If only the Keynesians had spoken up when the government spending spree began.
If only.
None of this will matter if the government insists on playing games with their accounting methods. They need to follow the same rules of accounting that they require of businesses.
The only benefit I can see to the “super congress” group is that just maybe the 12 will be chosen with an eye to actually understanding the economics involved. I’m _darn_ certain that the majority of congressional members _don’t_.
The thing that bothers me about “The Twelve” is that if they don’t reach agreement, they’ll reduce both defense and entitlements supposedly. I’ve heard two versions – first, that half of the reductions will be taken from each, and second that each will have their budgets reduced by half. Either is probably unsustainable.
So why would the Dems agree? I think it’s because they are of the opinion that if Defense is reduced (by any amount) that it will be harder to reinstate than the entitlements. With the “stuck pig” phenomenon in mind, there will be constant clamor to up the entitlements. Defense, on the other hand is the red headed stepchild…unless we have another 9-11, people are fine with a small DOD.
To some extent I agree with them except for two things: “Good fences make good neighbors” and the fact that technology minimizes – or at least reduces – body count, and technology doesn’t come cheap.
And one other thing – peace time makes for lousy generals when the need for war action arises. Peacetime promotions are political. The problem is that wars are bad. So…peace is good, but makes for bad generals when war comes, and then the bad generals extend the agony of war.
Bad losses in A-stan this AM, by the way. We need to do what needs to be done. The Pols are doing their best to make this another Vietnam quagmire.
The news is reporting that the 31 killed in A-stan were from Seal Team 6.
“Unless America gets back to buying military ships, planes and vehicles soon, the industries that provide these goods will dry up and blow away. Then, when the next war comes, we’ll be back to 1917: anxious to spend billions, but no place to spend them. Well, maybe the Chinese will sell us something.” – Heritage Foundation’s James Jay Carafano