The Keynesians Were Wrong Again

Discussion in 'Economics' started by Tom B, Sep 11, 2009.

  1. jem


    when does government get too large? when does the spending create too much of a tax and inflationary burden. When is it that government paid workers are paid so well that the private sector can not handle the burden.

    See California....
    #11     Sep 11, 2009
  2. I'll be absolutely honest: I had convinced myself that bad things were going to happen, but I underestimated the severity, and more importantly, I wouldn't have sold off such a major chunk of my assets, which is a big step and takes a big level of confidence, if it hadn't been for his counsel.

    There were other people warning of some red flags and such, but they're comments were no where close to being as particularly spot on as the gentleman I'm referring to.

    Ominously, he sees absolutely no light right now because no one with credibility can point to a real reason to believe in job growth, let alone quality job growth. Even Wall Street, with high paying jobs, is cutting pay and workers, and the signs point to a permanently shrunk financial sector there (not that a heavy reliance on financial services has been a boon to many nations).

    All this talk of windmills and solar panels - he's as skeptical of that as rainbows and unicorns, and there's not really any reason to disagree, when oil, coal and natural gas producers can ramp up production, lowering costs, to kill off those higher cost alternatives, any time they want.

    No one can answer the critical question of where the new jobs in the U.S. are going to come from. We can't just keep relying on the government to hire people, as that's one of the reasons our debt and deficits have exploded (and local units of government are starting to cut pay and jobs), and health care services are beginning to soften.
    #12     Sep 11, 2009
  3. To the OP,

    I'm never really a proponent of Keynesian policies, but we should be fair in saying that there were huge flaws in Reagan's policies also.

    If a person were to argue that it was Reagan who started the mess that we are in right now, I would have a hard time arguing against that point. This is coming from a Reagan fan.

    Reagan did what was necessary to accomplish his objective. This included massive debt spending. It could be argued that this kicked off a culture of borrow and spend in this country that just escalated from there, landing us in our current situation.

    So he accomplished his objective, and the borrow and spend policies should've died there, but they didn't. Now we muct decide if we want to return to the status quo. If the answer to that is yes, then the government is probably taking the best step that they realistically can. That is, tell the people whatever they need to hear to allow you to inflate the currency as quickly as possible. While this screws most everyone for generations to come, the other side of the coin is that homes retain their value. Bad debts are resolved at banks, as within a couple years wages increase to counter inflation.

    Conversely I would argue that we shouldn't return to the status quo, but that would require the government to sit on their hands and let us reach equilibrium. Not gonna happen.
    #13     Sep 11, 2009
  4. Make no mistake, there will be a shift to solar power during my lifetime. That is completely obvious. For the most part I'm not sold on wind power for most locations. It makes sense in some locations though. This is coming from someone who has incentive to talk it up as much as possible.

    I think that a lot of people really haven't kept up with solar technology during the past 2 years. It is almost viable for the average joe right now, with what are essentially garbage panels. They are on average only 20% efficient. There are already huge advancements coming down the pipe, and costs have plummeted. All this while oil dropped to $30/barrel.

    OTOH, this sector will not provide a huge number of jobs. In fact, it won't even provide a noticeable number of jobs.
    #14     Sep 11, 2009
  5. homes is not everything

    resolving debt this way probably will restrain new private credit for years

    wages will not increase to counter inflation as global workforce competition and local unemployed will pressure wages

    overall reliance on growth model might be not sustainable
    #15     Sep 11, 2009
  6. logikos


    The current president ran on a platform of not continuing the status quo. It is curious they are doing just that in an attempt to prop up the economy, not just to boost confidence in the current administration so they can gain support for their reforms, but also to help keep their overwhelming control of Congress the next election cycle.
    #16     Sep 11, 2009
  7. What Keynesianism?

    There is very little real keynesianism now.
    The iraq war is almost over.
    Afganistan is too cheap.
    No new fighter jets.

    Health care is NOT keynesianism.
    #17     Sep 11, 2009
  8. The Libtards can't see far enough ahead to recognize that THIS is what "Obama-ism" fosters. (All they know is "buy a vote today, let somebody else deal with the mess"...:mad: )
    #18     Sep 11, 2009
  9. Homes aren't everything but it is at the root of the problem. Inflation makes all debt cheaper relative to cost of living. Wages will always keep up, although they do lag inflation during recessions.

    I've not seen much evidence that local unemployed are pressuring wages downward. Most companies do not decrease wages, but rather simply lay people off. The ECI hasn't yet gone negative, and inflation on a consumer level isn't out of control YET.

    Recessions will always result in a cash flow away from the middle class and toward the upper class, as the middle class find themselves much too leveraged and just barely undercompensated. Lower class just continue to be lower class.
    #19     Sep 11, 2009
  10. The same can be argued by all the supply-side supporters. We've never had real Keynesianism. We've also never really have provide a good environment for supply-side to work.

    Subsequently, both side claim that the other side is a failure. In reality, they are both failures, because they are both just pseudo versions of the real thing. We change presidents and agendas too frequently to create the appropriate environment for either to be fully implemented.

    If completely implemented though, supply-side creates a society where even the poor have a much higher standard of living, in absolute terms. It is a question of the wealth gap. In a true supply side economy, the gap is also larger between the poor and the rich. So even though the poor are better off, the feel as if they are worse off.
    #20     Sep 11, 2009