Mr Khan said:
Well, not straight to Japan. International trade is not quite so seamless as that, such that demand in one market necessarily produces jobs in that market even if the demand were 100% for foreign made goods. Enough of a boost and NoA would have to hire people, or more Gamestop branches open and they hire more associates Not that video games are entirely a product where increased demand creates more jobs, though. That's one of the real problems of demand-based economics: it was devised some 60 years before the information age, whereby content generation doesn't have to match the scale of demand, and only delivery networks have to expand. Unlike, say, GM, who rapidly reaches a bottleneck of how many cars they can sell should there be a surge in demand that they don't have enough factories or workers for. There's still much to be said for demand economics (moreso than the giant tax-evasion scam that is supply-side economics, anyway), but the math complicates dramatically as the notion of "product" becomes more dynamic. |
Yeah... though Gamestop hardly make anything on new games. It's why they push used games so much. Really, retail margins in general are lower then they've ever been.
To quote Keynes... “A favorable balance, provided it is not too large, will prove extremely stimulating; whilst an unfavorable balance may soon produce a state of persistent depression"
He wrote this after the route of stimulating yourself out of a depression became the standard.
It's worth noting as well that Keynes was for Free Trade,(violently so) and Anti-Tariff. So he wouldn't fall into the usual camps afraid of the trade deficit either.
He thought the only way out of the problem was to get rich people to invest in exportable goods.
As for Supply side economics being a tax evasion scheme... tax cuts are demand side policies. Tax cuts are something Keynes would of supported... greatly.
To quote Keynes....
"Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance, than an increase, of balancing the budget. For to take the opposite view to-day is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more;—and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss. ”
He actually saw such "Tax Avoidence schemes" as equally valid as stimulus spending. Since he argued, they had the same effect.
Substantially the same argument also applies to a relief of taxation by suspending the Sinking Fund and by returning to the practice of financing by loans those services which can properly be so financed, such as the cost of new roads charged on the Road Fund and that part of the cost of the dole which can be averaged out against the better days for which we must hope. For the increased spending power of the taxpayer will have precisely the same favourable repercussions as increased spending power due to loan-expenditure; and in some ways this method of increasing expenditure is healthier and better spread throughout the community. If the Chancellor of the Exchequer will reduce taxation by £50,000,000 through suspending the Sinking Fund and borrowing in those cases where formerly we thought it reasonable to borrow, the half of what he remits will in fact return to him from the saving on the dole and the higher yield of a given level of taxation;—though, as I have pointed out above, it will not necessarily return to him in the same Budget. I strongly support, therefore, the suggestion which has been made that the next Budget should be divided into two parts, one of which shall include those items of expenditure which it would be proper to treat as loan-expenditure in present circumstances.
http://gutenberg.ca/ebooks/keynes-means/keynes-means-00-h.html
It's worth noting, that one of Keynes main reasons for supporting public works was that... by the government paying for stuff to be done. Less people would be paid unemployment. He would actually be against increases in unemployment, and money given "for free". Instead wanting to put people to work, hopefully gettin something out of it that would of been going to the poor anyway, getting that money back and then getting some back in taxes.
In otherwords, "If we're paying someone $150 a week to be unemployed, why not pay them $300 a week anyway, since we're basically getting a deal... and since this $300 would be borrowed, taxes for unemployment would be lowered. Meaning more spending power for tax payers."
Or in his direct words.
" If the dole was as great as a man's earnings when in work and was paid for by borrowing, there would be scarcely any repercussions at all. On the other hand, now that the dole is paid for by taxes and not by borrowing (so that a reduction in the dole may be expected to increase the spending power of the taxpayer), we no longer have to make so large a deduction on this head."
Of course... one could argue that we are facing such an issue since... a lot of government spending is based on borrowing... which he would of hated... and the huge trade deficit.
Even Keynes probably woud think we've done fucked up with our debt naturally so high in the first place and having a trade deficit. Keynes was a big proponent of country self sufficency.
So generally, if you support Keynsian economics. You should support tax cuts just as much as any additional spending. Becuase Keynes did. Economic thought that doesn't is not in actuallity based on demand side economics or Keynsian economics but instead supported by political support or specific policies to help the poor trying to cloak itself in economic legitamicy. Not that there is anything wrong with wanting to help the poor... but don't try to sell someone a fork by telling them it's a spoon. Otherwise they're just going to be mad when they find they can't eat soup.
That the Bush tax cuts didn't work... nor the stimulus... isn't exactly surprising from a Keysnian perspective due to the aforementioned huge trade deficits. If you don't think trade deficits matter... you shouldn't be a Keynsian but instead Neo-Classical in terms of economic belief.
