Mendicate Bias said:
badgenome said: This also works for "How to argue for Neo Keynesianism." |
Are you totally against Keynesian economics or just in the governments approach to it regarding the current economic problems. (1)
Wouldn't you say, even though the economic theory itself did not exist at the time, that a keynesian principle was used in response to the great depression. (2)
Wouldn't it also be rational to say that any centralized government, no matter the counry will always take a keynesian approach to a fiscal crisis, versus allowing instability to threaten their government? (3)
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If I may, I'd like to respond to this post.
1) Keynesian economics doesn't work. Forget about morality (stealing from Pete to give to Paul), or what happens in theory versus reality (thanks to cronyism), the theory itself is deeply flawed. Take, for example, the "paradox of thift", where saving money causes a slope in consumption, which in turn lowers employment, which causes more saving. The fact of the matter is that saving is essential for economic growth because it's the only way in which businesses can attain funds in order to invest.
Keynesianism has no idea what interest rates even are. They just see it as a number which should always be as close to zero as physically possible. They don't understand that it's a price on time preference. Just as fixing the price on, say, oil causes market distortions so does fixing the price of time preference.
2) The Keynesian principle was used in response to the great despression. Hell, it was the keynesian principle that turned the recession into the great depression (currently at work, if you want sources for this claim, ask, and I'll dig them out later). It's the keynesian response that's turned this current recession into some 5-years (and more to come) of uncertaintly, stagnation, and regression.
3) They will always take the keynesian position. Doesn't mean it's right. In fact, taking the Keynesian position will cause more instability. Maybe that's what they want. More instability means they can claim more powers as a police state.