Article Image
News Link • Economy - International

Questioning Keynes

• CNN Money

2 Comments in Response to

Comment by Die Daily
Entered on:

I wouldn't say there's NOTHING wrong with Keynesian economic philosophy, that's for sure, but it is over-maligned. For many reasons. One thing, Keynes was very clear that you have to pay deficits back as soon as possible after the recovery. And one is supposed to sock away trust funds in the good times too. This has NOT happened, so Keynes hasn't exactly been tried.

The fact is, we could have virtually ANY central control scheme, and it would be little or no better. What economists blithely refer to as "stochastic variables" (meaning "variables in the model that are driven by stuff that isn't anywhere in the model") rules supreme. This would be true of any model, as the world stands right now, because as long as oligarchs and their cartels and client governments can manipulate the economy.

Don't take this as an endorsement of Keynes. It's anything but. It's just that I notice Keynes not getting a fair shake. Same as when Austrian philosophers get creamed for advocating a "free market" of the type that has not yet been tried. When anti-Austrians point to the disastrous consequences of all the deregulation that's gone on in the last 15+ years and say "how do you like your free market?"...they are being just as absurd. That "deregulation" DECREASED the freedom of the market, where regulating was actually keeping the field much more level. We shouldn't do the same thing to Keynes. Should we take the abject failure of Friedman's Chicago School of so-called "libertarian free market values" as proof that all Austrian types are idiots?No we should not...but that's kind of the treatment Keynes is getting here...

Comment by Anonymous
Entered on:

There is nothing wrong about the "Keynes law" in economics. Public spending will stop recession – the Keynesian "law" as un-modifiable as the law of supply and demand. It is just wrongly applied and the bad result blamed on Keynes by politicians whose abrasive or destructive political agenda must have a scapegoat.

For example, take Obama’s massive bailouts. This is not Keynes’ economic concept of public spending to pump-prime a declining economy – it is a corporate rescue of massive debts gone bad [mad]. Paying up huge foreign debts with national savings [known to the laypeople as their tax money] is not the same as massive spending for public works, a good example of pump-prime spending for a depressed economy. Government borrowing for this purpose is totally different from sub-prime loans or borrowing that leads to nowhere but financial disaster or economic debacle. This distortion is blamed on "Keynes’ law" on how the receding economy is led out of depression.

Another example of the "Keynes law" that vultures take advantage of is with regards to galloping inflation. Government spending can only intentionally create so much rate of inflation in order to respond to a certain level of unemployment when the depressed economy is rapidly losing so much jobs. "Keynes law" has a corresponding precise curve in the graph – the ascending rate of inflationary spending reflects the equivalent of the declining rate of unemployment. When the arrow is going up for inflation, the arrow is going down for unemployment.

But this did not happen in the 1970s. Inflation was up and unemployment did not go down but up. To us economists, this is better known as "stagflation". A pump-prime economy is not supposed to be stagnant, and employment should have increased when consumer spending was up [the Philips’ Curve Paradox]. The distortion of rising prices was oil-based created by OPEC. It was not generated by the "Keynes law" on inflation that spurs employment.

Thus faulting the Keynesian economic principles in this manner makes me yawn with such a revolting indifference that I cannot help but share this concern with those who pretend to know everything with nothing.


Join us on our Social Networks:


Share this page with your friends on your favorite social network:

Purse.IO Save on All Amazon Purchases