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Early economics was really political economics and most early economist where political thinkers and philosophers. A couple of points: 1. negative externalitie

Early economics was really political economics and most early economist where political thinkers and philosophers. A couple of points: 1. negative externalities make necessary laws and regulations if you want an efficient market. 2. Keynesian economics (presumably what you referring to) has nothing to do with restricting free trade, but deals with the boom-bust cycle and how a government can manage it.

paganel 10y ago
> 2. Keynesian economics (presumably what you referring to) has nothing to do with restricting free trade, but deals with the boom-bust cycle and how a government can manage it. Yeah, I'm now reading Benjamin Constant (I've read guys like Jean-Baptiste Say and Jeremy Bentham before) and there was is close to no mention in their works about the government having the intrinsic need to "manage" anything. Which brings me to my second question: who has empowered the Government to actively manage economic cycles? And assuming it has acquired these powers all by itself, based on which premises/presumptions does it accomplish its economics-related actions? It's funny reading Constant and how he warns about the perils of moral hazard associated to the active involvement of Government in the economy. 200 years have passed and we still make the same mistakes.
- matt4077 10y ago
  > who has empowered the Government to actively manage economic cycles? Voters > based on which premises/presumptions does it accomplish its economics-related actions? Find causal relationships -> create causes for effects that you would like to see > the perils of moral hazard associated to the active involvement of Government Maybe the 18th century governments overstepped their boundaries when, dunno, they stopped slave labor of 8-year olds in coal mines. Today, the term applies almost exclusively to private industry. Mostly financial.
  - deleted 10y ago
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  - aminorex 10y ago
    Voters did not authorize Smoot-Hawley or the confiscation of gold or the disregard of the money Clause of the Constitution. That was accomplished by incompetents, criminals and traitors occupying political office. It occurred about the same time that voters in Germany elected Hitler Chancellor, and about the same time that passports were institutionalzed, to prevent freedom of movement. The 19th century abolished slavery. The 20th century re-imposed it, and made it universal, creating the public-private complex which owns our labor today.
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- deleted 10y ago
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- ianai 10y ago
  Adam Smith "wealth of nations"
- solatic 10y ago
  > who has empowered the Government to actively manage economic cycles? Why do we need a government at all? Why not live in anarchy? Because we, as a country/people/nation who give our Government at least some sort of legitimacy, desire a large institution to protect us. Historically, the only kind of protection we desired was from external foes who would wage war and enjoy the spoils thereof, but there's general agreement that we also need a government to protect us from ourselves, whether that's from petty criminality or to enforce our contracts, along with establishing standards which make those contracts of generally mutually agreeable meaning and enforceability. So why is it illegitimate for the government to protect us from the boom/bust cycle? Keeping in mind that whether this is possible to begin with is a different question from whether it is moral and ethical for a government, which we instituted to protect us, should also protect us from a downfall seemingly built into the Laws of Nature.
  - Animats 10y ago
    Why do we need a government at all? Why not live in anarchy? Because we know what that looks like. It's called a "failed state", and there are too many of those now. See Somalia. In practice, it usually means rule by local warlords, which sucks.
    - Godel_unicode 10y ago
      That question was pretty clearly rhetorical. Read the rest, it's a good point about expanding the list of things we ask government to protect us from. If government can protect us from big evils (warlords), why not small evils (insider trading).
  - crpatino 10y ago
    > Why do we need a government at all? Why not live in anarchy? Are you a charismatic amoral-yet-benevolent despot with a knack for turning violent tuggs into loyal enforcers? Anarchy sounds so great, but keep in mind that other, less enlightened, despot wannabes are going to come after you and yours, so keep at all times enough resources for the defense of your turf. Not really interested? I am not surprised.
- dragonwriter 10y ago
  > who has empowered the Government to actively manage economic cycles? For the federal government, a mix of the authors and later amenders of the Constitution, by way of a variety of Constitutional powers by which that function is effected, and the voters of nearly every election in the history of the US who have elected members of Congress and Presidents largely based on their stated intent to actively manage the economy in various ways. The same is generally true for state governments, though with reference to the crafters of the respective State constitutions rather than the federal one.
- noir-york 10y ago
  > who has empowered the Government to actively manage economic cycles The common good. Economic uncertainty, like political uncertainty, makes it hard for a society to plan, budget and invest. A stable currency, low inflation, enforcement of property / contract law and political stability enable commercial activity. Constant was a man of his time and the Reign of Terror - the despotic abuse of power - was a tragedy. How this is relavent to modern economic management and why Constant should be relevant today (he advocated a monarchical republic, a monarchy? today?) in such very different times would be interesting to hear.
  - rconti 10y ago
    And if not explicitly, at least implicitly. If you don't right the ship sooner, you don't get that second term.
  - paganel 10y ago
    > he advocated a monarchical republic, a monarchy? today?) The US has become a "de facto" monarchical republic: the powers of Congress have been much diminished compared to what the Founding Fathers presumably had in mind, the Supreme Court actually acts like a monarch's Privy council (it's a non-elected entity and its members depend on the good-will of the so-called "president" to reach its ranks). If Hillary had been elected the US would have continued the hereditary tradition which had started with the Bushes (or with Bob Kennedy, had he not been shot). There are lots of people on the Democratic-side of things who have lately suggested for Michelle Obama to run for presidency in 4 years' time. So I'd say Constant is still spot-on on lots of things (I've read a collection of Hannah Arendt's essays this summer and on lots of things she has just copied Constant's discourse. I'd say Hannah Arendt is pretty much part of today's conversation). So is Bentham, so is Burke, so is Thomas Paine.
    - Godel_unicode 10y ago
      But she wasn't. Russia is a de facto monarchy, the United States is a Republic in every way that matters. The President's entire executive branch has been sent home without pay (yes, they got back pay eventually but contractors often didn't) a few years back by Congress. His appointee to the Supreme Court was blocked very effectively by that same body. His trade deal (TPP) is likely not going to be approved thanks again to Congress. Also, while the justices need the President's help to get onto the bench, they do not need it in order to stay there. This is an important distinction.
- anigbrowl 10y ago
  who has empowered the Government to actively manage economic cycles The people who alternately vote on and/or protest existing economic conditions and demand representation for their views. It sounds very much as if you are limiting tyour reading to authors who will reinforc the views you already hold. It must have required considerable effort on your part to filter out any awareness of labor movements through history and related demands for economic security, regardless of whether individual policies were well- or ill-founded. Market forces can be massively disruptive to people's lives and when people's lives are disrupted by forces beyond their control (whether by natural or economic disasters) people generally petition their government to Do Something About It. I'm having a hard time believing that you're ignorant of really basic historical trends like governments losing legitimacy and being overthrown due to famine or similar adverse economic conditions.
  - paganel 10y ago
    > It must have required considerable effort on your part to filter out any awareness of labor movements through history and related demands for economic security, regardless of whether individual policies were well- or ill-founded. Trust me, I've read more Marx than 95% of the Marxists out there: I've read his "Capital I" (Capital II+III are on a bookshelf which right now stands behind me), his German Ideology and other works from his younger years. I genuinely think of him as one of the most brilliant minds of the 19th century and one of history's best when it comes to human sciences, it's just that when it came to economics he was so very wrong. You don't have to trust me on this, you don't have to trust your logic or anything else of that matter (which would suffice were you to read a writer like Say in parallel with Marx, let's say) you just have to look at the economic history of the last 150 years or so. Marx's view on economics proved to be utterly wrong. > Market forces can be massively disruptive to people's lives and when people's lives are disrupted by forces beyond their control (whether by natural or economic disasters) people generally petition their government to Do Something About It. I'm having a hard time believing that you're ignorant of really basic historical trends like governments losing legitimacy and being overthrown due to famine or similar adverse economic conditions. And suppose a famine is around, what should a Government do? Invent food out of thin air, like in Star Trek? No, it can't do that, because we live in real life not in science fiction. The matter of fact is that looking back at history the most effective ways of dealing against famine involved less Government meddling, meaning less taxes on transport, less taxes on sales/purchases of food. That's one of the first signs telling you when a Government has started losing the grip on its constituents, i.e. when it starts lowering taxes on food because of its own volition (for a recent example look at Sisi's Egypt).
ianai 10y ago
There is no such thing as a boom bust cycle. 1929 proved there is no natural stop on how bad things can go and how long they can endure.
- qubex 10y ago
  That is why counter-cyclical governmental intervention was postulated to break out of dismal self-reinforcing economic feedback, both ‘reboot’ economies when bust phases set in but (less intuitively and somewhat more vexingly) to “reign in” excessive euphoria when economies show signs of being in an over-enthusiastic boom.
- noir-york 10y ago
  > There is no such thing as a boom bust cycle. Right. When everyone from Marxists to Keynesians to neo liberals agree that there is such a thing as a business cycle (even if they may not agree on the causes or how to manage the cycle), then I guess you may be using a definition that is different to everyone elses.

paganel 10y ago

> 2. Keynesian economics (presumably what you referring to) has nothing to do with restricting free trade, but deals with the boom-bust cycle and how a government can manage it. Yeah, I'm now reading Benjamin Constant (I've read guys like Jean-Baptiste Say and Jeremy Bentham before) and there was is close to no mention in their works about the government having the intrinsic need to "manage" anything. Which brings me to my second question: who has empowered the Government to actively manage economic cycles? And assuming it has acquired these powers all by itself, based on which premises/presumptions does it accomplish its economics-related actions? It's funny reading Constant and how he warns about the perils of moral hazard associated to the active involvement of Government in the economy. 200 years have passed and we still make the same mistakes.

matt4077 10y ago
> who has empowered the Government to actively manage economic cycles? Voters > based on which premises/presumptions does it accomplish its economics-related actions? Find causal relationships -> create causes for effects that you would like to see > the perils of moral hazard associated to the active involvement of Government Maybe the 18th century governments overstepped their boundaries when, dunno, they stopped slave labor of 8-year olds in coal mines. Today, the term applies almost exclusively to private industry. Mostly financial.
- deleted 10y ago
  [deleted]
- aminorex 10y ago
  Voters did not authorize Smoot-Hawley or the confiscation of gold or the disregard of the money Clause of the Constitution. That was accomplished by incompetents, criminals and traitors occupying political office. It occurred about the same time that voters in Germany elected Hitler Chancellor, and about the same time that passports were institutionalzed, to prevent freedom of movement. The 19th century abolished slavery. The 20th century re-imposed it, and made it universal, creating the public-private complex which owns our labor today.
deleted 10y ago
[deleted]
deleted 10y ago
[deleted]
ianai 10y ago
Adam Smith "wealth of nations"
solatic 10y ago
> who has empowered the Government to actively manage economic cycles? Why do we need a government at all? Why not live in anarchy? Because we, as a country/people/nation who give our Government at least some sort of legitimacy, desire a large institution to protect us. Historically, the only kind of protection we desired was from external foes who would wage war and enjoy the spoils thereof, but there's general agreement that we also need a government to protect us from ourselves, whether that's from petty criminality or to enforce our contracts, along with establishing standards which make those contracts of generally mutually agreeable meaning and enforceability. So why is it illegitimate for the government to protect us from the boom/bust cycle? Keeping in mind that whether this is possible to begin with is a different question from whether it is moral and ethical for a government, which we instituted to protect us, should also protect us from a downfall seemingly built into the Laws of Nature.
- Animats 10y ago
  Why do we need a government at all? Why not live in anarchy? Because we know what that looks like. It's called a "failed state", and there are too many of those now. See Somalia. In practice, it usually means rule by local warlords, which sucks.
  - Godel_unicode 10y ago
    That question was pretty clearly rhetorical. Read the rest, it's a good point about expanding the list of things we ask government to protect us from. If government can protect us from big evils (warlords), why not small evils (insider trading).
- crpatino 10y ago
  > Why do we need a government at all? Why not live in anarchy? Are you a charismatic amoral-yet-benevolent despot with a knack for turning violent tuggs into loyal enforcers? Anarchy sounds so great, but keep in mind that other, less enlightened, despot wannabes are going to come after you and yours, so keep at all times enough resources for the defense of your turf. Not really interested? I am not surprised.
dragonwriter 10y ago
> who has empowered the Government to actively manage economic cycles? For the federal government, a mix of the authors and later amenders of the Constitution, by way of a variety of Constitutional powers by which that function is effected, and the voters of nearly every election in the history of the US who have elected members of Congress and Presidents largely based on their stated intent to actively manage the economy in various ways. The same is generally true for state governments, though with reference to the crafters of the respective State constitutions rather than the federal one.
noir-york 10y ago
> who has empowered the Government to actively manage economic cycles The common good. Economic uncertainty, like political uncertainty, makes it hard for a society to plan, budget and invest. A stable currency, low inflation, enforcement of property / contract law and political stability enable commercial activity. Constant was a man of his time and the Reign of Terror - the despotic abuse of power - was a tragedy. How this is relavent to modern economic management and why Constant should be relevant today (he advocated a monarchical republic, a monarchy? today?) in such very different times would be interesting to hear.
- rconti 10y ago
  And if not explicitly, at least implicitly. If you don't right the ship sooner, you don't get that second term.
- paganel 10y ago
  > he advocated a monarchical republic, a monarchy? today?) The US has become a "de facto" monarchical republic: the powers of Congress have been much diminished compared to what the Founding Fathers presumably had in mind, the Supreme Court actually acts like a monarch's Privy council (it's a non-elected entity and its members depend on the good-will of the so-called "president" to reach its ranks). If Hillary had been elected the US would have continued the hereditary tradition which had started with the Bushes (or with Bob Kennedy, had he not been shot). There are lots of people on the Democratic-side of things who have lately suggested for Michelle Obama to run for presidency in 4 years' time. So I'd say Constant is still spot-on on lots of things (I've read a collection of Hannah Arendt's essays this summer and on lots of things she has just copied Constant's discourse. I'd say Hannah Arendt is pretty much part of today's conversation). So is Bentham, so is Burke, so is Thomas Paine.
  - Godel_unicode 10y ago
    But she wasn't. Russia is a de facto monarchy, the United States is a Republic in every way that matters. The President's entire executive branch has been sent home without pay (yes, they got back pay eventually but contractors often didn't) a few years back by Congress. His appointee to the Supreme Court was blocked very effectively by that same body. His trade deal (TPP) is likely not going to be approved thanks again to Congress. Also, while the justices need the President's help to get onto the bench, they do not need it in order to stay there. This is an important distinction.
anigbrowl 10y ago
who has empowered the Government to actively manage economic cycles The people who alternately vote on and/or protest existing economic conditions and demand representation for their views. It sounds very much as if you are limiting tyour reading to authors who will reinforc the views you already hold. It must have required considerable effort on your part to filter out any awareness of labor movements through history and related demands for economic security, regardless of whether individual policies were well- or ill-founded. Market forces can be massively disruptive to people's lives and when people's lives are disrupted by forces beyond their control (whether by natural or economic disasters) people generally petition their government to Do Something About It. I'm having a hard time believing that you're ignorant of really basic historical trends like governments losing legitimacy and being overthrown due to famine or similar adverse economic conditions.
- paganel 10y ago
  > It must have required considerable effort on your part to filter out any awareness of labor movements through history and related demands for economic security, regardless of whether individual policies were well- or ill-founded. Trust me, I've read more Marx than 95% of the Marxists out there: I've read his "Capital I" (Capital II+III are on a bookshelf which right now stands behind me), his German Ideology and other works from his younger years. I genuinely think of him as one of the most brilliant minds of the 19th century and one of history's best when it comes to human sciences, it's just that when it came to economics he was so very wrong. You don't have to trust me on this, you don't have to trust your logic or anything else of that matter (which would suffice were you to read a writer like Say in parallel with Marx, let's say) you just have to look at the economic history of the last 150 years or so. Marx's view on economics proved to be utterly wrong. > Market forces can be massively disruptive to people's lives and when people's lives are disrupted by forces beyond their control (whether by natural or economic disasters) people generally petition their government to Do Something About It. I'm having a hard time believing that you're ignorant of really basic historical trends like governments losing legitimacy and being overthrown due to famine or similar adverse economic conditions. And suppose a famine is around, what should a Government do? Invent food out of thin air, like in Star Trek? No, it can't do that, because we live in real life not in science fiction. The matter of fact is that looking back at history the most effective ways of dealing against famine involved less Government meddling, meaning less taxes on transport, less taxes on sales/purchases of food. That's one of the first signs telling you when a Government has started losing the grip on its constituents, i.e. when it starts lowering taxes on food because of its own volition (for a recent example look at Sisi's Egypt).

ianai 10y ago

There is no such thing as a boom bust cycle. 1929 proved there is no natural stop on how bad things can go and how long they can endure.

qubex 10y ago
That is why counter-cyclical governmental intervention was postulated to break out of dismal self-reinforcing economic feedback, both ‘reboot’ economies when bust phases set in but (less intuitively and somewhat more vexingly) to “reign in” excessive euphoria when economies show signs of being in an over-enthusiastic boom.
noir-york 10y ago
> There is no such thing as a boom bust cycle. Right. When everyone from Marxists to Keynesians to neo liberals agree that there is such a thing as a business cycle (even if they may not agree on the causes or how to manage the cycle), then I guess you may be using a definition that is different to everyone elses.