5 ms·
"If economists could manage to get themselves thought of as humble, competent people, on a level with dentists, that would be splendid!" Sadly this is
by dforrestwilson 9y ago
"If economists could manage to get themselves thought
of as humble, competent
people, on a level with dentists, that would be splendid!"
Sadly this is still not the case. Macroeconomics in particular is still theory > scientific process.
And the frustrating thing about Keynes is that he failed to acknowledge the simple fact that Keynesian policy only works when every country in the world is not practicing it.
Microeconomics is where I think the real breakthroughs are happening.
Edit: Down-voted?
- tome 9y ago> Keynesian policy only works when every country in the world is not practicing it. Huh?
- baybal2 9y ago>> Keynesian policy only works when every country in the world is not practicing it. >Huh? When somebody big prints money, everybody print money.
- tome 9y agoAnd that means Keynsianism fails to work why exactly?
- dforrestwilson 9y agoGovernment creep results in suboptimal outcomes for everyone, raising tensions and exacerbating economic books and busts. I point to Greenspan and the housing crisis. Maybe the U.S. shouldn't be subsidizing housing and student loans? Additionally, currency and trade wars tend to become the violent kind. You could argue that the real problem is that Keynesian backed governments never turn off the spigot, but why should they when the chosen stimulus policy neatly aligns with their own professional goals?
- tome 9y agoThat sounds like "Keysian policy never works". dforrestwilson said "Keynesian policy only works when every country in the world is not practicing it" which sounds like a different claim entirely, so I'm confused.
- dforrestwilson 9y agoIt worked before and during WW2 because it was unprecedented and other countries did not engage in similar policies to remain competitive in international trade.
- dforrestwilson 9y agoIt will not work again.
- dforrestwilson 9y agoThank you. This is what I tried to say above in a much longer way..
- CalChris 9y ago>>> Keynesian policy only works when every country in the world is not practicing it. >>Huh? >When somebody big prints money, everybody print money. This is not what Keynesian policy is.
- dforrestwilson 9y agoKeynes basically advocated for massive government stimulus to make up for national economic slack. The problems with governments doing this is: 1. Governments are less efficient than free markets at spending money. See China. 2. It tends to lead to central bank stimulus (dilution and tight control of currency values). 3. Currency devaluation results in a more competitive international trade for the country in question. This puts more unnatural pressure on other nations' economies. 4. Everybody racing their currencies to the bottom to remain economically competitive. Which is why people got in a tizzy about Japan, China, and now Germany. If a politician can get away with it why wouldn't they tweak monetary policy to juice the economy under their watch? Trump has made comments to this effect and appears poised to continue the cycle. If you can believe anything he says.. These ingredients (high global trade levels compared to historical, tightly interconnected economies, disconnect from the established standard of trade ie: gold in favor of paper IOUs, yet competing and ambitious political interests) can only lead to one thing. An undeclared currency war. Why else are we still witnessing weak to no inflation across the developed world?
- ue_ 9y ago>1. Governments are less efficient than free markets at spending money. See China. It's worth noting that the free market is less efficient than governments in other areas, or at least, it does not optimise for outcomes in certain areas.
- djschnei 9y agocare to provide an example?
- ue_ 9y agoWorker rights.
- bjelkeman-again 9y agoHealthcare is a nice example of this. http://www.commonwealthfund.org/publications/issue-briefs/2015/oct/us-health-care-from-a-global-perspective http://www.commonwealthfund.org/publications/issue-briefs/20...
- deleted 9y ago[deleted]
- CalChris 9y agoDo you have any backing or cites for your categorical statement?
- dforrestwilson 9y agoI replied below.
- crdoconnor 9y ago"Keynesian policy only works when every country in the world is not practicing it." Most economies acted along keynesian principles during WW2. There's nothing stopping any economy from raising aggregate demand to equal productive capacity, no matter what other countries are doing. It required an existential war for elites to stop pretending, though.
- dforrestwilson 9y agoSorry but this was a pretty novel idea and one-time solution for 2 countries in a time of serious crisis. It was not known or practiced by other nations at the time, so there was no counter-Keynesian policy enacted by other trading countries.
- crdoconnor 9y agoI have never heard of, nor do I believe there is any such thing as "counter-keynesian policy". Are you thinking of export-substitution industrialization?
- dforrestwilson 9y agoKeynesian seems to lead to currency manipulation doesn't it?
- dforrestwilson 9y agoI'm thinking of purposefully devaluing your currency to remain competitive against countries with subsidized production.
- CalChris 9y agoYou are talking about Mercantilism and more specifically Protectionism. That is not Keynesianism at all. In fact Keynes was part of the British delegation to Breton Woods favoring negotiated trade balance. https://en.wikipedia.org/wiki/Bretton_Woods_system https://en.wikipedia.org/wiki/Bretton_Woods_system
- tome 9y ago> Down-voted? I didn't downvote you at first, but I always downvote complaints about downvotes. I'd give it more time. Decent comments generally arrive back in the black.
- dforrestwilson 9y agoOK thanks for the clarification.