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I think it never really fell out of fashion, nor has it ever been properly implemented. Keynesianism consists of two elements: 1. Stimulating growth when organ

I think it never really fell out of fashion, nor has it ever been properly implemented. Keynesianism consists of two elements: 1. Stimulating growth when organic growth is low. 2. Paying back the debt taken on to be able to do #1 when organic growth is self-sustaining again. Politicians usually only consider #1 but conveniently forget about #2 because it doesn't suit their motives. This probably also is why conservatives and libertarians criticise Keynesianism as a leftist ploy to further big government and the expansion of the public sector. Keynesianism implemented properly and without ideology is a reasonable strategy.

CalChris 9y ago
Keynesianism a feedback control loop. Neoliberalism is an open loop. Do you save money for a rainy day or do you spend it like a drunken sailor?
- deleted 9y ago
  [deleted]
- dnautics 9y ago
  The assumption is that the feedback control loop is timed correctly. And the second assumption is that the natural system of economics doesn't have it's own feedbacks. If you wire a feedback control loop even slightly wrong you can wind up with positive feedback instead. Moreover the feedback control comes at a cost. What if the cost is "the rich get richer and the poor get poorer"?
lkrubner 9y ago
Paying back the debt taken on to be able to do #1 when organic growth is self-sustaining again. This happens automatically when growth is strong. Even if the nominal debt keeps growing, it shrinks as a percentage of the GDP, so long as the growth of the GDP is faster than that the growth of the nominal debt. So for instance, in the USA, between 1945 to 1980, the national debt shrank from 98% of GDP to 33% of GDP. The USA ran budget deficits in many of those years, but it didn't matter, because the nominal growth of the GDP was much faster that the growth of the debt.
- BjoernKW 9y ago
  It doesn't happen automatically if the government in question acts irresponsibly, which more often than not unfortunately is the case and also the reason why structures like the Euro convergence criteria are in place to keep governments in check (which in recent years often hasn't exactly worked out).
- Consultant32452 9y ago
  http://www.macrotrends.net/1381/debt-to-gdp-ratio-historical-chart http://www.macrotrends.net/1381/debt-to-gdp-ratio-historical... The last 37 years aren't looking so hot. :(
dnautics 9y ago
> Keynesianism implemented properly Who gets to decide where the money for stimulus goes and how can I be that person so that I can enrich me and my friends?
- CalChris 9y ago
  Who gets to pay to clean up after the crash when people have no money? We’ve learned this lesson a few times already.
  - dnautics 9y ago
    If there's limited central bank intervention, it's usually the rich, to be honest. Even with the great depression, income inequality was worse before than after. A notable exception is the 2008 crash when bush was saying things like we must break capitalism to save it as an excuse to soak the banks and companies like GM and Obama certainly continued the stimulus policies that helped the wealthy. As for the suffering, probably the social capacity to weather a depression is largely mitigated by technology. The 2008 recession was not far off from the great depression by certain metrics, but people were not starving in the street, because food (even unsubsidized food) is relatively cheap and has a predictable supply chain.
- BjoernKW 9y ago
  In principle: The electorate. I agree though that the potential for rent-seeking and cronyism is a problem with any government investment.
  - petre 9y ago
    It doesn't work in practice. Governments just grow and grow endlessly borrowing and renegotiating debt w/o any intention to pay back. The cronysm problem can be fixed to some extent by limiting terms for every public office, ending career politicians. But don't expect Congress or any parliament to vote for such a measure.
- tim333 9y ago
  The government decides naturally and typically the spending is on things like infrastructure or unemployment benefits. I'm not quite sure how you would game it in a practical way.
dragonwriter 9y ago
> Keynesianism implemented properly and without ideology is a reasonable strategy. If you have an objective, you aren't acting without ideology, and if you don't have an objective, you have nothing at which to direct at strategy. Talking about a strategy without an ideology is nonsense.

CalChris 9y ago

Keynesianism a feedback control loop. Neoliberalism is an open loop. Do you save money for a rainy day or do you spend it like a drunken sailor?

deleted 9y ago
[deleted]
dnautics 9y ago
The assumption is that the feedback control loop is timed correctly. And the second assumption is that the natural system of economics doesn't have it's own feedbacks. If you wire a feedback control loop even slightly wrong you can wind up with positive feedback instead. Moreover the feedback control comes at a cost. What if the cost is "the rich get richer and the poor get poorer"?

lkrubner 9y ago

Paying back the debt taken on to be able to do #1 when organic growth is self-sustaining again. This happens automatically when growth is strong. Even if the nominal debt keeps growing, it shrinks as a percentage of the GDP, so long as the growth of the GDP is faster than that the growth of the nominal debt. So for instance, in the USA, between 1945 to 1980, the national debt shrank from 98% of GDP to 33% of GDP. The USA ran budget deficits in many of those years, but it didn't matter, because the nominal growth of the GDP was much faster that the growth of the debt.

BjoernKW 9y ago
It doesn't happen automatically if the government in question acts irresponsibly, which more often than not unfortunately is the case and also the reason why structures like the Euro convergence criteria are in place to keep governments in check (which in recent years often hasn't exactly worked out).
Consultant32452 9y ago
http://www.macrotrends.net/1381/debt-to-gdp-ratio-historical-chart http://www.macrotrends.net/1381/debt-to-gdp-ratio-historical... The last 37 years aren't looking so hot. :(

dnautics 9y ago

> Keynesianism implemented properly Who gets to decide where the money for stimulus goes and how can I be that person so that I can enrich me and my friends?

CalChris 9y ago
Who gets to pay to clean up after the crash when people have no money? We’ve learned this lesson a few times already.
- dnautics 9y ago
  If there's limited central bank intervention, it's usually the rich, to be honest. Even with the great depression, income inequality was worse before than after. A notable exception is the 2008 crash when bush was saying things like we must break capitalism to save it as an excuse to soak the banks and companies like GM and Obama certainly continued the stimulus policies that helped the wealthy. As for the suffering, probably the social capacity to weather a depression is largely mitigated by technology. The 2008 recession was not far off from the great depression by certain metrics, but people were not starving in the street, because food (even unsubsidized food) is relatively cheap and has a predictable supply chain.
BjoernKW 9y ago
In principle: The electorate. I agree though that the potential for rent-seeking and cronyism is a problem with any government investment.
- petre 9y ago
  It doesn't work in practice. Governments just grow and grow endlessly borrowing and renegotiating debt w/o any intention to pay back. The cronysm problem can be fixed to some extent by limiting terms for every public office, ending career politicians. But don't expect Congress or any parliament to vote for such a measure.
tim333 9y ago
The government decides naturally and typically the spending is on things like infrastructure or unemployment benefits. I'm not quite sure how you would game it in a practical way.

dragonwriter 9y ago

> Keynesianism implemented properly and without ideology is a reasonable strategy. If you have an objective, you aren't acting without ideology, and if you don't have an objective, you have nothing at which to direct at strategy. Talking about a strategy without an ideology is nonsense.