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"...they can take as big hammer as needed to fix it." If you believe complex economic systems follow simple, well-known control laws, then yes. But I haven't s

"...they can take as big hammer as needed to fix it." If you believe complex economic systems follow simple, well-known control laws, then yes. But I haven't seen much evidence for this.

Nokinside 8y ago
Just study the War Economy in different countries during the WWII. Government can simplify and direct the economy if it has total control over it. For lighter control look at the post war economies in Europe, Japan and Korea. Tight control of the economy worked just fine to stabilize the system.
- neilwilson 8y ago
  You can see that blind spot in the piece where the author states there are only four ways out. There is actually a fifth, which is currently the one being used. At the moment Bejing discounts 'foreign currency' into Yuan and distributes it to factories that export. If foreign entities fail to buy that output Bejing can simply discount 'other assets' instead at the central bank, distribute it to the same firms and stick the output in a shed somewhere. The result is the same monetary circulation within China in Yuan.
- crwalker 8y ago
  If WWII policies seem to be evidence that "tight control of the economy worked just fine to stabilize the system," consider that centralized economic decisions (German war finance, treaty of Versailles, war reparations, Weimar Republic hyperinflation) paved the way for WWII. Early 20th century Europe is an odd example to choose to demonstrate a stable, well-controlled system.
  - mistermann 8y ago
    Unless I'm mistaken, I think the point of contention here is whether centralized economic decisions can work sometimes (his point?) versus can never ever work (your point?). And by "work", I do not mean "work absolutely perfectly".
    - mcguire 8y ago
      Perhaps centralized economic planning can work, for a period of time. Five year plans appear historically sketchy.
- pas 8y ago
  Tight control to produce armaments is one thing. Tight control to compete on cost and efficiency is another.

"...they can take as big hammer as needed to fix it." If you believe complex economic systems follow simple, well-known control laws, then yes. But I haven't seen much evidence for this.

Nokinside 8y ago

Just study the War Economy in different countries during the WWII. Government can simplify and direct the economy if it has total control over it. For lighter control look at the post war economies in Europe, Japan and Korea. Tight control of the economy worked just fine to stabilize the system.

neilwilson 8y ago
You can see that blind spot in the piece where the author states there are only four ways out. There is actually a fifth, which is currently the one being used. At the moment Bejing discounts 'foreign currency' into Yuan and distributes it to factories that export. If foreign entities fail to buy that output Bejing can simply discount 'other assets' instead at the central bank, distribute it to the same firms and stick the output in a shed somewhere. The result is the same monetary circulation within China in Yuan.
crwalker 8y ago
If WWII policies seem to be evidence that "tight control of the economy worked just fine to stabilize the system," consider that centralized economic decisions (German war finance, treaty of Versailles, war reparations, Weimar Republic hyperinflation) paved the way for WWII. Early 20th century Europe is an odd example to choose to demonstrate a stable, well-controlled system.
- mistermann 8y ago
  Unless I'm mistaken, I think the point of contention here is whether centralized economic decisions can work sometimes (his point?) versus can never ever work (your point?). And by "work", I do not mean "work absolutely perfectly".
  - mcguire 8y ago
    Perhaps centralized economic planning can work, for a period of time. Five year plans appear historically sketchy.
pas 8y ago
Tight control to produce armaments is one thing. Tight control to compete on cost and efficiency is another.