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Here is why this government spending recommendation is just a head fake: assuming the economy can be in a functional state at all, it is obviously true that if

by Tichy 14y ago

Here is why this government spending recommendation is just a head fake: assuming the economy can be in a functional state at all, it is obviously true that if the government would spend money on the right things, it could create a functional economy. The real problem of economics however is resource allocation, or in this case, what should the government spend the money on. The proponents of government spending don't give any details - they don't solve the problem at all. They just market themselves as prophets by spouting trivial truths (spending money on the right things is good). You'll answer "spending money on infrastructure" but that is not good enough. Even for roads there is a point when enough is enough (imagine every square meter of the country covered in roads). To fix the economy, you have to devise a mechanism of efficient resource allocation. Just saying "let the government decide" is not an answer.

eli_gottlieb 14y ago
Put simply, you are outright lying. Advocates of Keynesian spending advocate its usage for public goods and commons goods, the two known categories where "the government" is clearly more efficient than markets. Does that mean no decisions remain in the realm of politics and everything turns into a technocratic utopia run by Economics majors? No. But that's because in any case there is no such thing as an apolitical economic policy of any kind. All of it, right down the property laws themselves, is political. In fact, it's generally the very core of politics.
- Tichy 14y ago
  "public goods and commons goods, the two known categories where "the government" is clearly more efficient than markets." Could you give me a reference for that? I am not an expert in economics, and that claim seems very doubful to me. Unless you are saying governments are good in spending money - yes, they are (getting rid of money, I mean). The rest of your post, I am not sure what you are going on about. Yes, property laws are political (and some countries famously got rid of them, which for now has to be considered a failure). But what does that have to do with Keynesian spending? Also I admit I am not an expert on Keynes, but I suspect that puts me on par with most other people who have an opinion on it and advocate to just print more money.
  - eli_gottlieb 14y ago
    http://en.wikipedia.org/wiki/Public_goods http://en.wikipedia.org/wiki/Public_goods The rest of your post, I am not sure what you are going on about. Yes, property laws are political (and some countries famously got rid of them, which for now has to be considered a failure). But what does that have to do with Keynesian spending? Also I admit I am not an expert on Keynes, but I suspect that puts me on par with most other people who have an opinion on it and advocate to just print more money. Actually, advocating printing money is not a Keynesian position, it's a Modern Monetary Theory position. But anyway, I'm arguing against your assertion that political decisions cannot and should not be made about the economy.
    - Tichy 14y ago
      I did not make that assertion, what I said is that the advocates of government spending only shift the burden of decision making and don't really propose anything at all. Or in other words, the claim "government spending can fix the economy" is trivially true but useless. The link about public goods doesn't convince me that government spending on public goods is always the best choice, see example of too many roads. As for printing money, isn't it kind of equivalent to taking on debt?
      - eli_gottlieb 14y ago
        what I said is that the advocates of government spending only shift the burden of decision making and don't really propose anything at all. Of course, advocates of privatization are doing the same thing: shifting the decision-making and not really proposing anything at all. Both markets and governments are voting mechanisms. Difference is, in a market, the dollars vote, and in a government, the people vote. Then we have to start talking about the signal/noise ratios of both mechanisms...
        Tichy 14y ago
        Markets are a mechanism for allocating resources. Of course, there is neither the perfect market nor the perfect government. It seems to me that the potential for abuse is greater in the government, though. There is one vote every x years, and good tracking mechanisms of what is really being done don't exist yet. Signal/noise - the difference is that in the market, participants can not simply spend other people's money. They have to come up with real money somehow, which might be a pretty strong signal.

by Tichy 14y ago

eli_gottlieb 14y ago

Put simply, you are outright lying. Advocates of Keynesian spending advocate its usage for public goods and commons goods, the two known categories where "the government" is clearly more efficient than markets. Does that mean no decisions remain in the realm of politics and everything turns into a technocratic utopia run by Economics majors? No. But that's because in any case there is no such thing as an apolitical economic policy of any kind. All of it, right down the property laws themselves, is political. In fact, it's generally the very core of politics.

Tichy 14y ago
"public goods and commons goods, the two known categories where "the government" is clearly more efficient than markets." Could you give me a reference for that? I am not an expert in economics, and that claim seems very doubful to me. Unless you are saying governments are good in spending money - yes, they are (getting rid of money, I mean). The rest of your post, I am not sure what you are going on about. Yes, property laws are political (and some countries famously got rid of them, which for now has to be considered a failure). But what does that have to do with Keynesian spending? Also I admit I am not an expert on Keynes, but I suspect that puts me on par with most other people who have an opinion on it and advocate to just print more money.
- eli_gottlieb 14y ago
  http://en.wikipedia.org/wiki/Public_goods http://en.wikipedia.org/wiki/Public_goods The rest of your post, I am not sure what you are going on about. Yes, property laws are political (and some countries famously got rid of them, which for now has to be considered a failure). But what does that have to do with Keynesian spending? Also I admit I am not an expert on Keynes, but I suspect that puts me on par with most other people who have an opinion on it and advocate to just print more money. Actually, advocating printing money is not a Keynesian position, it's a Modern Monetary Theory position. But anyway, I'm arguing against your assertion that political decisions cannot and should not be made about the economy.
  - Tichy 14y ago
    I did not make that assertion, what I said is that the advocates of government spending only shift the burden of decision making and don't really propose anything at all. Or in other words, the claim "government spending can fix the economy" is trivially true but useless. The link about public goods doesn't convince me that government spending on public goods is always the best choice, see example of too many roads. As for printing money, isn't it kind of equivalent to taking on debt?
    - eli_gottlieb 14y ago
      what I said is that the advocates of government spending only shift the burden of decision making and don't really propose anything at all. Of course, advocates of privatization are doing the same thing: shifting the decision-making and not really proposing anything at all. Both markets and governments are voting mechanisms. Difference is, in a market, the dollars vote, and in a government, the people vote. Then we have to start talking about the signal/noise ratios of both mechanisms...
      - Tichy 14y ago
        Markets are a mechanism for allocating resources. Of course, there is neither the perfect market nor the perfect government. It seems to me that the potential for abuse is greater in the government, though. There is one vote every x years, and good tracking mechanisms of what is really being done don't exist yet. Signal/noise - the difference is that in the market, participants can not simply spend other people's money. They have to come up with real money somehow, which might be a pretty strong signal.