4 ms·

Have we totally forgotten Keynes? My spending is your income. The resources of an economy (in this case, many of Spain's workers) are lying idle. The entire cou

Have we totally forgotten Keynes? My spending is your income. The resources of an economy (in this case, many of Spain's workers) are lying idle. The entire country would be wealthier if they were put to work. Further, I don't know what you mean by "easy living", but Spain was more fiscally responsible than even Germany before the crisis. Spain's deficits are not the result of irresponsible borrowing and spending (as in Greece), but rather of a collapsed economy because the investment money (mostly German, etc) that flooded the country before the crisis evaporated just as quickly after the crisis.

ekianjo 13y ago
put to work by who? Stimulus has not worked very well for the US after 2008, has it? And Spain does not have trillions of dollars to spend in stimulus anyway. Stop dreaming.
- anigbrowl 13y ago
  We haven't had that much fiscal stimulus in the US releative to the size of the economy. It's a missed opportunity considering money is basically free right now and T-bills return a fixed coupon (so even if interest rates were 5% in 5 years' time it would have no effect on the cost of servicing debt issued today). The EU has trillions to spend. This is a federal problem, but some countries in Europe don't want to admit because they want to cling to the illusion that monetary union can exist indepedently of fiscal union.
  - ekianjo 13y ago
    > that much fiscal stimulus in the US releative to the size of the economy. I knew this was coming. "The stimulus didnt work because it was not big enough". Always the same excuse coming from Keynesians. "Aspirin did not cure my Cancer because I didnt take enough". Sure, when you attack the wrong causes in the first place you get very poor results, unless you get lucky.
    - tptacek 13y ago
      This is a comment that literally says nothing.
brc 13y ago
Te entire country would be wealthier if they were put to work...doing something productive, in which the investment of their labor were to return future benefits. The problem of most 'stimulus' spending is that this does not happen.
- justincormack 13y ago
  They spent the last ten years building houses no one wants now and creating a property bubble. It wasn't deficit spending it was just excess borrowing. Sure it created jobs for a bit but then they went away just leaving a lot of debt. Somehow you need to actually build a sustainable economy.
  - brc 13y ago
    No argument from me, private borrowing to spend on unproductive assets is just as bad as public borrowing to dig holes in the ground and fill,them in again. The key is productive work- work that people are willing to pay for without incentives or coercion.
- loumf 13y ago
  We got out of the great depression by turning labor into bombs and destroying the results of productivity. And by hiring people to kill people. It really can't get more unproductive than that. Sure, I'm all for doing something productive -- that's icing on the cake. I'm not for using it as an excuse to do nothing.
tomjen3 13y ago
No we have not fogotten him. We should, though because he was wrong. Stimulus doesn't work.
- brazzy 13y ago
  Except he was right and austerity works even less.
  - adventured 13y ago
    Except he was wrong and well managed austerity does work. When it's actually employed. Cutting government 1%, or holding spending the same, is not austerity. The ideas of Keynes are responsible for the last decade of economic disaster around the planet. Austerity has been proven to work over and over again. Just ask Sweden, they're a proof case that managed austerity works exceptionally well. http://www.bloomberg.com/news/2012-06-06/booming-sweden-s-free-market-solution.html http://www.bloomberg.com/news/2012-06-06/booming-sweden-s-fr... Or ask Latvia, a recent case of successful austerity. http://www.nytimes.com/2013/01/02/world/europe/used-to-hardship-latvia-accepts-austerity-and-its-pain-eases.html?pagewanted=all&_r=0 http://www.nytimes.com/2013/01/02/world/europe/used-to-hards... http://www.cnbc.com/id/100558455 http://www.cnbc.com/id/100558455 However, Latvia employed REAL austerity. They cut deep. Not the slow motion - we don't really want to cut anything - train wreck that people like Krugman are claiming is austerity (see: Greece or Spain). Over the last 30 years China has radically reduced its public to private spending ratio. It has been one long managed austerity process. No surprise it has boomed accordingly as private capital was left free to be invested to actually grow the economy, which is not something consumption based Keynesian policies can accomplish. Most government spending doesn't create wealth, sustainable jobs, and it doesn't produce anything. It's consumption paid for by production. The more you tip the balance toward government consumption, the more disastrous the consequences. Greece, Italy, France, the US, Portugal, Spain, Japan, Britain, etc. are all obvious examples of following Keynes policies the last few decades. It has led to destruction.
    - megablast 13y ago
      I am guessing well managed stimulus would work. This is the no real scotsman problem.
Paradigma11 13y ago
Every politician is a Keynesian in a bad economy, but only then.

ekianjo 13y ago

put to work by who? Stimulus has not worked very well for the US after 2008, has it? And Spain does not have trillions of dollars to spend in stimulus anyway. Stop dreaming.

anigbrowl 13y ago
We haven't had that much fiscal stimulus in the US releative to the size of the economy. It's a missed opportunity considering money is basically free right now and T-bills return a fixed coupon (so even if interest rates were 5% in 5 years' time it would have no effect on the cost of servicing debt issued today). The EU has trillions to spend. This is a federal problem, but some countries in Europe don't want to admit because they want to cling to the illusion that monetary union can exist indepedently of fiscal union.
- ekianjo 13y ago
  > that much fiscal stimulus in the US releative to the size of the economy. I knew this was coming. "The stimulus didnt work because it was not big enough". Always the same excuse coming from Keynesians. "Aspirin did not cure my Cancer because I didnt take enough". Sure, when you attack the wrong causes in the first place you get very poor results, unless you get lucky.
  - tptacek 13y ago
    This is a comment that literally says nothing.

brc 13y ago

Te entire country would be wealthier if they were put to work...doing something productive, in which the investment of their labor were to return future benefits. The problem of most 'stimulus' spending is that this does not happen.

justincormack 13y ago
They spent the last ten years building houses no one wants now and creating a property bubble. It wasn't deficit spending it was just excess borrowing. Sure it created jobs for a bit but then they went away just leaving a lot of debt. Somehow you need to actually build a sustainable economy.
- brc 13y ago
  No argument from me, private borrowing to spend on unproductive assets is just as bad as public borrowing to dig holes in the ground and fill,them in again. The key is productive work- work that people are willing to pay for without incentives or coercion.
loumf 13y ago
We got out of the great depression by turning labor into bombs and destroying the results of productivity. And by hiring people to kill people. It really can't get more unproductive than that. Sure, I'm all for doing something productive -- that's icing on the cake. I'm not for using it as an excuse to do nothing.

tomjen3 13y ago

No we have not fogotten him. We should, though because he was wrong. Stimulus doesn't work.

brazzy 13y ago
Except he was right and austerity works even less.
- adventured 13y ago
  Except he was wrong and well managed austerity does work. When it's actually employed. Cutting government 1%, or holding spending the same, is not austerity. The ideas of Keynes are responsible for the last decade of economic disaster around the planet. Austerity has been proven to work over and over again. Just ask Sweden, they're a proof case that managed austerity works exceptionally well. http://www.bloomberg.com/news/2012-06-06/booming-sweden-s-free-market-solution.html http://www.bloomberg.com/news/2012-06-06/booming-sweden-s-fr... Or ask Latvia, a recent case of successful austerity. http://www.nytimes.com/2013/01/02/world/europe/used-to-hardship-latvia-accepts-austerity-and-its-pain-eases.html?pagewanted=all&_r=0 http://www.nytimes.com/2013/01/02/world/europe/used-to-hards... http://www.cnbc.com/id/100558455 http://www.cnbc.com/id/100558455 However, Latvia employed REAL austerity. They cut deep. Not the slow motion - we don't really want to cut anything - train wreck that people like Krugman are claiming is austerity (see: Greece or Spain). Over the last 30 years China has radically reduced its public to private spending ratio. It has been one long managed austerity process. No surprise it has boomed accordingly as private capital was left free to be invested to actually grow the economy, which is not something consumption based Keynesian policies can accomplish. Most government spending doesn't create wealth, sustainable jobs, and it doesn't produce anything. It's consumption paid for by production. The more you tip the balance toward government consumption, the more disastrous the consequences. Greece, Italy, France, the US, Portugal, Spain, Japan, Britain, etc. are all obvious examples of following Keynes policies the last few decades. It has led to destruction.
  - megablast 13y ago
    I am guessing well managed stimulus would work. This is the no real scotsman problem.

Paradigma11 13y ago

Every politician is a Keynesian in a bad economy, but only then.