tag:blogger.com,1999:blog-6245381193993153721.post2418890111058168052..comments2024-03-17T00:23:24.896-07:00Comments on Social Democracy for the 21st Century: A Realist Alternative to the Modern Left: Some Discussion of Aggregates in the BlogosphereLord Keyneshttp://www.blogger.com/profile/06556863604205200159noreply@blogger.comBlogger46125tag:blogger.com,1999:blog-6245381193993153721.post-33052727492391480942012-04-05T01:51:12.593-07:002012-04-05T01:51:12.593-07:00"Finally, in the spirit of being open-minded,...<i>"Finally, in the spirit of being open-minded, can you recommend a book (for a layman of average intelligence) to explain Post-Keynesian idea"</i><br /><br />(1) Robert Skidelsky, “The Relevance of Keynes,” January 17, 2011, http://www.skidelskyr.com/site/article/the-relevance-of-keynes/<br /><br />(also published as Robert Skidelsky, “The Relevance of Keynes,” Cambridge Journal of Economics 35.1 [2011]: 1–13).<br /><br />(2) Davidson, Paul. 2009. The Keynes Solution: The Path to Global Economic Prosperity (1st edn), Palgrave Macmillan, New York and Basingstoke.<br /><br />(3) Skidelsky, R. J. A. 2010. Keynes: The Return of the Master (rev. and updated edn.), Penguin, London.<br />------<br /><br />There is a reading list here with more references:<br /><br />http://socialdemocracy21stcentury.blogspot.com/2011/12/reading-list-for-post-keynesian.htmlLord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-75591729013435767432012-04-04T23:35:37.965-07:002012-04-04T23:35:37.965-07:00This whole harping on the definition of "rela...This whole harping on the definition of "relatively prosperous" is quite irrelevant. You pursue this line as if getting me to admit that Panama does not fit your arbitrary definition of "relatively prosperous" somehow invalidates any of the possible merits of Panama's banking system. (Since you focus on this single issue, I assume that you have conceded that Panama's economy is stable and rapidly growing.)<br /><br />(Incidentally, I am not 100% decided on the central banking question. While my opinion is still that central banks are not necessary, and in fact harmful, I am trying to learn more, and, unlike you, I am hesitant to make sweeping judgements that certain opinions re: the economy are "false" or "worthless." This Panama discussion started with my asking your opinion of the system, not my pronouncement that Panama had attained financial nirvana.)<br /><br />Since you did mention Mexico and Costa Rica, let's look at them a bit more. Panama's per capita GDP (PPP) is about 18% more than Costa Rica. Perhaps your definition of "almost the same" is different from mine, but if a co-worker's pay were 18% more than mine, I wouldn't feel our wages were "almost the same." As for Mexico, I would say that it also is "relatively prosperous." Per capita GDP (PPP) is 50% higher than the world average of approx. $10,000. They do have terrible drug-related gang violence, but I think that's primarily due to another unwanted govt intrusion, the war on drugs (in your quest to refute all things libertarian, somehow I have the feeling you support the war on drugs).<br /><br />Panama has a two-tiered economy: a modern service sector, and a poor, rural agricultural sector. No banking system in the world, central or otherwise, is going to change this fact. So your single-minded focus on per capita GDP is, as I said, irrelevant.<br /><br /><i>Panama's banking system is dominated by US and foreign banks, which depend on New York credit markets. Such banks can have indirect access to the Fed as a lender of last resort.</i><br /><br />Looking at the following list, while there are some heavy hitters (Citi, BNP), it seems that only HSBC is the only one with a dominant presence. Lots of these banks are local or regional--is it really true that they would all be bailed out by the Fed if they were in trouble? While I think the Fed IS profligate with bailouts, I suspect getting Bernanke to write a check isn't quite so simple for these smaller players.<br /><br />http://www.panamaforum.com/panama-banks/9372-panama-banks-complete-list.html<br /><br /><i>So all this emphasis on it having no central bank is mostly a red herring.</i> <br /><br />May I ask your opinion on this article? (this is NOT an appeal to authority; I am genuinely curious to hear your criticisms): <br /><br />http://www.cato.org/publications/commentary/fewer-central-banks-please<br /><br /><i>When in history has cutting taxes and spending by similar amounts in the same year (or a period of several years) caused an economy to collapse?</i> <br /><br />May I take your silence here to mean that you don't have any examples?<br /><br />Finally, in the spirit of being open-minded, can you recommend a book (for a layman of average intelligence) to explain Post-Keynesian idea? Is Debunking Economics a good start? (though I hope you can recommend something cheaper; paying $27 for a Kindle book feels absolutely dirty, to be honest)<br /><br />Thank you for your time.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-33528576406140844312012-04-02T17:54:32.746-07:002012-04-02T17:54:32.746-07:00"I merely said that it has been remarkably st...<i>"I merely said that it has been remarkably stable (historic low inflation, very few bank failures) and relatively prosperous (highest growth in Americas from 2005-2010) compared to its peers in a very unstable, poor region"</i><br /><br />(1) "relatively prosperous"?<br /><br />It has already been pointed out above that Mexico has as a higher per capita GDP - Costa Rica (76 Costa Rica 11,562) has almost the same per capita PPP GDP but with much lower poverty.<br /><br />(2) <i>"no traditional central bank (with the functions of money creation, lender of last resort);"</i><br /><br />Panama uses the US dollar and is nothing but an effective satellite of the US Fed: interest rates and credit conditions are affected by US factors. Furthermore, Panama's banking system is dominated by US and foreign banks, which depend on New York credit markets. <br /><br />Such banks can have indirect access to the Fed as a lender of last resort.<br /><br />So all this emphasis on it having no central bank is mostly a red herring.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-30748083597716084982012-04-01T20:49:25.561-07:002012-04-01T20:49:25.561-07:00I never said Panama was an "extraordinary exa...I never said Panama was an "extraordinary example of free market economics." I merely said that it has been remarkably stable (historic low inflation, very few bank failures) and relatively prosperous (highest growth in Americas from 2005-2010) compared to its peers in a very unstable, poor region (and LOL in comparing it to Sweden, an OECD member--how is this even remotely relevant? Apples to apples, please).<br /><br />Admit it--it IS possible to have a stable, relatively prosperous (roughly on par with Turkey, and ahead of several E. European nations in PPP; not bad for a developing country), and growing economy with these characteristics: (1) no traditional central bank (with the functions of money creation, lender of last resort); (2) no deposit insurance; and (3) a purely market-driven currency (the dollar in this case). <br /><br /><i>Now you've switched to discussing Canada.</i><br /><br />HA! YOU'RE the one who shoehorned the Canadian banking system into the Panama discussion. I wasn't saying Panama was the BEST system, just that it was a viable one that incorporated several Austrian ideas re: decentralizing monetary policy and the banking system (which you disputed; you said my views on central banking were a “wholly flawed view”; I offered a real-world, working example). Comparing it to Canada was absolutely pointless. (btw, you state: "Canada with a central bank and financial regulation had an even more stable banking system than Panama." So you admit Panama's banking system, without a traditional central bank, is stable?)<br /><br />And as far being evasive goes, you still have not answered my question: When in history has cutting taxes and spending by similar amounts in the same year (or a period of several years) caused an economy to collapse, as you suggested it would? If there are such examples, I would be open to rethinking my position on tax cuts, but until you point out specific historical examples, as Lebowski said, "That's just, like, your opinion, man." Show me an example, I would honestly be interested in examining such a case.<br /><br />Since you DID bring up Canada first, let's talk about it. You like the Economist? How bout these apples?<br /><br />"Based on the average of [price-income and price-rent ratios], home prices are overvalued by about 25% or more in Australia, Belgium, Canada...Indeed, in the first four of those countries housing looks more overvalued than it was in America at the peak of its bubble."<br /><br />"Another concern is that Australia, Britain, Canada ...all have even higher household-debt burdens in relation to income than America did at the peak of its bubble."<br /><br />http://www.economist.com/node/21540231<br /><br />That sure doesn't sound like "the scale of the Canadian bubble is hardly as great as in other nations." <br /><br />Also, you forgot to quote the best part: "As long as money stays cheap, the balloon could get bigger—perhaps big enough to become a fully fledged bubble after all." Will Canada raise rates? I think they'll opt to kick the can instead.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-18835933221837255112012-04-01T07:15:47.557-07:002012-04-01T07:15:47.557-07:00LOL.. Don't bother to read what I said, huh?
...LOL.. Don't bother to read what I said, huh?<br /><br />Yes, Canada has a housing bubble, but I said (1) its financial system was regulated to prevent the level of sub-prime mortgages or fraudulent loans that occurred in the US.<br /><br />(2) I also said it had no financial crisis in 2008. <br /><br />(3) In 2008, the World Economic Forum ranked Canada’s banking system as the soundest in the world.<br /><br />All true statements.<br /><br />There will be a correction of housing prices in future, as there will be in other nations like Australia. <br /><br />But the scale of the Canadian bubble is hardly as great as in other nations: the ratio of house prices to income is 30% above the historical Canadian average. Ireland's, by contrast, reached 70%.<br /><br />Also note:<br /><br /><i>"since banks have recourse to all of a borrower’s assets, <b>and Canadian lending standards are stricter than America’s were, a decline in house prices would probably not wreck the banks as it did in the United States.... The inevitable landing will probably be soft. "</b></i><br /><br />http://www.economist.com/node/21546057<br /><br />This is typical of Austrians: your arguments are refuted time and again, and your tactic is to just switch quickly to some other subject.<br /> <br />The issue above was whether Panama was some extraordinary example of free market economics. It's not. Now you've switched to discussing Canada.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-8330883065063775312012-04-01T07:03:03.222-07:002012-04-01T07:03:03.222-07:00Canada’s banks were restricted by regulators from ...<i>Canada’s banks were restricted by regulators from mass securitizing of mortgage debt, and prohibited from taking on high levels of leverage to make larger and riskier loans. The Canadian mortgage industry was regulated to maintain high lending standards, instead of lax ones allowing an explosion in sub-prime mortgages</i><br /><br />So can I get you on record to say that you believe Canada will not experience a severe correction in the housing market (a fall of 20% or greater from current levels) sometime in the next 1-3 years?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-14119862123794035862012-04-01T05:46:47.722-07:002012-04-01T05:46:47.722-07:00"From IMF: "A key strength to the financ...<i>"From IMF: "A key strength to the financial sector has been the stable banking system..."</i><br /><br />Canada with a central bank and financial regulation had an even more stable banking system than Panama.<br /><br />Canada’s banking system required no bailout and had no systemic crisis in 2008/9. In 2008, the World Economic Forum ranked Canada’s banking system as the soundest in the world. The US system was ranked at number 40, and Germany and Britain ranked 39 and 44.<br />Canada’s banks were restricted by regulators from mass securitizing of mortgage debt, and prohibited from taking on high levels of leverage to make larger and riskier loans. The Canadian mortgage industry was regulated to maintain high lending standards, instead of lax ones allowing an explosion in sub-prime mortgages:<br /><br />http://www.nuwireinvestor.com/articles/canadas-highly-regulated-banks-helped-it-sidestep-the-financial-crisis-55555.aspxLord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-86863907869599335492012-04-01T05:44:11.681-07:002012-04-01T05:44:11.681-07:00Panama ranks as number 66 on a list of countries b...Panama ranks as number 66 on a list of countries by PPP per capita GDP. Even Mexico has a higher per capita GDP (IMF 2011):<br /><br />48 Equatorial Guinea 19,357<br />44 Trinidad and Tobago 20,301<br />54 Botswana 16,279<br />61 Mexico 15,121<br />66 Panama 13,595<br /><br /><br />Costa Rica (76 Costa Rica 11,562) has almost the same per capita PPP GDP but with much lower poverty.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-42529543026378961842012-04-01T05:10:16.731-07:002012-04-01T05:10:16.731-07:00The assertion that Panama has the "most succe...<i>The assertion that Panama has the "most successful and stable Central American economy" is based on what actually? It certainly can't be based on poverty or prosperity</i><br /><br />GDP Per Capita (PPP), 2011<br /><br />1. Panama ($13,595)<br />2. Costa Rica ($10,316)<br />3. Belize ($7,635)<br />4. El Salvador ($4,525)<br />5. Guatemala ($4,136)<br />6. Honduras ($2,793)<br />7. Nicaragua ($2,779)<br /><br />Population Below Poverty Line (most recent data)<br /><br />1. Costa Rica (16%)<br />2. Panama (26%)<br />3. El Salvador (38%)<br />4. Belize (43%)<br />5. Nicaragua (48%)<br />6. Guatemala (56%)<br />7. Honduras (65%)<br /><br />From IMF: "A key strength to the financial sector has been <i>the stable banking system</i>...The fully dollarized economy and completely open capital account have helped to keep <i>inflation low and interest rates stable</i>. Market discipline continues to be an important force for transparency and high operating standards, as <i>there is no lender of last resort or<br />deposit insurance</i>."<br /><br />To quote Ol' Dirty Bastard: "BOOM!! Jus' warmin' up a little bit, vroom vroom VROOM!"<br /><br />http://en.wikipedia.org/wiki/List_of_North_American_countries_by_GDP_per_capita<br /><br />http://www.indexmundi.com/map/?v=69&r=ca&l=en<br /><br />http://www.imf.org/external/pubs/ft/scr/2007/cr0766.pdfAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-83836876325731448962012-03-31T14:10:08.280-07:002012-03-31T14:10:08.280-07:00"That's funny because you're complete...<i>"That's funny because you're completely ignoring the fact that bond interest and principle repayment is financed by the government telling the citizens to give them their money or else, i.e. taxation. "</i><br /><br />That is a totally different issue, which requires demolition of libertarian ethics, as I have done here:<br /><br />http://socialdemocracy21stcentury.blogspot.com/2011/10/hoppe-on-argumentation-ethics.html<br /><br />http://socialdemocracy21stcentury.blogspot.com/2011/08/rothbards-argument-for-natural-rights.html<br /><br />I asked: "Holders of bonds have bought those bonds freely, for a return on their money. Who are you to tell them what to do with their money?"<br /><br />You haven't answered the question. This comment is nothing but ridiculous evasion.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-53803234180809200352012-03-31T14:06:36.599-07:002012-03-31T14:06:36.599-07:00I see. Now you divert attention from the actual st...I see. Now you divert attention from the actual statements of your fellow Austrians like Anderson or Roddis and switch to a quite different nominalist position.<br /><br />The nominalist versus realist debate as applied to existence of aggregates is <i>not</i> what these idiots are trying to articulate or engaging in: they making <i>extreme</i> statements precisely of the type like "aggregate demand is meaningless or invalid" - just as some of them attack GDP in this way.<br /><br /><i>"All abstract universals do not have their own existence apart from the individual humans to which the abstract refers."</i><br /><br />To assert such a thing as if it is settled, universally accepted as truth or not controversial is misleading<br />(of course, moderate realism might be challenged philosophically too).<br /><br />Your assertion requires nominalism and now gets into issues of profound philosophical or ontological depth - a debate I suspect that most Austrians would be incapable of having.<br /><br />As I said above, the crude Austrians never seem even to have the wit or intelligence to frame the debate on aggregates in terms of nominalism versus realism. I take a “moderate realist” position, and contend that what you say is not philosophical defensible.<br /><br />Take Quine's argument for the existence of numbers, the criterion of ontological commitment<br /><br />http://books.google.com/books?id=-FEcQMQ72yEC&pg=PA104&dq=Quine+existence+of+numbers+realism+logic&hl=en&sa=X&ei=-W93T-L9Jey4iAfK3MDoBA&ved=0CEAQ6AEwAzgU#v=onepage&q=Quine%20existence%20of%20numbers%20realism%20logic&f=false<br /><br />We could have a mature debate about nominalism versus realism if you like, but there seems little point, because this last comment of yours effectively concedes the essence of what I say above: that aggregates are meaningful and valid.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-87998911164471174142012-03-31T13:48:21.911-07:002012-03-31T13:48:21.911-07:00LK, you said
"...it would be covered by bond...LK, you said<br /><br />"...it would be covered by bond issues. Holders of bonds have bought those bonds freely, for a return on their money. Who are you to tell them what to do with their money?"<br /><br />That's funny because you're completely ignoring the fact that bond interest and principle repayment is financed by the government telling the citizens to give them their money or else, i.e. taxation. That itself is telling people what to do with their money.<br /><br />Of the course those who lend to the government are not the ones personally telling others what to do with their money, but those who support it, like you, cannot possibly object to someone else's argument on the basis that what they are saying carries with it "telling people what to do with their money." You'd only be a hypocrite.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-90562304680974856782012-03-31T13:44:53.667-07:002012-03-31T13:44:53.667-07:00"From what I understand, they don't have ...<i>"From what I understand, they don't have a central bank, yet they have the most successful and stable Central American economy. Is this in spite of not having a central bank?"</i><br /><br />They were hit by the global recession just like everyone else: their response was Keynesian fiscal expansion.<br /><br />I am sure if you bothered to look you'd also find the usual range of instabilities and economic problems all market economies face.<br /><br />Panama is also faced with a lot of poverty and extraordinary income inequality:<br /><br /><i>"Panama is one of the more unequal countries in the world. With a consumption Gini of 49 and an income Gini of 60, Panama's inequality ranks among the highest — on par with Brazil and just below South Africa, two of the most unequal countries in the world."</i><br /><br />http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/EXTPA/0,,contentMDK:20207841~menuPK:443285~pagePK:148956~piPK:216618~theSitePK:430367,00.html<br /><br />The assertion that Panama has the "most successful and stable Central American economy" is based on what actually? It certainly can't be based on poverty or prosperity: <br /><br /><i>"Over one million people (37 percent of the population) live below the poverty line. Of these, over half a million (19 percent) live in extreme poverty."</i><br /><br />http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/EXTPA/0,,contentMDK:20207841~menuPK:443285~pagePK:148956~piPK:216618~theSitePK:430367,00.html<br /><br />Compare that with Social democratic Sweden: around 7% live in poverty.<br /><br />Back before neoliberalism the figure was about 5%.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-77228098203523291822012-03-31T13:42:42.726-07:002012-03-31T13:42:42.726-07:00You're failing to grasp the importance and imp...You're failing to grasp the importance and implication of the word "thing" when nominalists say "there is no such thing as aggregate demand."<br /><br />They do NOT mean that there is no such abstract universal called aggregate demand. They do not mean that totalling up all the nominal expenditures individuals make is meaningless or imaginary. They do not mean that aggregate demand is at best only a figment of people's imaginations.<br /><br />No, they are only saying that there is no such THING as aggregate demand, apart from the actual things in question, which are the individuals and their individual exchanges of paying money for goods and services.<br /><br />Remember, Austrian economics is based on individual action. All abstract universals do not have their own existence apart from the individual humans to which the abstract refers.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-35268555939083443392012-03-31T13:29:52.253-07:002012-03-31T13:29:52.253-07:00(1) There are 2 government owned banks in panama: ...(1) There are 2 government owned banks in panama: National Bank of Panama (Spanish: Banco Nacional de Panamá) and Caja de Ahorros.<br /><br />http://en.wikipedia.org/wiki/National_Bank_of_Panama<br /><br />(2) Panama has personal income taxes and business taxes.<br /><br />(3) the government practises Keynesian fiscal intervention, with deficits. They had a stimulus a few years ago:<br /><br />http://www.laht.com/article.asp?ArticleId=326173&CategoryId=14088<br /><br />(4) the fact that, technically, they have no central bank (a bank issuing their own domestic currency) is because they use the US dollar.<br /><br />However:<br /><br /><i>"In Panama, central banking responsibilities are shared between the National Banking Commission and the National Bank of Panama."</i><br /><br />Charles Collyns, <i>Alternatives to the central bank in the developing world</i>, p. 16.<br /><br />In any case, using the US fiat money dollar as your domestic currency is not free banking at all.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-36658336863967877872012-03-31T13:26:56.032-07:002012-03-31T13:26:56.032-07:00"You're caricaturizing Anderson via ad ho...<i>"You're caricaturizing Anderson via ad hominem rather than understanding the philosophical underpinnings of the comments he is making."</i><br /><br />No, I am not. <br /><br />His absurd statements are repudiated even by Austrians like Jonathan Finegold Catalán:<br /><br /><i>"[sc. Anderson] ... simply said “aggregate demand” is a nonsense term. Don’t give Anderson credit where credit isn’t due, because if you do then you’re not pursuing the problem objectively. <b>You’re defending Anderson where there is no merit in a defense. Anderson is just plain wrong — simple as that."</b></i><br /><br />http://www.economicthought.net/blog/?p=997#comment-5175<br /><br /><br /><i>"Don’t shift the goal posts. This isn’t what Anderson said,<br /><br />>'When Krugman uses ‘demand,’ he means <br />>‘aggregate demand,’ which <br />> economically speaking is a <br />> nonsensical term. There is no such <br />> thing as “aggregate demand.’'<br /><br />There is nothing to defend here. <b>Anderson is categorically wrong</b></i><br /><br />http://www.economicthought.net/blog/?p=997#comment-5171Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-1958126121711908302012-03-31T13:22:47.748-07:002012-03-31T13:22:47.748-07:00"When Austrians say aggregate demand does not...<i>"When Austrians say aggregate demand does not exist, they don't mean that the meaning of what aggregate demand refers to does not exist. "</i><br /><br />Garbage. Austrians who declare it doesn't exist are obviously denying its existence in both concrete and abstract terms.<br /><br /><i>"While you implicitly admitted that abstract things like "aggregate demand" do not have any independent existence apart from the individual exchanges to which the abstract refers, you then claimed that aggregate demand is a "thing" after all."</i><br /><br />(1) I did not implicitly admit that "abstract things like 'aggregate demand' do not have any independent existence apart from the individual exchanges to which the abstract refers" at all. I said it was an abstract thing as opposed to a concrete particular. <br /><br />The sum of 4, 3, 5, and 1 is an abstract aggregate, the result of a mathematical operation on things which are themselves abstract entities.<br /><br />(2) in any case, there is no contradiction.<br /><br />e.g., I can refer to a crowd and look at its macro behaviour, which could manifest itself in physical ways (e.g., a stampede), but understand that the abstract entity (crowd) is composed of concrete particulars (individual people). Even if there were no actual crowds in the world (say, if the world was populated by 2 people who never met), they could still imagine a real abstract entity like a crowd.<br /><br /><i>"Remember, Austrian economics is based on individual action. To them, all existence is concretized in individual action."</i><br /><br />Austrian economics also does macroeconomics. The Austrian business cycle theory is nothing but a macro theory.<br /><br /><i>"Economic principles to the Austrians are based entirely on individual human action, so they are not saying that $20 of spending didn't take place."</i><br /><br />Then aggregate demand has real existence and is a valid, meaningful concept.<br /><br />What your comment above shows is that you're probably unaware of the actual extreme statements made by certain Austrians denying the existence of aggregate demand.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-63505714559411805872012-03-31T12:59:40.896-07:002012-03-31T12:59:40.896-07:00Hahaha, you just contradicted yourself.
While you...Hahaha, you just contradicted yourself.<br /><br />While you implicitly admitted that abstract things like "aggregate demand" do not have any independent existence apart from the individual exchanges to which the abstract refers, you then claimed that aggregate demand is a "thing" after all.<br /><br />In fact, aggregate demand does not have any independent existence apart from the actual existence of individual people and their individual respective demands for goods and services.<br /><br />When Austrians say aggregate demand does not exist, they don't mean that the meaning of what aggregate demand refers to does not exist. They mean that it has no independent existence apart from the individual humans and their individual demands.<br /><br />Remember, Austrian economics is based on individual action. To them, all existence is concretized in individual action. So when you say "aggregate demand", the Austrian are thinking "the individual demands from multiple individual people used to acquire goods and services."<br /><br />If you spend $10 on a good, and I spend $10 on a good, then the real concrete existence is you spending $10 and myself spending $10. Sure, you can say there was "an aggregate of $20 spent", but that "$20 spending" has no independent existence apart from you individually spending $10 and myself individually spending $10.<br /><br />No individual spent $20. No individual demanded $20 worth of anything.<br /><br />Economic principles to the Austrians are based entirely on individual human action, so they are not saying that $20 of spending didn't take place. They are not saying that there wasn't a combined total of $20 spent. They are just saying that it has no ontological independent existence apart from you spending $10 and myself spending $10, and those two actions are the only relevant economic actions in this two person situation.<br /><br />You're caricaturizing Anderson via ad hominem rather than understanding the philosophical underpinnings of the comments he is making.<br /><br />Your response to Roddis above, that "It <i>is</i> a "thing" and you're a fool for making latter statement" is just mindless antagonism that doesn't constitute a sound, informed, and educated argument. It was weak.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-61299626962046576532012-03-31T07:22:37.749-07:002012-03-31T07:22:37.749-07:00That is wholly flawed view, derived from a deficie...<i>That is wholly flawed view, derived from a deficient understanding of how markets economies work.</i><br /><br />What is your opinion of the Panamanian model? From what I understand, they don't have a central bank, yet they have the most successful and stable Central American economy. Is this in spite of not having a central bank?<br /><br />Btw, I support free banking (like on freebanking.org), and I have no problem with fractional reserve banking.<br /><br />Also, sorry for the emotional diatribe. I thought you were saying, "Don't you care about those starving unemployed folks?" or some tripe like that. I took your comment the wrong way. My apologies.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-65546831856160169262012-03-31T07:13:02.162-07:002012-03-31T07:13:02.162-07:00That would just collapse the economy.
Can you cit...<i>That would just collapse the economy.</i><br /><br />Can you cite an historical example when tax cuts plus equivalent spending cuts caused an economic collapse? I don't mean this in a snarky way, I'm just curious.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-43597001530650351932012-03-31T07:09:08.525-07:002012-03-31T07:09:08.525-07:00In my example, I also said that the woman is a wor...In my example, I also said that the woman is a working single-mother, and doesn't like classroom study. So my comment still applies--she derives no benefit, despite paying taxes, yet she would have been able to gain some benefit if she had control over how to spend the $150.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-17055219665163541662012-03-30T11:48:38.347-07:002012-03-30T11:48:38.347-07:00"From an economic standpoint, I still believe...<i>"From an economic standpoint, I still believe elimination of centralized control over interest rates and the money supply would allow the free market to allocate resources and credit to their most productive uses, to the benefit of everyone, including the temporarily unemployed."</i><br /><br />That is wholly flawed view, derived from a deficient understanding of how markets economies work.<br /><br />(1) Say's law is a myth:<br />http://socialdemocracy21stcentury.blogspot.com.au/2010/10/myth-of-says-law.html<br /><br />(2) Even if there were perfect wage and price flexibility, there could still be involuntary unemployment<br /><br />http://socialdemocracy21stcentury.blogspot.com.au/2011/01/f-h-hahn-in-candid-moment-on-neo.html<br /><br />(3) The arguments for free trade are deeply flawed<br />http://socialdemocracy21stcentury.blogspot.com.au/2011/01/mises-on-ricardian-law-of-association.html<br /><br />(4) Money has special properties that mean that monetary market economies are subject to serious problems, not foreseen by neoclassical or Austrian theory<br />http://socialdemocracy21stcentury.blogspot.com.au/2011/05/keynes-on-special-properties-of-money.html<br /><br />(5) Fractional reserve banking is not fraudulent or immoral: whatever pro-cyclical effects it has are a natural, endogenous part of capitalism<br /><br />http://socialdemocracy21stcentury.blogspot.com.au/2011/12/my-posts-on-fractional-reserve-banking_19.html<br /><br />(6) The Austrian business cycle theory is false <br /><br />http://socialdemocracy21stcentury.blogspot.com.au/2011/12/my-posts-on-austrian-business-cycle.htmlLord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-10419589827991658032012-03-30T11:38:52.157-07:002012-03-30T11:38:52.157-07:00"http://www.thenewamerican.com/economy/commen...<i>"http://www.thenewamerican.com/economy/commentary-mainmenu-43/11357-fed-is-buying-61-of-us-government-debt (link in article to original WSJ op-ed)"</i><br /><br />The statement that "Fed purchased a stunning 61% of the total net Treasury issuance" cannot be true: the Fed does NOT (repeat not) purchase bonds directly from the Treasury. <br /><br />Presumably what it is trying to say is that the Fed has purchased bonds from secondary markets equivalent to the value of total net Treasury issuance: a quite different thing.<br /><br />As I said above, people have freely chosen to buy new Treasury issues.<br /><br />Yes, no doubt the Fed has stabilised and lowered yields and helped raise demand for new issuance - but that is just plain common sense, and the reason why the US is a sovereign nation with an independent monetary system, and not, say, like Greece.<br /><br /><i>"On an emotional level, you're right: I don't care about aggregate unemployment. etc etc"</i><br /><br />This long diatribe is irrelevant: in fact, you could still not care about aggregate unemployment on "an emotional level" to say it is deleterious in economic terms.<br /><br />The original issue was the truth of your statement: "But they didn't freely choose to implement the stimulus (at least not all of them did)."<br /><br />In fact, democracy DOES allow a degree of choice in policy matters.<br /><br />And even if not choosing freely to accept something were a serious argument against it, that would apply equally well to unemployment: if I didn't choose to get sacked, then how if this morally different from not choosing to implement stimulus.<br /><br /><i>"I prefer federal tax cuts in conjunction with spending cuts."</i><br /><br />That would just collapse the economy.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-56993130062668645292012-03-30T11:15:19.986-07:002012-03-30T11:15:19.986-07:00"Last year, the Fed purchased 61% of Treasury..."Last year, the Fed purchased 61% of Treasury bonds."<br /><br /><i>What is your evidence of this?</i> <br /><br />http://www.thenewamerican.com/economy/commentary-mainmenu-43/11357-fed-is-buying-61-of-us-government-debt (link in article to original WSJ op-ed)<br /><br /><i>if the majority of the voting public vehemently object to stimulus they can vote the government out.</i><br /><br />I believe this is a very possible outcome. After Obama wins handily this year vs. Romney, I think Rand Paul will be a major factor in 2016. One can only hope!<br /><br /><i>They didn't freely choose to lose their jobs in a recession either. Funny how you don't care about that.</i><br /><br />On an emotional level, you're right: I don't care about aggregate unemployment. It provokes no emotional reaction in me. And I doubt that it does in you either.<br /><br />My mother has Alzheimer's. It has been an emotionally wrenching experience for us. But I'm sure that you don't care one iota about that. And that's fine, b/c I think it's ludicrous to expect people to care about other people that they don't know personally. <br /><br />I care about myself, my family, and my friends. Barring mass genocide or extreme natural disaster, invisible strangers in the newspaper get maybe 1% of my attention and concern. I'd be lying if I said it was more.<br /><br />From an economic standpoint, I still believe elimination of centralized control over interest rates and the money supply would allow the free market to allocate resources and credit to their most productive uses, to the benefit of everyone, including the temporarily unemployed.<br /><br /><i>I assume you are conceding point (3) above. Of course Post Keynesians would support tax cuts.</i><br /><br />I don't think supporting tax cuts is a concession on my part, as it is a move in the direction of the non-interventionist central govt that I favor. But if it puts a smile on your face, score it as a concession.<br /><br />I prefer federal tax cuts in conjunction with spending cuts. But even without spending cuts, I favor tax cuts. You also support permanent federal income tax cuts? To what level--a 10% (or less) flat tax, with the majority of govt taxation and spending at the state and local level? If so, you have my complete support.<br /><br /><i>In short, your argument is almost totally worthless.</i><br /><br />If your goal with this comment is to make me hostile to everything you say, then you've very nearly succeeded. If it's to influence my thinking in any way, this is the wrong way to go about it, imo.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-35953220400069505912012-03-30T07:40:15.640-07:002012-03-30T07:40:15.640-07:00"Last year, the Fed purchased 61% of Treasury...<i>"Last year, the Fed purchased 61% of Treasury bonds."</i><br /><br />What is your evidence of this? Even if it were true, the Fed does not purchase them directly from the Treasury. All new bond issues found buyers.<br /><br />Fed purchases are from secondary markets, and people who hold them freely choose to sell them for new money - so even here your "coercion" argument does not work.<br /><br /><i>"But they didn't freely choose to implement the stimulus (at least not all of them did)."</i><br /><br />(1) LOL! They didn't freely choose to lose their jobs in a recession either. Funny how you don't care about that.<br /><br />(2) in any case, we have a democratic system: if the majority of the voting public vehemently object to stimulus they can vote the government out. However, if you bother to take a well sampled survey of public opinion I'd suspect you'd find broad agreement for government stabilization measures, just as you do for universal health care.<br /><br /><i>"This would be the most preferable form of stimulus. </i><br /><br />So I assume you are conceding point (3) above. Of course Post Keynesians would support tax cuts.<br />MMTers would support broad payroll tax cuts.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.com