tag:blogger.com,1999:blog-6245381193993153721.post4315817941826423477..comments2024-03-17T00:23:24.896-07:00Comments on Social Democracy for the 21st Century: A Realist Alternative to the Modern Left: Mike Whitney on KeynesLord Keyneshttp://www.blogger.com/profile/06556863604205200159noreply@blogger.comBlogger29125tag:blogger.com,1999:blog-6245381193993153721.post-58964506081423068552011-04-22T07:12:10.122-07:002011-04-22T07:12:10.122-07:00Prateek, by scarce capital you obviously mean real...Prateek, by scarce capital you obviously mean real resources and not financial ones. There is no such thing as scarce financial resources in the fiat non-convertible system with floating exchange rates. Neither for the government nor for the private sector.<br /><br />By saying that if something is not profitable it is not worth doing you obviously assume a monetary measure of profitability. “Profitability” is never an issue for a monetary independent government. There is no reason to expect government to make a profit. Let’s remember that monetary profit on one side of equation means a monetary loss on another side. By requiring government to make a profit you require that the private sector bears a monetary loss. Is it really what you want?<br /><br />But it is a completely different story on the real side of economy. Yes, government by spending engages real resources in certain activities. But government is just a tool of society. It does not eat wheat and it does not drink milk. So your argument that government diverts too many resources from the use by others is pure ideology. Government is just a tool of all “others” in the country. Some “others” can clearly have different opinions then other “others”. But if first “others” lost in the last elections they have zero right to realize their claims on resources for their “others” tasks.<br /><br />Besides this, given persistently high unemployment during the last several decades it is hard to argue about the lack of real resources which government “steals” from the ever-profitable private sector.Игры рынкаhttps://www.blogger.com/profile/12001273098690387194noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-24848701302350783442011-04-22T05:28:36.134-07:002011-04-22T05:28:36.134-07:00Something something, have you actually considered ...Something something, have you actually considered that if something was not profitable, it was not worth doing in the first place?<br /><br />You are basically arguing that it's a good idea to create a deficit of wealth by putting your scarce capital into an activity that will reduce the amount of capital you have left afterwards.<br /><br />The high cost of such an activity is merely a reflection of reality - too many resources have to be diverted from other uses to put to that task.<br /><br />The low gain of that activity is merely a reflection of another reality - other people are not willing to divert their resources from other uses in order make use of the fruits of this activity.<br /><br />Let's remember that even nonprofits have to show a surplus in order to get money for reinvestment and replacement in their assets.Prateek Sanjaynoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-35020946458144278272011-04-22T00:54:20.223-07:002011-04-22T00:54:20.223-07:00And by the way, there is another way to argue abou...And by the way, there is another way to argue about it. If private business can do profitable things better than the government (in general true), then the government has to leave all profitable activities to the private sector. This also implies that the government should engage only in non-profitable activities or activities were profits can not be easily quantified or measured. Like any long-term stuff.Игры рынкаhttps://www.blogger.com/profile/12001273098690387194noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-66517024615408984292011-04-22T00:46:09.147-07:002011-04-22T00:46:09.147-07:00As a matter of fact, long-term planning has much h...As a matter of fact, long-term planning has much higher chances of success compared to any short-term planning over long-term horizon. Well, some of long-term trends are obvious even to primary school kids. Private business can do long-term planning as well but it is not really interested in carrying those plans out.Игры рынкаhttps://www.blogger.com/profile/12001273098690387194noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-39013746559076065992011-04-22T00:25:24.164-07:002011-04-22T00:25:24.164-07:00Planning of roads, highways and freeways requires ...Planning of roads, highways and freeways requires long time planning.<br /><br />That we face fundamental uncertainty does not mean certain long term planning cannot work, either by the state or private business.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-11727026339275650932011-04-22T00:10:54.067-07:002011-04-22T00:10:54.067-07:00""The idea the that the government eithe...""The idea the that the government either can and/or does calculate long term is total nonsense without any basis in fact, history or experience."<br /><br />Patent nonsense.<br /><br />If that were even remotely true, there would be no functioning roads, bridges, highways, etc."<br /><br />Lord Keynes, I don't exactly see how governments can calculate the long term total whatever that is. Governments are made up of people. Businesses are made up of people. All people face fundamental uncertainty.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-75858775696845423342011-04-19T23:58:13.299-07:002011-04-19T23:58:13.299-07:00"Neither Keynes nor his acolytes EVER bother ...<i>"Neither Keynes nor his acolytes EVER bother to identify, much less refute, basic Austrian concepts which are axiomatic to human existence."</i><br /><br />What?<br /><br />You mean the idea that all human action is purposeful? <br /><br />That there is a difference between "free goods" and "economic goods", in terms of the scarcity of the latter.<br /><br />That we have potentially unlimited human needs and wants, but limited commodities to satisfy those needs and wants?<br /><br />These ideas require no "refutation" because they are <i>perfectly</i> compatible with Keynesian economics.<br /><br />On the hordes of Austrian nonsense about the human action axiom, see here:<br /><br />http://socialdemocracy21stcentury.blogspot.com/2011/02/limits-of-human-action-axiom.htmlLord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-64588330335241908002011-04-19T19:26:52.423-07:002011-04-19T19:26:52.423-07:00And as for your Keynes bashing, there are actually...And as for your Keynes bashing, there are actually quite a few similarities between Keynes' and Hayek' thought in some important areas of economics.<br /><br />You might care to read this:<br /><br />http://thinkmarkets.wordpress.com/2009/03/31/lord-keynes-a-hayekian-appreciation/Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-8975240725595059742011-04-19T19:14:37.272-07:002011-04-19T19:14:37.272-07:00"The Austrian explanation was purposefully an...<i>"The Austrian explanation was purposefully and meticulously ignored by Keynes."</i><br /><br />Sadly, your reading of history is wrong.<br />Hayek and Keynes debated each other many times.<br /><br />Hayek's pupils at the LSE like Kaldor - who knew his theories perfectly well - abandoned Austrian economics after Hayek and the Austrians were roundly defeated in the intellectual battles of the 1930s.<br /><br />Austrians had their "moment". They failed totally to convince people of their theories.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-10978166339022046402011-04-19T19:09:02.653-07:002011-04-19T19:09:02.653-07:00Prateek Sanjay,
"What do you think about th...Prateek Sanjay, <br /><br /><i>"What do you think about the fact that the critics of Keynes (to whom you often respond in this blog) have probably not read Keynes properly? Shouldn't that be a convincing reason that those people read Keynes first?"</i><br /><br />You are entirely correct in these comments and the one following. We can agree on this.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-91428974272380851462011-04-19T11:42:30.765-07:002011-04-19T11:42:30.765-07:00I've just watched the great Keynes documentary...I've just watched the great Keynes documentary. It claims that prior to Keynes, NO ONE could possibly explain how the market might run off the tracks nor had anyone allegedly managed to explain the causes of the Great Depression.<br /><br />The essence of the Austrian theory is that most everything we experience as horrible in the world of economics can be attributed to Keynesian-style policies in the broad sense that government spending and money dilution are at the root of most evil. In other world, it’s all your fault. (I refuse to get into a pissing contest of guessing whether Keynes would have or would not have supported money dilution and/or unpayable debt as a solution to a particular Keynesian-induced boom/bust situation). <br /><br />The Austrian critique existed in its almost full fledged glory PRIOR to the anything Keynes ever wrote. Except for two off-handed paragraphs that do not identify the Austrian theory (and which demonstrate a complete lack of comprehension by Keynes), there is no mention of the Austrian theory in “The General Theory”. Neither Keynes nor his acolytes EVER bother to identify, much less refute, basic Austrian concepts which are axiomatic to human existence. For starters, the entire Keynesian scheme is defective ab initio due to THE KNOWLEDGE PROBLEM.<br /><br />Further, the essence of the Keynesian theory is that no prior economic theory could nor did explain depressions such as the Great Depression and therefore markets need the guiding hand of the omniscient magic bureaucrat. That is a lie and a complete falsehood because the Austrian theory explained the cause of depressions (whether one agrees with it or not). The Austrian explanation was purposefully and meticulously ignored by Keynes. That Keynesian dog and pony show continues to this day as exemplified by this “documentary”.Bob Roddisnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-57332424082950701692011-04-19T09:29:15.299-07:002011-04-19T09:29:15.299-07:00What do you think about the fact that the critics ...What do you think about the fact that the critics of Keynes (to whom you often respond in this blog) have probably not read Keynes properly? Shouldn't that be a convincing reason that those people read Keynes first?<br /><br />But of course, I am guessing that, even after General Theory, one is expected to read the various follow-up books of the same theories or the commentaries on it, in order to get the right idea?Prateek Sanjaynoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-32939998878031995272011-04-19T05:27:18.626-07:002011-04-19T05:27:18.626-07:00"I don't understand LK's response, si...<i>"I don't understand LK's response, since it has more to do with Bob Roddis' post than mine"</i><br /><br />Yes, that comment was directed at Bob Roddis.<br /><br />There is certainly something to be said for reading things in the original, especially the <i>General Theory</i>, though that <br />has its limitations.<br /><br />For example, you can have a highly advanced understanding of Newtonian/classical mechanics, without reading Newton's <i>Philosophiae Naturalis Principia Mathematica</i> (1687), a work which is also written in Latin, and which would be inaccessible to all but people knowing that dead language.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-84491849685145595842011-04-19T00:47:31.716-07:002011-04-19T00:47:31.716-07:00It probably is a Courtier's Reply, except a Co...It probably is a Courtier's Reply, except a Courtier's Reply, among other things, involves avoiding the argument in order to rebut it, and my post had no other argument to make than itself.<br /><br />And I wasn't even rebutting anything. Quite ironically, my post was a simple agreement with the original writer Mike Whitney that people should read Keynes before deciding Keynes was wrong.<br /><br />I don't understand LK's response, since it has more to do with Bob Roddis' post than mine. I think he makes the mistake of lumping me in with him?Prateek Sanjaynoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-71363253626624271102011-04-18T20:48:34.854-07:002011-04-18T20:48:34.854-07:00Mike,
And most insulting of all is the bizarre cl...Mike,<br /><br />And most insulting of all is the bizarre claim that no one else but them is familiar with ideas such as economic scarcity and that human action is purposeful, etc. etc.<br /><br />RegardsLord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-9448934941128336022011-04-18T17:22:16.152-07:002011-04-18T17:22:16.152-07:00Prateek Sanjay is giving us a classic Courtier'...Prateek Sanjay is giving us a classic <a href="http://scienceblogs.com/pharyngula/2006/12/the_courtiers_reply.php" rel="nofollow">Courtier's Reply</a>.Mike Hubenhttps://www.blogger.com/profile/01371469964446567690noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-87295540989414598212011-04-15T02:50:58.404-07:002011-04-15T02:50:58.404-07:00"Usage of an empty insubstantial political rh...<i>"Usage of an empty insubstantial political rhetoric, such as the word "Neo-Liberal"</i><br /><br />One does not need to know the full body of literature to reject obviously and blatantly false ideas. For instance money multiplier. Or loanable funds. Or even hole-digging-and-filling.Игры рынкаhttps://www.blogger.com/profile/12001273098690387194noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-25650091528158289392011-04-14T22:32:58.923-07:002011-04-14T22:32:58.923-07:00And another thing.
IMF and World Bank don't i...And another thing.<br /><br />IMF and World Bank don't implement policies.<br /><br />Robert McNamara once said that his goal was to raise a certain amount of money and spend a certain amount of money. When that target was reached years later, he said he achieved his goals. Rinse and repeat.<br /><br />The World Bank doesn't worry about how it uses money. They are using other people's money, so they don't have to economize it. They spend it on other people, so they don't have to seek highest value for it. The governments that give the World Bank money also use other people's money, and are unconcerned about economizing or seeking highest value for it. The governments that receive World Bank money are unconcerned about economizing it or using it for any meaningful purpose. Those governments don't have to implement a damn thing.<br /><br />IMF lended money to Indonesia's corrupt regime over and over and over again. They requested reforms, but as pure suggestions. None of them was accepted. And IMF continued lending money. And then Indonesia went bust. Because its corrupt leaders were subsidised for failure by IMF. Russia too never had to reform anything while it was generously getting dumped with loans, and only after things got too bad did they consider dramatic changes; changes that would have been less dramatic if they accepted reforms earlier.<br /><br />"Liberalization" and "globalization", which only have happened less than partially in the Third World, only happened because those countries were bankrupted and had no choice. Nothing was never imposed. Suharto doesn't willingly reform or privatize industries that he distributed to his friends and family. He doesn't stop priority sector lending in banking to his friends and family, because he embraced any Washington Consensus. Else, why would he refuse to do so over and over?Prateek Sanjaynoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-11232096077945187142011-04-14T22:21:22.423-07:002011-04-14T22:21:22.423-07:00If it refers to economics developed in the past 30...If it refers to economics developed in the past 30 years, why was Anonymous talking about it in reference to Hayek? I am assuming he was referring to Hayek, because that's one example I chose in the point I was making, and he replied to that point.<br /><br />Even if Neo-Liberal has perfectly clear meaning, it is thrown around carelessly these days. Alexander Coburn once called the 1890s a time of neoliberalism. Heh. So when was neoliberalism just plain liberalism? Indian journalists writing for Frontline or otherwise will say it is neoliberalism to build an airport (where there already was an airport), neoliberalism to charge tolls on congested highways, neoliberalism to increase public sector pay, neoliberalism to decrease public sector pay,.etc,.etc,.etc.<br /><br />This soup is too hot! Neoliberalism! Kids these days have no respect! Neoliberalism!Prateek Sanjaynoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-54681574785376936122011-04-14T21:13:00.053-07:002011-04-14T21:13:00.053-07:00"Usage of an empty insubstantial political rh...<i>"Usage of an empty insubstantial political rhetoric, such as the word "Neo-Liberal".</i><br /><br />The term "neoliberal" has a perfectly clear meaning: it refers to the New Consensus macroeconomics, and more particularly to the more extreme neoclassical version of it called "New Classical economics".<br /><br />Such policies have been implmented via various governments and by the IMF and World Bank over the 30 years under the name "globalization" or the "Washington consensus".Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-24742219681402161762011-04-14T20:50:20.181-07:002011-04-14T20:50:20.181-07:00"I don't need to read neo-liberal economi..."I don't need to read neo-liberal economics in the original to realize that it is incredible that it has any intellectual respectability."<br /><br />This statement tells me everything I need to know.<br /><br />1) Usage of an empty insubstantial political rhetoric, such as the word "Neo-Liberal". <br /><br />2) Rejection of economics on basis of above mentioned partisan political rhetoric.<br /><br />3) Deciding that certain economics is wrong on the basis of second-hand sources, as is typical of Wikipedia scholars and people miserly with textbooks.<br /><br />4) Taking the position of refuting a work, without knowing the actual work.<br /><br />I think Ed Milliband may have a job for you, since you are such a dedicated and loyal party worker, Anonymous.<br /><br />Sorry for the snark, but what you say is pure politics and has nothing to do with economics. <br /><br />Remember, Catholics read works of atheists like Christopher Hitchens and other dangerous thinkers all the time. Seemingly narrow-minded religious folk are ahead of the curve compared to economics students and teachers today. You are merely part of a trend, not an exceptionally bad case.<br /><br />PS: You damn well better read Einstein before claiming to use Einstein's theories, because Einstein's ideas have been strawmanned and misrepresented over and over. Indeed, when Einstein published his work, very few claimed to understand it. And somehow, people will understand Einstein before ever having read him. Such nonsense!Prateek Sanjaynoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-14106824103804228062011-04-14T11:38:24.135-07:002011-04-14T11:38:24.135-07:00Prateek,
I don't agree that one should not co...Prateek,<br /><br />I don't agree that one should not comment unless one has read original works - in the original language.<br /><br />Hardly any physicists would consider it necessary to read the original Newton, Maxwell or Einstein, yet they understand and use their theories all the time. <br /><br />I don't need to read neo-liberal economics in the original to realize that it is incredible that it has any intellectual respectability.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-84775385767310272352011-04-14T01:22:09.347-07:002011-04-14T01:22:09.347-07:00"Because even private business or private ind...<i>"Because even private business or private individuals can not calculate long term."</i><br /><br />In other words, fundamental uncertainty affects private investment decisions, destroying any tendency to "pattern/plan coordination" (Hayek/O'Driscoll and Rizzo) or neoclassical full employment equilibrium.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-9595121414505577892011-04-13T21:41:50.354-07:002011-04-13T21:41:50.354-07:00Bob's point was a somewhat legitimate one.
Th...Bob's point was a somewhat legitimate one.<br /><br />The government can not calculate long term.<br /><br />Why?<br /><br />Because even private business or private individuals can not calculate long term. No human can easily envision and then act on what is going to happen 30 years later.<br /><br />Look at all the renewable energy projects across the world. If, in the distant future, some new discovery out of nowhere comes to optimize the energy production from a single gallon of oil to 10 times of what it is now, every one of these projects will see net present values fall sharply into the negative. Yes, it is an unlikely, unexpected breakthrough. But are such energy project managers really going to think they will be safely insulated from unlikely, unexpected breakthroughs? Even across the span of 20 years or 30 years? They don't even know what will happen next year!Prateek Sanjaynoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-61327420628440651782011-04-13T19:29:05.798-07:002011-04-13T19:29:05.798-07:00"The idea the that the government either can ...<i>"The idea the that the government either can and/or does calculate long term is total nonsense without any basis in fact, history or experience."</i><br /><br />Patent nonsense.<br /><br />If that were even remotely true, there would be no functioning roads, bridges, highways, etc.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.com