Forum Post: Capitalism? We've had a mixed system for a long time now. Keynes was never really overturned. Who is confused about this?
Posted 13 years ago on Nov. 6, 2011, 9:41 p.m. EST by Josue
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Our answers are still essentially within a liberal Keynesian framework: tax the rich, regulate the banks, social services, scrub the electoral process, help students with higher education, help returning veterans, promote jobs and growth through infrastructure spending, etc. Who is going to be surprised when the polls show massive support for this agenda? It is the agenda of the 99%. Where's the mystery here? How can anyone be walking around dazed and confused about any of this?
Friedman is a rhetoric, but regulatory agencies are understood even by Republican senators and such as a modern necessity. So are programs like Social Security and Medicare. Privatization was pie in the sky rhetoric even during the Bush years. The middle class is solidly Keynesian in thinking, with Friedman as a fun thing to amuse themselves with in the afternoons. Reagan was successful at spinning that yarn, but the most significant thing he did was lower tax rates, not reducing the size of government. Maybe we need to work to rehabilitate liberalism and Keynes.
"Maybe we need to work to rehabilitate liberalism and Keynes."
That is my purpose in life at this point.
But try telling that to the Austrians swarming this forum (just below).
The 1% use the regulatory system to get over on the 99%. This is so obvious that even the advocates of regulation admit it. The idea that the govt can be reformed to serve the people is a fantasy, it will always be controlled by the 1%. That's why liberalism & Keynesianism will never work.
Keynes has been radically diminished. We live in Chicagoland now, have for 30-40 years. Yeah when it gets really bad people fall back into Keynesian thinking, but Friedman rules most of the time. Hence deregulation, privatization, tax cuts, starving the beast, huge debt, etc.
Also, progressive taxation a.) barely exists at this point and b.) is not Keynesian. Adam Smith actually talked about it.
That said, what's your point? I think we need to embrace Keynes, and not in the half-assed way we do lately because it's ideologically distasteful...
However, lingering Reaganomics has really done a number on us with this lack of fiscal discipline during booms (i.e. squandering surpluses on tax cuts and military, instead of maintaining revenue and paying down the debt), So, now we're in a place where more Keynesian spending is of limited utility - at least until we drastically increase revenue - and even then...
Welcome to neoliberalism.
You are..
Keynesian economics was not repealed. Just the laws that underpinned it.
These 235 sitting members of Congress voted in 1999 to repeal Glass-Steagall thus creating "too big to fail banks",further expanding use of under-regulated 'toxic' derivatives by those banks and reorganizing the Community Reinvestment Bank lowing lending standards which was a license for the banks to run roughshod over the home equity of honest middle class American tax payers.
SEE: The Congress that Crashed America http://home.ptd.net/~aahpat/aandc/congcrash.html
Protesting at these congress members offices across the nation would send a powerful message to Wall Street that we know who their minions in Congress are, we will confront them and we will vote them out of office. Tell Wall Street that We the People will no longer reward these criminal conspirators in Congress with our vote.
H.R.2451 Latest Title: Glass-Steagall Restoration Act of 2011
Find it here: http://thomas.loc.gov/home/thomas.php
Write to your members in Congress and demand that they co-sponsor this bill. NOW!
I hate to be the barre of bad news but a piece of information I came across is ,Bush and his rich buds very quietly passed a bill and funded it with our taxpayer money, a super highway that is being built as we speak five lanes wide it will run from the gulf of Mexico in Mexico and run all the way up 35w to Canada and is sponsored by NAFTA, AND NASCO North American Supercorridor coalition which is code for privately owned by rich business men for one purpose to get rid of borders between our countries and get rid of the port unions and have nonunion truck drivers from Mexico delivering cheep products from all over the world . also they will take land from farms small businesses regular people etc. under eminent domain,they are probably using non union construction workers . AMERICA WILL FADE AWAY, the rottenness goes to the core , we as a free nation have the right to print our own money with no interest, the Federal Reserve is an illegal operation in our country, they have nothing to do with us, they are privately owned and set what ever rates they want to keep us in debt. through them out and print our own money as a sovereign nation and they know it .
When you rob Peter to pay Paul, you will always have the support of Paul
Absolutely!
Restore proven Keynesian well regulated free market economics.
End predatory libertarian 'what me worry' Alfred E. Newman economics.
No, they're not. I am really tired of people saying that OWS protestors don't want to abolish capitalism. Speak for your self. Capitalism cannot be "greened" or made better through a welfare state. Its a failure.
FDR's succeeded at using Keynesian stimulus to bring the US out of the depression just as the world was plunged into WW2. Every industrial power had their cities and factories bombed into rubble, while the US (being shielded on either side by two great oceans) emerged from the war in better economic shape then when it started. This is why the US was so prosperous during the later half of the 20th century. We cannot expect this to work again. Capitalism is a system which requires endless growth and it's destroying the planet's ability to sustain human life. It needs to go.
Let's all stop pretending that the only possibilities are government control of the economy or corporate control of the economy (so called "free market")
Couldn't Keynes be leveraged to build the infrastructure we'll need for a more sustainable society, longer-term? Think geothermal, high-speed rail, massive solar & wind, R&D into alternatives... Seems like, even if everyone agreed with you (they obviously don't - things aren't that bad yet) there will need to be a transitional phase. So, in the interim, would you prefer Keynes or the "free market" wild west?
Except of course FDR and the New Deal lengthened and worsened the great depression but let's always ignore that.
Fucking revisionism. Mind-numbing.
"If you’re like me, you sometimes find yourself speechless when confronted with abject insanity.
If you’re like me, for instance, you were dumbfounded when “Forrest Gump” beat out “Pulp Fiction” for best picture; when HBO’s “Sopranos” received more accolades than “The Wire”; and when George W. Bush insisted Iraqi airplanes were about to drop WMD on American cities.
So if you’re like me, you probably understand why I was momentarily tongue-tied last week after running face-first into conservatives’ newest (and most ridiculous) talking point: the one designed to stop Congress from passing an economic stimulus package.
During a Christmas Eve appearance on Fox News, I pointed out that most mainstream economists believe the government must boost the economy with deficit spending. That’s when conservative pundit Monica Crowley said we should instead limit such spending because President Franklin Roosevelt’s “massive government intervention actually prolonged the Great Depression.” Fox News anchor Gregg Jarrett eagerly concurred, saying “historians pretty much agree on that.”
Of course, I had recently heard snippets of this silly argument; right-wing pundits are repeating it everywhere these days. But I had never heard it articulated in such preposterous terms, so my initial reaction was paralysis, the mouth-agape, deer-in-the-headlights kind. Only after collecting myself did I say that such assertions about the New Deal were absurd. But then I was laughed at, as if it was hilarious to say that the New Deal did anything but exacerbate the Depression.
Afterward, suffering pangs of self-doubt, I wondered whether I and most of the country were the crazy ones. Sure, the vast majority of Americans think the New Deal worked well. But are conservatives right? Did the New Deal’s “massive government intervention prolong the Great Depression?”
Ummm … no."
...
'“Excepting 1937-1938, unemployment fell each year of Roosevelt’s first two terms [while] the U.S. economy grew at average annual growth rates of 9 percent to 10 percent,” writes University of California historian Eric Rauchway.'
...
http://www.salon.com/2009/01/02/sirota_fdr_depression/
all true what you said but it would be very helpful to point out that in1937 they (the fdr administration) raised taxes and cut spending and the country (and stock market) plunged into another decline. same things going on today. i am 61 - for all of my life it was common knowledge that fdr's new deal helped to soften the effects of the depression (for working people) and that the deficit spending of ww2 ended the depression. then right after 2008 i began to hear this nonsense that the war did not end the depression - orwell really had it right! chomsky has very interesting info on the period right after ww2 when the country was slipping back into a recession - the debate was how to spend the money needed to "prime the pump" - build schools, hospitals and houses or tanks and airplanes and submarines - we all know what they chose but the debate surrounding that time is very informative.
Thanks. We need to hold on to the wisdom of our older generations, because right now the victors (descendants of Friedman, Reagan, etc) are trying to rewrite history to suit their ideological aims.
Agreed, the 1937 recession was precisely like this current call for austerity around the world - the GOP pushing back and FDR bowing to political pressure. You're also right that postwar Keynesian spending was pushed by conservatives towards military buildup, instead of investing in ourselves - though not entirely (think Eisenhower's highways, etc). As much as I am opposed to that military application of Keynes (WWII being an exception), I prefer it to this new narrative that he and FDR were failures and lies.
I'm a fan of Chomsky but haven't read him on this subject. Do you have any articles or books to recommend?
we agree on all of this - keep it up - we need a better understanding of what is happening to us or will can never figure out how solve some of these problems. the sad truth is i would vote for lbj today - that is how bad things have are! i think the best source for all things chomsky is "understanding power" - it has a few hundred pages of footnotes online! i googled - chomsky pentagon system and came up with an article - lifted this quote -"The Pentagon system was considered ideal for these purposes. It imposes on the public a large burden of the costs (research and development, R&D) and provides a guaranteed market for excess production, a useful cushion for management decisions. Furthermore, this form of industrial policy does not have the undesirable side-effects of social spending directed to human needs. Apart from unwelcome redistributive effects, the latter policies tend to interfere with managerial prerogatives; useful production may undercut private gain, while state-subsidized waste production (arms, Man-on-the-Moon extravaganzas, etc.) is a gift to the owner and manager, who will, furthermore, be granted control of any marketable spin-offs. Furthermore, social spending may well arouse public interest and participation, thus enhancing the threat of democracy; the public cares about hospitals, roads, neighborhoods, and so on, but has no opinion about the choice of missiles and high-tech fighter planes. The defects of social spending do not taint the military Keynesian alternative, which had the added advantage that it was well-adapted to the needs of advanced industry: computers and electronics generally, aviation, and a wide range of related technologies and enterprises.
Great quote, thank you; I will do some searching and reading.
Re: LBJ - ha! My parents were big George McGovern supporters in '68 and I bet even they would agree with you. :)
Thanks for your encouragement. Sometimes I feel a little like the dutch boy with his finger in the dike...
didn't you know - you are the little dutch boy - his picture comes up with all your posts! yes i know the feeling but just keep in mind - the begining of the end of the vietnam war was the teach ins. keep at it. not sure this forum is the best place to educate and be educated but it seems to be getting better - have you been down to the park - pretty amazing i think! not sure where you can find it but i have heard chomsky talk about the debate in the business press in 1948 or so about how to spend money - military or housing. it was assumed that the gov't would have to spend in order to keep the capitalist system afloat - the question was how. if anyone thinks about it now we also know the gov't has to give huge money to corporations etc - computers, boeing, agribusiness and on and on - oh, did i forget banks. they just don't like to admit it since it gives away the game
"they just don't like to admit it since it gives away the game"
So true.
I'm on the opposite coast but have been down to my local Occupy a few times. It is pretty amazing. To see signs of life at all, after all these years, is inspiring. I thought everybody was mindless reality-TV watching drones by now... I'm glad I was wrong. :)
this is the best chance to make change i have seen - maybe in my lifetime - obama getting elected was a chance - he had everything one would need to make real change (us public opinion, world opinion and both houses) but he was the wrong person - emma goldman said "if voting would change anything it would be illegal" i guess she was right - so we will have to do it another way - best conversation i have had on this site - i was thinking it was me but maybe not!
Obama makes me so mad I could spit (as my grandma used to say). What a blown opportunity...
No it's not just you. We're not alone, after all. :) Take care!
by the way, i have been reading much about the economy since that is the crux of the problem for us all - not sure what you have read but - "secrets of the temple" is very good and "debt the first 5000 years" is stunning (he - graeber - is somehow involved in ows) and "super imperialism" is also really good. i still do not understand the system of money etc as well as i would like so if you have read something good i would like to hear about it.
Adding to my reading list right now...
Have you read Shock Doctrine? It's not as academic as Chomsky and others, but Klein makes a very strong case. It was she that opened my eyes to neoliberalism - linking Friedman to Pinochet, Thatcher, Reagan, even Yeltsin, in ways I had never considered. Its all so relevant to what's going on, not only here, but in Greece and elsewhere.
i have the book , never finished it but i like her very much - she is on democracy now often and is great - her movie is fabulous "the take" about workers taking over factories in argentina - wow - i thought it was really good. secrets of the temple is really readable and good history of money (a good bit about the populism of the 1890's) and the fed - esp during the reagan years. like the shock doctrine it is all very informative about what is going on now right before our eyes!
The owners' personal profits must have been stifled during the New Deal; therefore, the pundits see the lack of profits as the failure, or they are intellectually lazy and just disseminate whatever they are told.
I'm sure that's part of it. More broadly, it's about ideology. They have to prove FDR was a failure before they can complete the project of destroying government as a positive moral force (so it remains only as a tool for the elite). It's a concerted effort to push us back to the Gilded Age. They've almost won.
If it's any conciliation, two months ago I'd have said they had already won, but now i'm not so sure.
Well said. I agree.
Thanks for that.
I have been seeing that psychopathic economic denial repeated on forums but I didn't know that the Fux News was indoctrinating their minions with it.
My pleasure.
Imagine America without the invention of Fox News...
These people don't deal in facts, they deal in confusion. If you want to see a great example of this psyc-ops techneque read time magazine.
Most economists believed that the first stimulus would be enough, most didn't see a collapse coming, most thought the housing market was stable.
That is a great track record to put your faith in but I'll follow an economic philosophy which predicted all of it and allowed me to make money when others were losing theirs.
It isn't revisionist history just because it counters what has been spoon fed to you your whole life. The broken window fallacy is a fallacy for a reason. The boom didn't occur until we stopped war spending and lowered taxes all the while all the military men were coming back - and there were enough jobs for them. Meanwhile all during that time there were food, and gas rations and scrap metal was being melted down in desperation. Hardly times of plenty.
My father lived through the Great Depression and served in WWII to come home. The story of magical FDR created recovery is a fairytale. Economics shows it, history proves it, and my father is an eyewitness.
Go here and watch http://raymondpronk.wordpress.com/2011/01/08/thomas-woods-the-great-depression-world-war-ii-and-american-prosperity-videos/
Most economists did not believe the first stimulus would be enough, and they did not think its composition was actually stimulative.
Ideology driving revisionism.
The broken window fallacy is fallaciously applied to our economic system.because, thankfully, we do not have a fixed money supply.
http://thinkprogress.org/yglesias/2011/08/16/296903/the-denial-of-money/
Your father is one of many who remember the depression, and one of the few who are not thankful to FDR. It's not mystery that it's taken 50+ years for revisionism to take root. It's a calculation that time has muddied the waters and blurred the vision sufficiently enough that you/they will get away with it.
Yes I do ignore market fundamentalism, and its constant excuses for the failures of their beloved "free market." No one takes seriously the idea that FDR worsened the depression. Nor do they take seriously the idea that government meddling caused the Great Depression. Just like the rampant unregulated "free market" in derivatives caused the 2008 crash. These same people insist that it too was somehow caused by government interference.
Its kinda like fundamentalist Christians and and prayer: If you pray and something good happens, then God did it. If something bad happens to you, then God works in mysterious ways--- it must be a result of your free will.
Market Fundamentalists see it the same way: Any and all prosperity is attributed to the free market. Whenever the free market fails: government interference must have caused it somehow. Since even the most unregulated markets in the world still have at least SOME government involvement, all possible economic problems can be attributed back to a lack of commitment to "free-market" principles. Such a looney ideology.
I take it seriously, so do several economists and historians who have researched and written about it.
It is not about fundamentalism solely because someone disagrees with you. When actions and consequences are shown to be correlated through time it tends to be a stronger correlation than the circular logic you're attempting to compare it to.
Von Mises is not a serious source. The Austrian School was discredited ancient history even last century.
What has been demonstrated to correlate in time is: Market Liberalization with---famine, poverty and economic collapse
The "free-market" is an inefficient, monstrous method of mis-allocating resources. It's a failure.
Discredited by being right about interest and the business cycle? I recall neo-Keynesians laughing away the housing bubble and the Austrians warning of it.
It seems that when it comes to predicting market actions it is the neo-Keynesians that have been discredited by waiving off the long term consequences of their actions with the quip "In the long run we are all dead".
Its funny because history has taught me that the more fully implemented a command economy is the more likely famine poverty and economic collapse will be - Zimbabwe, USSR, Cuba, North Korea. Could you point me to the books on history which have brought you some other lesson?
The market is the most efficient method of resource allocation humanity has discovered - the thing people always fails to remember is that efficient doesn't equate to "what you desire".
"Discredited by being right about interest and the business cycle?"
Discredited BY the business cycle-- in that these policies invariably lead to recession and poverty.
"I recall neo-Keynesians laughing away the housing bubble and the Austrians warning of it.
It seems that when it comes to predicting market actions it is the neo-Keynesians that have been discredited by waiving off the long term consequences of their actions with the quip "In the long run we are all dead".
Everyone and their dog could see housing bubble bursting--- other than capitalism's cheerleaders on Wall Street and Washington (including many Austrians) . As for neo-Keynesians, i have no vested ideological interest in defending them, so I will not.
"Its funny because history has taught me that the more fully implemented a command economy is the more likely famine poverty and economic collapse will be - Zimbabwe, USSR, Cuba, North Korea. Could you point me to the books on history which have brought you some other lesson?"
Its funny because of the layers of assumption and ignorance in this comment. How to peal them back? Should we start with the false dichotomy? The assumption that the only two possible institutions capable of administering economic activity are brutal, hierarchical and totalitarian (Corporations or States). We must choose between Corporate-Autocracy ("free" market) or State-control?
Or perhaps the idea that we should attribute the collapse of these totalitarian regimes to inefficient economic administration (And not attribute it to the stated policy of the most militarily dominate superpower in history to destroy and undermine these economies through: protracted arms race, military conflict, attrition, economic encirclement/isolation, embargo, bombing and open warfare) ?
"The market is the most efficient method of resource allocation humanity has discovered"
'sigh' http://en.wikipedia.org/wiki/Market_fundamentalism
"the thing people always fails to remember is that efficient doesn't equate to "what you desire""
That's right. Normal people define "efficient" to mean: "expediently meets the material needs of human beings by wisely managing resources."
The Holy Market defines "efficient" to mean: "leading to the short term financial benefit of a handful of oligopolistic firms"
Exactly how does the business cycle performing as expected by Austrian theory somehow discredit Austrian theory?
If you don't understand the Austrian theory of the business cycle I would be willing to either suggest reading material or go over it with you in detail.
You're logic intrigues me and I would like to subscribe to your newsletter.
If everyone could see the bubble forming then no one would have lost assets in the housing market. Also we wouldn't have had numerous government officials, reporters, and economists claim that the economy is stable and the housing market and those who subsidized it's risk were stable.
http://www.youtube.com/watch?v=w-YtqVIKTTE&feature=related (for example)
If you don't defend the current majority opinion of neo-Keynesians then what economic school do you support?
If you wish to attribute the cause to inefficient economic administration - then you're placing the blame on the state for our system (run on neo-Keynesian thought) believes the state should administer the market. We can certainly talk about the reasons why neo-Keynesianism rules the state (it supports the warfare-welfare state) or the consequences of adopting such thought - but they are really out of the scope of our current discussion about economic theory.
You will note I am not claiming the market is always perfect - simply that it is the most efficient method of resource allocation humanity has discovered. You're perpetrating a few logical fallacies there - one is a version of false dichotomy by assuming one either makes that statement by faith alone or one would not make that statement - when (and it is in this case) possible for one to come to that conclusion by examining all methods of resources allocation humanity has discovered. It is also a form of ad hominem as you attempt to insult me by assuming (and alluding) that I am making my arguments out of faith. You're not engaging in discussion in good faith.
Its nice how you engage in another set of logical fallacies by attempting to redefine terms instead of attempting to support your position with facts (say by showing how the market does not efficiently assign resources in most cases) . This fallacy is called equivocation.
Here is a handy primer so perhaps you can avoid such fallacies in the future: http://onegoodmove.org/fallacy/toc.htm
If you wish to have explained and be provided with examples of how the market more efficiently allocates resources than any other system I'll also be glad to show you or suggest reading material.
<<Exactly how does the business cycle performing as expected by Austrian theory somehow discredit Austrian theory?>>
[read: Begging the Question] For someone so concerned about informal fallacies, you sure do commit and awful lot of them. Then you insist that others are doing so. While not strictly speaking a logical fallacy, it is a common tactic of lawyers----"accuse the accuser"--- and its certainly not conducive to rational discussion.
<<If you don't understand the Austrian theory of the business cycle I would be willing to either suggest reading material or go over it with you in detail.
You're logic intrigues me and I would like to subscribe to your newsletter.>>
If you need reading material to help you understand the Austrian school's theology of the business cycle, I suggest starting with this article: http://www.spunk.org/texts/intro/faq/sp001547/secC7.html
Its understandable that the Austrian school's fanciful religious mythology would be confusing to you. If you want to better understand the marginal theory of value (and other parts of Austrian liturgy/apologetics) I suggest the larger article: http://www.spunk.org/texts/intro/faq/sp001547/secCcon.html As well as: http://www.infoshop.org/page/AnarchistFAQSectionF10
Personally, I would rather read "The Song of the Nibelungs" "Beowulf" or the Edda's of Odin. Anglo-saxon/Norse and other Proto-Germanic legends have a certain degree of internal consistency and realism that Free-Market ideology just lacks.
<<If you wish to attribute the cause to inefficient economic administration - then you're placing the blame on the state for our system (run on neo-Keynesian thought) believes the state should administer the market. We can certainly talk about the reasons why neo-Keynesianism rules the state (it supports the warfare-welfare state) or the consequences of adopting such thought - but they are really out of the scope of our current discussion about economic theory.>>
Laissez faire policies themselves are the cause. When they invariably and utterly fail, Keynesian intervention is used to keep the market from destroying itself and causing economic collapse. Except in certain cases, like the Free-Market paradise in Somalia.
<<You will note I am not claiming the market is always perfect - simply that it is the most efficient method of resource allocation humanity has discovered.>>
Yes, I have heard the Good News and am all too well acquainted with this doctrine.
<<You're perpetrating a few logical fallacies there - one is a version of false dichotomy by assuming one either makes that statement by faith alone or one would not make that statement>>
Have I been unclear? I'll have to be more precise. Many people base their views on sound reasoning and empirical data. I don't mean to suggest that everyone's statements are grounded in religious faith---
only neoliberalism<<when (and it is in this case) possible for one to come to that conclusion by examining all methods of resources allocation humanity has discovered.>>
I'm skeptical you're even aware of most of the methods of resource allocation humanity has explored, let alone "examin[ed] all methods of resources allocation humanity has discovered"
<<It is also a form of ad hominem as you attempt to insult me by assuming (and alluding) that I am making my arguments out of faith. >>
I pointed out the fact that the ideology of Market-fundamentalism is grounded in a religious faith divorced from scientific evidence. If you make statements supporting this religion, and it reflects negatively on you, it is not my responsibility.
<<You're not engaging in discussion in good faith.>>
I expose the absurdity underlining your worldview: therefore I must not be arguing in good faith. Gotcha.
<<Its nice how you engage in another set of logical fallacies by attempting to redefine terms instead of attempting to support your position with facts (say by showing how the market does not efficiently assign resources in most cases) . This fallacy is called equivocation.>>
Your ideology redefines "efficient" to mean "whatever maximizes production" or "whatever is profitable" or more plainly: "efficiency is whatever the market happens to do."
Thus the statement "markets are efficient" becomes a meaningless tautology.
Then when someone operating under a normal person's definition of economic efficiency (something like: "meets material needs of human beings while minimizing time and effort") points out that that this is silly and useless, you accuse them of redefining terms and equivocation.
So for example, the capitalist system makes the following economic decisions:
The isles and goods in grocery/retail stores are arranged in the most convoluted, inefficient and circuitous path possible. The products with the highest volume of purchases are placed at the very back of these routes, so that more foot traffic has to pass through them. From the market system's point of view this is "efficient", as it maximizes the likelihood consumers will respond to all of the various advertisements they are harassed with and purchase more goods.
Another example. Grain produced in one state is shipped across the country to feed cattle in another state. The manure from the cattle is shipped to china where it fertilizes apples, the apples are shipped to Indonesia where cheap labor is used to bottle them into apple juice, the apple juice is shipped BACK to the original state where the grain came from. This process contains a number of negative externalities and inefficiencies: It burns energy in the form of non-renewable fossil fuels, depletes the local water tables (water is exported in the form of produce and never returns to the aquifer it came from), destroys top soil, replaces the education/childhood of young laborers with drudgery, etc. The pricing mechanism of the market sees this as "efficient" because its cheaper than growing it locally and sustainably.
Another example: More food than is needed to solve world famine several times over is simply disposed of or burned every year. The market determines that this is the most efficient way of eliminating the excess. Starving people have too little of a currency that lacks the purchasing power needed make it profitable for agribusiness to distribute it. No reason to send it half-way across the globe if it isn't profitable. Any rational observer can so how this is an obscene waste.
But that is how the Glorious Market sees efficiency--- not as what serves human needs but what serves corporate greed. The real world just defines efficiency differently than neoclassical economics.
I know, I know. You're going to assure me that all inefficiencies within the markets are somehow distortions caused by government intervention or subsidies.
Keep reciting this mantra.
No a tautology would be only in the case of the market defining its outputs as the most efficient and then stating that the market is always most efficient in allocating resources.
It seems from reading that we need to start with a very basic common point because to me your head seems to have been filled with a lot of pop culture thought on things that are extremely unrelated to how things actually function.
So lets start with this: What is profit and what does it signify?
Yes that is how grocery stores are designed and they also put the most profitable products at normal gazing levels to encourage purchase. Now the point you're missing is the human action of the purchase. If a person sees an advertisement for a product and buy it they are making the decision that they believe will best affect their future happiness. It is their right to do so and it is their right to make their decisions based on as little or as much information as they so choose. So what have we done once this purchase is completed? The business has increased in wealth because it has obtained the dollars it desired more than the product and the consumer has increased in wealth because they have obtained a product they desired more than the dollars. We have a win win situation moving both entities closer to their perceived paths to future happiness. Absent the encounter with this product both would have items they valued less than they would having completed the trade. Thus the result is the most efficient way to maximize opportunities to pursue happiness.
Your assumption in the second example assumes all resource availablity is exactly the same. The same state that produces apples well (a temperate climate that supports the growth of large trees) is also as efficient at having cattle (which conversely prefer wide open areas) as it is to glass production (silicon oxide in abundance) and manufacturing (good pollution controls to keep the cows, grain, and apples safe), and a large available pool of labor.
I think we can see how finding all of those at the same cost level in the same area is fairly unlikely.
Yes the glorious market functions based on actual reality and not the assumptions which lead to an imaginary land of perfectly balanced resource availability needed in the one cycle you mention. Imagine that.
Eric you previously stated that observation had discredited the Austrian theory - I am simply asking you for the evidence behind this claim. It may have been snarky but it was not fallacious. Since it was the Austrians who were the only ones who called the coming collapse I would be very interested in seeing how this could be so. To date you've failed to provide any support for your bare assertion.
Let me get this straight - when you want information on an entire economic school you get all the information you need to know from a faq? I was thinking we could start on Bohm-Bawerk's "Capital and Interest" and its critiques and rebuttals of those critiques but of course an online faq is much more credible which is why that is how most college's teach economics - from faq's.
Its interesting you keep repeating your mantra but continue to not provide any proof. You assert and reassert my beliefs are derived from faith but when we get into policy you let some website do the arguing for you.
Could you please provide the evidence for your argument that free market policies are the cause of this latest collapse where neither money supply nor interest rates are set by the market and risk was subsidized by government backed agencies creating substantial moral hazard? Somalia is not a free market paradise but I can see why you would try to make such a suggestion to try to include negative feelings on the topic since feelings aren't subject to logic.
Again you dodge by alluding that my position is religious in nature.
Then I suppose I can get you to stop this behavior by stating I am not a neo-liberal? There, done. Now can we have a discussion where you don't attempt to throw up a smokescreen all the time?
There are only four methods of resources allocation humanity has used. The first two are always command forms the third usually is. Familial, Directed, Communal, Market. If you want to include None that also has technically existed in cases of person stranded on island scenarios.
No what you did was state your belief that I am engaged in market-fundamentalism which you also believe to be religious in nature. Calling your belief a fact does not make it one.
You've exposed your need to believe that my position is one born of faith because it allows you to avoid discussion. This is all you have exposed.
Recovery Depends on Investment and Capital Accumulation
GDP growth based on private investment in productive capital is the only basis for real growth. In other words companies must invest in factories and other productive facilities (capital accumulation). This investment must come from people's savings, i.e. it must be based on real production, real resources that have been produced. In this way the economy can grow in a realistic and sustainable manner.
When the government spends untold fortunes to stimulate the economy, GDP and unemployment numbers may temporarily improve, but this improvement is illusory. All one does under this scenario is put more money out chasing a stagnant or declining supply of goods and services. The resources used in such a process are not being invested in any kind of productive facilities. On the contrary, productive facilities are being run down to support the make work projects that the government is spending tax money on. http://theinternationallibertarian.blogspot.com/2010/08/recovery-depends-on-investment-and.html
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Please demonstrate Keynesian economics working successfully. For extra credit, please cite examples where the nation used a fiat currency, and had a corrupted interventionalist government.
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What we live in is a world the progressives created & it isn't working out well, is it? That's why the protests. More of the same won't make anything better. Get rid of the govt's ability to control the economy rather than try to seize that power for yourselves. End taxation, regulation, & the Fed!
We live in Friedman's fucking mess. The 40s-70s were prosperous, stable, and relatively equal.
Just like Chile and Argentina in the 70s-80s, and the former Soviet states in the 90s, we're suffering Chicago arrogance - the only thing worse is the Austrian kind.
Austrian school economics are the only thing that will save us from Friedman's mess & the rest of the progressive agenda. Face the truth already, the progressives got their way & it hasn't worked. An income tax, a central bank, & regulation of the economy are what got us into this mess. This is the legacy of the progressive era. Out with the failed old tyranny & in with liberty!
Friedman's "progressive" agenda - to privatize and neuter government? Are you insane? Friedman, mentored by Hayek? Free markets by any means necessary Friedman? You are insane.
Chicago and Austrian = siamese twins.
Friedman not only helped with income tax withholding during WW II he was an advocate of central banks. These are not free market nor Austrian ideas but progressive ones. Study up a little before you make so much noise in public.
Oh please. This is the "we need to go further towards free market fundamentalism" argument - Friedman's a "progressive" because he wasn't enough of an extremist for you. His policies have been a major step in the direction you want to go - which is why Friedman and Hayek are so closely linked, personally, professionally, and in the policies of leaders like Thatcher and Pinochet who were inflenced by them. It's not pure free markets, is what you're saying; we need to get much more like the Gilded Age. I think everyone understands where you're coming from, which is why your whackjob ideology masquerading as economics remains heterodox. It's regressive. That Friedman was slightly less so does not, in any way, shape, or form, make him a progressive.
10/10
I bet most of the dingy right doesn't even know that Hayek supported government support for poor people.
The 40's and 70's were prosperous because we were still reaping the manufacturing benefits of being the only major producer left post WWII and the advantageous relationships that came from having to stratify the world during the Cold War.
This is what your argument comes down to, proving that it was prosperity despite Keynes, and it's now total calamity despite Friedman.
I'm not Keynesian nor am I Chicago school. Examining either only supply or demand is ignoring half of the equation. While I admire Milton for his ability to explain simple economic realities to the layman I find his more advanced theories as laughable as I find Keynes on those matters.
I would say that the reason the 40s through the 60s were prosperous was that the govt hadn't grown to the full strength that it reached by the time Nixon took the US completely off the gold standard in 71. It has been downhill ever since.
The mythology of being wealthy because we were the only producer after WW II has been debunked many times over:
The first straw….
When it was decided that the U.S. was to act as world banker and benefactor to those countries in need of help after World War II, it is doubtful that anyone really believed the U.S. would profit as world banker. On the contrary, the consensus was that war-torn nations needed more money than they could afford to pay back. It was argued that the
U.S. could afford to (and therefore should) extend foreign aid (gifts), loans at below market rates of interest (gifts), and military protection (gifts), to those countries in need.
What must be remembered is the precedent for this decision: the U.S. was committed to protect and finance the western world by virtue of its great strength and an ever-expanding stream of dollars.
It was assumed that this money would return to the U.S. via import demand, and in fact, during the years 1946 to 1949 most of it did, resulting in fantastic U.S. surpluses.
On selling one’s cake and wanting it too….
But during the years 1950 to 1957, a turn of events took place. Europe by design curtailed its already abundant imports and concentrated on replenishing its national reserves. With conscious intent, the U.S. continued to supply the world with dollars through deliberate balance of payments deficits to accommodate Europe’s demand for reserve replenishment. The refusal of the foreign governments to allow their citizens to use their constantly rising dollar surpluses for U.S. goods (by imposing trade restrictions) led to the dollar glut of the 1960′s.
The blame for the chronic surpluses of foreign governments and chronic deficits of the U.S. must be shared. While the U.S. can be blamed for financial irresponsibility, the surplus countries must be blamed for economic irresponsibility. The U.S. could have stopped its deficits, but surplus-ridden countries could have stopped penalizing their citizens and discouraging them from importing. Instead, they decided to increase dollar reserves (dollars that for the most part were given or loaned to them) and to either exchange them for gold or hold them in the form of interest-bearing notes and accounts.
By accumulating excessive amounts of dollars that they refused to use, surplus countries helped foster U.S. deficits: some nations’ chronic surpluses must mean that other nations are running deficits. The irony of the decision to run an intentional chronic surplus is that the purpose of selling goods is to gain satisfaction as an eventual consumer. The drive for both surplus reserves and surplus exports, and the refusal to consume goods with the money received, implies that a nation expects to sell a good and somehow derive satisfaction from it after it’s gone.
http://www.thefreemanonline.org/featured/bretton-woods-1944-1971/
That is what I meant by the advantageous relationships. I would also include our pressure to OPEC to only accept dollars in exchange for oil creating an artificially high dollar.