I was trained in economics by Keynesians

[Cary]

I haven't kept up as much as I would have liked to, having taken on a profession that doesn't involve economics. I am quite familiar with Paul Krugman whom we should consider, IMHO, a national treasure.

I also find myself being drowned in what I can only see as stupidity from "conservatives" who keep telling me that Keynesian economics have failed everywhere and that FDR aggravated the Great Depression. One guy posted this nonsense:

Now, your simplistic formula (which I realize pushes the envelope of your economic comprehension capabilities) needs to be considered in a dynamic mode and over periods (viz the above admonition), even before the other definitional simplicities of your prosaic formula are considered. The formula is fine if you consider the inherent differences and weighting factors that are necessary when considering “consumption” (which you cavalierly refer to as “consumer spending”) “gross investment” which you erroneously just refer to as “investment” (big difference between “gross” or depreciation of capital stock being considered which would render “net”) and the difference between Govt spending being treated as an exogenous variable as opposed to private which is generally considered endogenous by nature.


This gets us to the crux of the problem, which is a failure on your part to be specific. As with most libs, you learn a little bit…… then stop. $1 of endogenous gross expenditure which generates additional depreciation is vastly different than $1 of Govt expenditure which is exogenous and enclosed seperately within the macroeconomic model (unless converted to private ownership and control once built/produced/fabricated, etc….).

The differences between Govt Expenditure and Private Investment however, will only be teased out in the context of a dynamic model considering comparable periods in time. This is why Clinton started referring to (erroneously) Govt spending whether on infra-structure or social programs, as “investment”.

Govt Investment under Govt control has no profit motive/benchmark in ensuing periods and thus has to be weighted less than private investment if allowed to remain an exdogenous variable in the model and not reverted to some form of private control with its inherent efficiencies dicated by economic survival (until bailouts that is). So, Vel, in a capitalistic semi (at least until recently) free market system, the answer is IT DOES INDEED MATTER IF THE $1 IS GOVT OR GROSS INVESTMENT (AS DEFINED IN MOST ECONOMIC MODELS) WHICH IS PRIVATE SECTOR SPENDING.

This is only one area where even your hero-weasel Krugman is vastly mistaken, . . . , not to mention those like yourself who don’t even grasp the bare fundamentals -- instead choosing to ask inane questions without setting definitional parameters which allow one to properly address in the answer. You think you gave some kind of "definitive" discourse ending powerful question while in fact you only served to further exemplifiy your shallow knowledge base.

This rant, or whatever it is, was in response to me citing the GDP equation. We have been thinking it's some bullshit cut and pasted from somewhere else, but it could be from the recesses of this guy's messed up mind. It is quite like him to obfuscate with straw man arguments and other irrelevant information, which is one theory on what this might be about.

Does anyone have any good resources to direct me to regarding the current state of Keynesian economics? Does anyone know what this particular puke might think he's talking about? He's a cattleman in California, if that helps. Someone with some medical knowledge might identify this as a bad reaction to milking a cow with mad cow disease?

I dunno. Any help would be appreciated.

[Locrian]

1. well

Im not an economist, nor can I decrypt that bafflegab paragraph. But I have been reading some of Steve Keens' book "Debunking Economics". Maybe a source for you?

I immediately smell bullshit when he talks about "complicated dynamic models ... bla bla bla". These are inherently flawed as the nonlinear equations required cannot be mathematically solved for any type of decent sized system. Chaos math is one approach - but then you are talking *stability*. NOT equilibrium as most of these guys fall back on. EQUILIBRIUM is a fucked up concept in economics - there is no such thing as static equilibrium in a dynamic non-linear / chaotic system. But there can be stability (or not).






http://www.debunking-economics.com/

http://www.debunking-economics.com/index.htm#Book%20structure

Chapter 9 The sum of the parts Why Keynes’s criticisms of conventional economics are still relevant today

Macroeconomics is the study of the economy at the aggregate level, with particular emphasis upon output, employment and inflation. The focus of this book, on the other hand, is overwhelmingly on what economists call ‘microeconomics’–the study of disaggregated markets, where the theory attempts to derive market behaviour from the assumed characteristics of individual firms and consumers.

The major reason for this focus is because, by the end of the 20th century, macroeconomics had been almost totally subsumed by microeconomics.

The crowning glory of this process came with the development of ‘representative agent’ macroeconomics. This approach assumes that an economy can be modelled as if it consists of a single consumer/producer-the representative agent. As discussed in Chapter 2, economists invented this fiction because they had proven that it was impossible to treat collective welfare as simply the sum of the welfare of individuals (if individuals differed in tastes, or if tastes changed with income, which of course they do). The representative agent is clearly a fantasy, yet this fantasy became the standard way in which ‘respectable’ economists did macroeconomics.

It is stating the obvious to call the representative agent an ‘ad hoc’ assumption, made simply so that economists can pretend to have a sound basis for their analysis, when in reality they have no grounding whatsoever. Yet ironically, the prelude to this farce was the contention that macroeconomics was too ad hoc, because it was not grounded in microeconomic theory..

[Cary]

2. Bafflegab

ROTFLMAO.

That's a good one right off the bat. Thanks.

And thanks for the source, too. That's exactly what I'm looking for.

[idlisambar]

17. A jewel of a book

It's your one stop shop for economic theory. If you want to attack neoclassical economic theory everything you need is there.

One point though. I would not spend too much time defending Krugman or Keynesian economics in general because when it comes down to it, Keynesian economics has its own problems. Better to attack his foundation. Try to get him to call out his assumptions and cite what model he is using -- then first attack the assumptions for being ridiculous (thus making the model irrelevent), and after that (if you can) graciously grant some or all of the assumptions and attack the model using well-known arguments.

[FogerRox]

20. Which is why its now called post-Keynesian

lessons learned 50 yrs ago.

[roseBudd]

3. I would point out to him that "Deregulate Baby Deregulate" is Republican ideology

[Citizen Number 9]

4. It's a full-court press against Keynesian Economics.

Interesting theories, but it would take dissertation-level analyses to present any one of the aspects properly. And there may not be definitive solutions to any of them, although I have to say that the next four or eight years is going to deliver some terrific new data for the economists among us to argue with.

In a way, it's not an inappropriate support to his assertion that you "learn a little bit...then stop" in that you cited "the GDP equation" to him. That's fairly basic and he is touching on much more detailed stuff here.

He's probably quite intelligent and may be self-educated, but the problem is that he doesn't exhibit the training or the discipline to effectively present his arguments. Not sure why you'd want to do this on the Internet, anyway.

As to those of you who called it "bafflegab" I'd note that it shouldn't hurt you to admit there are people who are smarter than you even if you don't agree with their opinions.

[Warpy]

5. The sheer number of ad hominems interspersed with jargon

qualifies the quoted material as "bafflegab."

I doubt if the poster is smarter than even you are.

[Citizen Number 9]

12. Could you support my point any better?

I don't have any particular issue with you and certainly not over this, but just out of curiosity; do you have any ready knowledge as to what the normal IQ curve is for the general population and where you actually might appear on it?

[Cary]

14. Ooops.

Maybe I'm not so smart. You weren't talking to me.

<embarrassed>

[Cary]

15. In fairness No. 9, this particular poster, the one whom I'm enquiring about,

is not benign. Quite the contrary. He's positively toxic.

I am asking for an interpretation if you can give me one, but defend this particular poster at your own peril. It does kind of sort of make you look like you're a lurking Freeper.

I'm just saying.

[Citizen Number 9]

16. That'll be an academic argument...

"He's positively toxic."

That doesn't surprise me one bit. Smart doesn't equal correct or benign.

However, that doesn't mean the message is always worthless.

He appears completely steeped in his philosophy and I doubt anyone would be able to make a dent in it. As I pointed out, the arguments for and against Keynesian economics can get quite arcane. I'm not sure there is a single correct answer.

He has elements of Lucas and Monetarism in there, among others. I'd have to review what I knew in order to detail everything. You can probably research Keynesian criticism to find it and to see what the responses are.

He appears to be working from the assumption that private investment and spending is always better than public. There are responses to that, but, like I said, it's hard to prove any of that one way or the other. His biggest weakness may be that the current financial issues were probably facilitated by a lack of restraint or regulation in the "Capitalist" system. The upcoming changes will probably address some of that. Too bad for his side. :P

The next four years will be really interesting in terms of things that are going to be tried, however.

[Cary]

7. I have no problem admitting that there are people who are smarter than I am.

I have a problem capitulating to bullshit.

I have enough experience with this guy to say with confidence that intelligent he is not.

I don't understand your post any more than I understand his. Which part of what he is saying, assuming he is saying anything, leads you conclude he knows what he's saying?

[Citizen Number 9]

11. It's a compilation

of all the major disagreement vs Keynesian theory.

With a little political theory tossed in.

[Cary]

13. You get that out of it?

I am aware of the disagreements with Keynesian theory but I don't see how glean those disagreements from these mewlings.

[phantom power]

6. Paul Krugman has been posting some good stuff on his blog...

debunking the recent attacks on Keynesian economics.

[Cary]

8. One thing I can glean from this character is that he hates Krugman.

And of course he hates me too.

[phantom power]

9. Not surprising. Krugman is like kryptonite to these hacks.

[Cary]

10. So am I.

:-)

And I love to beat up on them. I especially love it when they're down.

[gravity]

18. The $700 billion bailout marked the death of neo-liberalism

Keynesian is making a big comeback in economic thought. It is finally proven wrong that free markets alone won't self correct all our problems and government intervention is needed.

I think that guy is basically arguing that private sector spending is better than public sector spending, using a bunch of random jargon to sound smarter than he really is. I would guess that his argument is that the GDP equation is wrong because of that.

It has to be an extreme libertarian position, because it is basically arguing that government spending is always worst than private investment for the economic growth, which can easily be proven wrong by examples like roads, bridges, and the military.

[Cary]

19. Random jargon to make himself sound smarter. . .

is certainly my preferred interpretation but I'm willing to allow for the possibility that it is something else.

Thanks for the confirmation.

[TomClash]

21. I think he is saying . . .

. . . government spending has a negative or less positive multiplier effect than private spending. This is a typical argument - most conservative economists are a little short on convincing data to support this position.

The rest is gibberish designed to make him sound smart.

I studied economics as a Keynesian stuck in the cradle of supply-side hell, arguing with none other than the God himself.

[notesdev]

22. Simple facts

The Keynesians totally missed the boat on what was happening until it was too late. They thought deflation simply couldn't happen. They're the ones who supported the $700 billion Treasury giveaway (that has had no effect except to save the butts and fortunes of many of the people who are to blame for the crisis), and the $8 trillion plus Federal Reserve leveraging programs.

Those who adhere to the Austrian school of economics were dead on target.

Read this guy's stuff if you want to educate yourself, if you're specifically interested in criticisms of Keynesian economics then just search on that term.

http://globaleconomicanalysis.blogspot.com

[Karl_Bonner_1982]

23. Don't worry...Republicanomics is on its last legs.

You still have a band of stubborn minds who aren't ready to accept defeat quite yet. It will take a few years of Democrat-led policy making before they finally start to abandon the deregulation, anti-unionist, anti-egalitarian and anti-welfarist creed en masse.