Capitalism / Consumerism ?
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Chris Austin wrote:
Who have you heard starting down that road?
Are you sitting down? Barney Frank.
Chris Austin wrote:
It was the first book written by Spider Robinson that I had read and I have to say, Spider is one hell of a story teller.
My feeling is that he's gone down hill, in part because he's switched from short stories which are, I think, his natural millieu, to novels which pay much better. I recommend some of his early "Callahan" books and even stop by alt.callahans if you want to experience something quite fascinating. Recently I've been reading Ian Douglas - novels based on the idea that the Navy, not the Airforce is the natural service to control our space fleet and take the marines out there with them. The first in the series has the US fighting off an attack from Mexico which is backed by the UN (relocated to Geneva) and France which tries to take over the joint Russo-American Mars colony under the blue and white flag of the UN. Nothing deep there, but fun reading 'em and he gets the feelings of men in combat down pretty well.
Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.
Oakman wrote:
Are you sitting down? Barney Frank.
sigh. I knew he had been on the banks for hoarding, now he is hounding people who are trying to be sensible?
Oakman wrote:
I recommend some of his early "Callahan" books and even stop by alt.callahans if you want to experience something quite fascinating.
I've heard that before, I'll have to check it out.
Sovereign ingredient for a happy marriage: Pay cash or do without. Interest charges not only eat up a household budget; awareness of debt eats up domestic felicity. --Lazarus Long Avoid the crowd. Do your own thinking independently. Be the chess player, not the chess piece. --?
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John Carson wrote:
By convention, profit only refers to the income of firms.
I believe you meant to say the difference from the income and expense of firms, didn't you? We have a very good word for income and that word is income. ;)
John Carson wrote:
then you would need to treat those incomes consistently.
An excellent point. And one you are right to bring up. Be that as it may, I was actually trying to define savings as a method of accumulating capital - which, it seemed to me was the definition of profit that was being offered. I have no trouble accepting someone else's definitions of terms, as long as those definitions don't change as the discussion progresses.
Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.
Oakman wrote:
I believe you meant to say the difference from the income and expense of firms, didn't you? We have a very good word for income and that word is income.
Alas, accountants have created confusion. They use income with two meanings: revenue and profit. For economists, a firm's income generally is the same thing as its profit. This is consistent with national income accounting, whereby the share of firms in national income is given by their profit, not their revenue.
Oakman wrote:
I was actually trying to define savings as a method of accumulating capital - which, it seemed to me was the definition of profit that was being offered.
It wasn't the definition of profit being offered by me. To quote myself: "That profit may in principle be used either for capital accumulation or for capitalist consumption." If your point is that "workers" may save, thereby accumulate capital and thereby receive a return on that capital, making them "capitalists" in some sense, then I agree.
John Carson
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This link is to a powerpoint presentation. Have a look at it, it is informative. Why we need a new Economics[^]. I can easily understand why Obama and Zep agree that government fiscal measures are required. But, in the last few months huge sums of money has been delivered or promised. The banks STILL have not taken the hint that they must start doing their job by lending it out. There are small and medium sized firms around the world who are crying out for this ability to borrow. If banks do not start doing their job pretty soon, those essential companies are at risk of failure, and those companies are the silent heroes (the life blood of a nation) insofar that without them, capitalism dies a quick death and no amount of money for General Motors, Sony... will make a blind bit of difference. This begs a question, that if the banks refuse to lend, why should the ordinary citizen try to help shorten this financial nightmare by spend their savings. Confidence is at a low point, and I'm not sure where to find, or look, for any silver linings. I commented to Zep the other day that the current system is perhaps irrevocably broken and a new system should be researched but Zep essentially disagreed that view, but, alas I am not the only person voicing that view.
Richard A. Abbott wrote:
Have a look at it, it is informative
I looked for awhile, but even though I have a very understanding boss, I don't think I should spend as long as that takes at one sitting. I'll look at it more later.
Richard A. Abbott wrote:
The banks STILL have not taken the hint that they must start doing their job by lending it out.
In all honesty, I wouldn't lend out a lot of money right now either. The banks got into trouble by making stupidly bad loans. Some really respected people have seen their reputations and their careers go down the toilet for giving money to people who were not credit worthy. Now, banks are being damned because they don't want to loan money to people who, because of the problems with the economy, cannot be considered credit worthy. They will "do their job," I believe. If someone can put down 30% on a house, he'll be able to get a mortage from just about any bank - at very favorable rates. If you want to buy a new car, you can still do so if you have a decent credit score, and/or if you have a nice fat down payment.
Richard A. Abbott wrote:
I'm not sure where to find, or look, for any silver linings.
Me, either. It's easy to identify the problems, with only a little thought. It's much harder to have faith in the tried and true economic theories that propose that doing A and B guarantees C. They say that the mistake generals make over and over again is that set up their defenses to protect themselves against the tactics the enemy used in the last war. (As you probably know, the Maginot Line was supposed to prove an insurmountable obstacle to Germany at the beginning of WWII. They didn't pause for even a day.) I think that I am beginning to detect a similar shortsightedness in those who propose solutions for the troubles. Indeed, a great deal of time is spent arguing about whether the New Deal helped or hurt and that predates the Maginot Line by years!
Richard A. Abbott wrote:
the current system is perhaps irrevocably broken and a new system should be researched
I sometimes fear that I will begin to remind people of fat_boy, with a bee in my bonnet about the devaluing of our currencies, but it appears to me that our modern-day problems are triggered by the ending of the Breton Woods agreement in the late sixties and early 7
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Lee Humphries wrote:
studying the Great Depression makes you realise that doing nothing, doing too little or doing it too late are the most moronic ideas of all.
A study of the great depression would establish to a sane, unbiased mind that stimulus spending just does not work. Doing nothing at all in 1929, or later, would have completely prevented the great depression. The markets would have corrected themselves in their own way and things would have been fine within a year or two. Calvin Cooledge proved that during the '20s. As to consumerism, it is a natual product of capitalism. The only problem we have is that consumers believe themselves to be protected from harm by the government. If people who over consume were allowed to suffer the consequencies for their own ignorance, the problems of over-consumption would largely go away. All these problems point back at government, not at capitalism. Capitalism works just fine. It provides the greatest amount of wealth and security for the greatest number of people. And, in addition to that, works completely independently of the state. The state does not want you to believe that, and does everything it can to cripple capitalism and blame capitalism for it, but it is true.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
modified on Wednesday, March 4, 2009 5:29 PM
Stan Shannon wrote:
A study of the great depression would establish to a sane, unbiased mind that stimulus spending just does not work. Doing nothing at all in 1929, or later, would have completely prevented the great depression.
Unemployment shot up to 25% under Hoover between 1929 and 1933. As a matter of interest, what is it that you think Hoover did to cause this?
John Carson
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Oakman wrote:
I believe you meant to say the difference from the income and expense of firms, didn't you? We have a very good word for income and that word is income.
Alas, accountants have created confusion. They use income with two meanings: revenue and profit. For economists, a firm's income generally is the same thing as its profit. This is consistent with national income accounting, whereby the share of firms in national income is given by their profit, not their revenue.
Oakman wrote:
I was actually trying to define savings as a method of accumulating capital - which, it seemed to me was the definition of profit that was being offered.
It wasn't the definition of profit being offered by me. To quote myself: "That profit may in principle be used either for capital accumulation or for capitalist consumption." If your point is that "workers" may save, thereby accumulate capital and thereby receive a return on that capital, making them "capitalists" in some sense, then I agree.
John Carson
John Carson wrote:
It wasn't the definition of profit being offered by me.
It occurred to me that you would respond by saying that and that you had every right to. But we are not having a private conversation and everything that gets said in our round-robin ultimately has an inpact on the conversation. That's not an excuse for misunderstanding you, but 'tis my explanation.
John Carson wrote:
If your point is that "workers" may save, thereby accumulate capital and thereby receive a return on that capital, making them "capitalists" in some sense, then I agree.
Then we, at least, understand each other's point. :thumbsup:
Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.
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Richard A. Abbott wrote:
Have a look at it, it is informative
I looked for awhile, but even though I have a very understanding boss, I don't think I should spend as long as that takes at one sitting. I'll look at it more later.
Richard A. Abbott wrote:
The banks STILL have not taken the hint that they must start doing their job by lending it out.
In all honesty, I wouldn't lend out a lot of money right now either. The banks got into trouble by making stupidly bad loans. Some really respected people have seen their reputations and their careers go down the toilet for giving money to people who were not credit worthy. Now, banks are being damned because they don't want to loan money to people who, because of the problems with the economy, cannot be considered credit worthy. They will "do their job," I believe. If someone can put down 30% on a house, he'll be able to get a mortage from just about any bank - at very favorable rates. If you want to buy a new car, you can still do so if you have a decent credit score, and/or if you have a nice fat down payment.
Richard A. Abbott wrote:
I'm not sure where to find, or look, for any silver linings.
Me, either. It's easy to identify the problems, with only a little thought. It's much harder to have faith in the tried and true economic theories that propose that doing A and B guarantees C. They say that the mistake generals make over and over again is that set up their defenses to protect themselves against the tactics the enemy used in the last war. (As you probably know, the Maginot Line was supposed to prove an insurmountable obstacle to Germany at the beginning of WWII. They didn't pause for even a day.) I think that I am beginning to detect a similar shortsightedness in those who propose solutions for the troubles. Indeed, a great deal of time is spent arguing about whether the New Deal helped or hurt and that predates the Maginot Line by years!
Richard A. Abbott wrote:
the current system is perhaps irrevocably broken and a new system should be researched
I sometimes fear that I will begin to remind people of fat_boy, with a bee in my bonnet about the devaluing of our currencies, but it appears to me that our modern-day problems are triggered by the ending of the Breton Woods agreement in the late sixties and early 7
I fully agree when you say a sizable downpayment for house purchase is necessary. But my main point in complaining that banks are still not lending (well not lending near enough) is all of those small and medium sized companies of which many, if not the majority, are profitable concerns. If they are unable to get the required loans from banks, this is my concern that these companies will fail. Once these small to medium sized companies have gone, they are gone never to be resurrected. This will cause huge queues at the unemployment offices, perhaps even matching or surpassing those of the Great Depression. And therein lies the threat to capitalism. It could be the death nail. I'll not comment on the "New Deal", due to my insufficient knowledge of it, but I will read up on it. But I fully comprehend those references to the Maginot Line. But you are right where you observe the need to find something that is of intrinsic value. But, what, if anything, is on the horizon that might be the saviour of the financial system. Bretton Woods, I understand, wouldn't work today. Don't you worry about being a carbon copy of Fat_Boy. The immediacy of this financial crisis trumps Fat_Boy's Global Warming rants. Wonder if he, Digital Man, Matthew Faithful, or even CSS will re-appear now that no links to the Soapbox exist elsewhere.
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Stan Shannon wrote:
A study of the great depression would establish to a sane, unbiased mind that stimulus spending just does not work. Doing nothing at all in 1929, or later, would have completely prevented the great depression.
Unemployment shot up to 25% under Hoover between 1929 and 1933. As a matter of interest, what is it that you think Hoover did to cause this?
John Carson
There was a completely normal downturn in the economy in 1929. Hoover's attempts to use government to correct the problem was misplaced. Everything he did was wrong. He should have done nothing at all. The markets would have pulled out of the slump all on their own.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
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There was a completely normal downturn in the economy in 1929. Hoover's attempts to use government to correct the problem was misplaced. Everything he did was wrong. He should have done nothing at all. The markets would have pulled out of the slump all on their own.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
Stan Shannon wrote:
There was a completely normal downturn in the economy in 1929. Hoover's attempts to use government to correct the problem was misplaced. Everything he did was wrong. He should have done nothing at all. The markets would have pulled out of the slump all on their own.
I see. No specifics. Just religious dogma.
John Carson
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I fully agree when you say a sizable downpayment for house purchase is necessary. But my main point in complaining that banks are still not lending (well not lending near enough) is all of those small and medium sized companies of which many, if not the majority, are profitable concerns. If they are unable to get the required loans from banks, this is my concern that these companies will fail. Once these small to medium sized companies have gone, they are gone never to be resurrected. This will cause huge queues at the unemployment offices, perhaps even matching or surpassing those of the Great Depression. And therein lies the threat to capitalism. It could be the death nail. I'll not comment on the "New Deal", due to my insufficient knowledge of it, but I will read up on it. But I fully comprehend those references to the Maginot Line. But you are right where you observe the need to find something that is of intrinsic value. But, what, if anything, is on the horizon that might be the saviour of the financial system. Bretton Woods, I understand, wouldn't work today. Don't you worry about being a carbon copy of Fat_Boy. The immediacy of this financial crisis trumps Fat_Boy's Global Warming rants. Wonder if he, Digital Man, Matthew Faithful, or even CSS will re-appear now that no links to the Soapbox exist elsewhere.
Richard A. Abbott wrote:
If they are unable to get the required loans from banks, this is my concern that these companies will fail.
I'm concerned, too. I'd be concerned if I was a banker - but my fiduciary responsibility would be to my depositers, not to loan-seekers. I could only ask these companies - what collateral do you have?
Richard A. Abbott wrote:
Bretton Woods, I understand, wouldn't work today.
So I am told - on the other hand it's quite obvious that not having the Betton Woods agreement in force isn't working either.
Richard A. Abbott wrote:
Wonder if he, Digital Man, Matthew Faithful, or even CSS will re-appear now that no links to the Soapbox exist elsewhere.
My guess is that CSS is too dumb to have a link to this page. And Mathew seemed to have disappeared awhile ago - but Fat-Boy will be back.
Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.
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Stan Shannon wrote:
There was a completely normal downturn in the economy in 1929. Hoover's attempts to use government to correct the problem was misplaced. Everything he did was wrong. He should have done nothing at all. The markets would have pulled out of the slump all on their own.
I see. No specifics. Just religious dogma.
John Carson
John Carson wrote:
I see. No specifics. Just religious dogma.
You can google for all the details you like. The simple fact of the matter is that the economy went into depression in 1929 and didn't emerge from it until WWII made the US the only safe industrial power on the planet dispite massive 'stimulus' spending and various other forms of government interventionism. If you look at the history of US recessions the most severe are those that saw the most interventionism by the government. WWII proves that the latent industrial capacity of the US could have been reignited at virtually any point during the '30's if the government had not been diverting such a hugh proportion of the nation's wealth into non-productive efforts.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
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John Carson wrote:
I see. No specifics. Just religious dogma.
You can google for all the details you like. The simple fact of the matter is that the economy went into depression in 1929 and didn't emerge from it until WWII made the US the only safe industrial power on the planet dispite massive 'stimulus' spending and various other forms of government interventionism. If you look at the history of US recessions the most severe are those that saw the most interventionism by the government. WWII proves that the latent industrial capacity of the US could have been reignited at virtually any point during the '30's if the government had not been diverting such a hugh proportion of the nation's wealth into non-productive efforts.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
Stan Shannon wrote:
You can google for all the details you like.
A dodge.
Stan Shannon wrote:
The simple fact of the matter is that the economy went into depression in 1929 and didn't emerge from it until WWII made the US the only safe industrial power on the planet dispite massive 'stimulus' spending and various other forms of government interventionism. If you look at the history of US recessions the most severe are those that saw the most interventionism by the government. WWII proves that the latent industrial capacity of the US could have been reignited at virtually any point during the '30's if the government had not been diverting such a hugh proportion of the nation's wealth into non-productive efforts.
The simple fact is that the economy started to recover when Roosevelt elected and recovery was continuous except for one blip when he started listening to Republicans about balancing the budget. WWII, far from contradicting a Keynesian analysis, completely vindicates it. The economy recovered because of massive deficit-financed government spending on the war. Waging war is the epitome of "diverting such a hugh proportion of the nation's wealth into non-productive efforts". Economically speaking, building planes and ships and bombs and tanks and employing soldiers is only different from building bridges and roads and power grids and employing teachers is that the latter contributes to long term productivity growth much more than the former.
John Carson
modified on Wednesday, March 4, 2009 9:24 PM
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Stan Shannon wrote:
You can google for all the details you like.
A dodge.
Stan Shannon wrote:
The simple fact of the matter is that the economy went into depression in 1929 and didn't emerge from it until WWII made the US the only safe industrial power on the planet dispite massive 'stimulus' spending and various other forms of government interventionism. If you look at the history of US recessions the most severe are those that saw the most interventionism by the government. WWII proves that the latent industrial capacity of the US could have been reignited at virtually any point during the '30's if the government had not been diverting such a hugh proportion of the nation's wealth into non-productive efforts.
The simple fact is that the economy started to recover when Roosevelt elected and recovery was continuous except for one blip when he started listening to Republicans about balancing the budget. WWII, far from contradicting a Keynesian analysis, completely vindicates it. The economy recovered because of massive deficit-financed government spending on the war. Waging war is the epitome of "diverting such a hugh proportion of the nation's wealth into non-productive efforts". Economically speaking, building planes and ships and bombs and tanks and employing soldiers is only different from building bridges and roads and power grids and employing teachers is that the latter contributes to long term productivity growth much more than the former.
John Carson
modified on Wednesday, March 4, 2009 9:24 PM
John Carson wrote:
WWII, far from contradicting a Keynesian analysis, completely vindicates it.
Do you think that the bailout under Bush was a clear indicator that we (the US) have moved to a Keynesian approach to the economy? A friend of mine who is doing his economics post doc at Yale tends to think we began moving to a Keynesian approch before that when Greenspan started manipulating the rates in 02 (or was that 03?). Not that it really matters I suppose.
Sovereign ingredient for a happy marriage: Pay cash or do without. Interest charges not only eat up a household budget; awareness of debt eats up domestic felicity. --Lazarus Long Avoid the crowd. Do your own thinking independently. Be the chess player, not the chess piece. --?
modified on Wednesday, March 4, 2009 10:42 PM
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Stan Shannon wrote:
You can google for all the details you like.
A dodge.
Stan Shannon wrote:
The simple fact of the matter is that the economy went into depression in 1929 and didn't emerge from it until WWII made the US the only safe industrial power on the planet dispite massive 'stimulus' spending and various other forms of government interventionism. If you look at the history of US recessions the most severe are those that saw the most interventionism by the government. WWII proves that the latent industrial capacity of the US could have been reignited at virtually any point during the '30's if the government had not been diverting such a hugh proportion of the nation's wealth into non-productive efforts.
The simple fact is that the economy started to recover when Roosevelt elected and recovery was continuous except for one blip when he started listening to Republicans about balancing the budget. WWII, far from contradicting a Keynesian analysis, completely vindicates it. The economy recovered because of massive deficit-financed government spending on the war. Waging war is the epitome of "diverting such a hugh proportion of the nation's wealth into non-productive efforts". Economically speaking, building planes and ships and bombs and tanks and employing soldiers is only different from building bridges and roads and power grids and employing teachers is that the latter contributes to long term productivity growth much more than the former.
John Carson
modified on Wednesday, March 4, 2009 9:24 PM
John Carson wrote:
A dodge.
No, just a refusal to play the game on your terms.
John Carson wrote:
The simple fact is that the economy started to recover when Roosevelt elected and recovery was continuous except for one blip when he started listening to Republicans about balancing the budget.
That too preposterous to even respond to. It was called "The Great Depression" for a reason. The only thing that improved was government control. I don't recall my parents talking about how great the economy was in 1938. My dad worked in the CCC at some point in the mid to late '30's because he could not find normal employment.
John Carson wrote:
WWII, far from contradicting a Keynesian analysis, completely vindicates it. The economy recovered because of massive deficit-financed government spending on the war. Waging war is the epitome of "diverting such a hugh proportion of the nation's wealth into non-productive efforts".
WWII proves precisely what I said it proved. The industrial capacity of the US was largely dormant throughout the '30's because of government diversion of wealth away from private industry. Once it was needed, the switch was flipped and it started right back up. That could have been done at any point during the entire 1930's. Economically, there was no differnce between 1940 and 1933. The weatlh was there, the capacity was there and the resources were there and but for the government's foot on the the throat of capitalism, the full recovery would have been there also. ALl those massive governemnt programs were not needed, they achieved nothing but taking the US one major step towards socialism.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
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John Carson wrote:
A dodge.
No, just a refusal to play the game on your terms.
John Carson wrote:
The simple fact is that the economy started to recover when Roosevelt elected and recovery was continuous except for one blip when he started listening to Republicans about balancing the budget.
That too preposterous to even respond to. It was called "The Great Depression" for a reason. The only thing that improved was government control. I don't recall my parents talking about how great the economy was in 1938. My dad worked in the CCC at some point in the mid to late '30's because he could not find normal employment.
John Carson wrote:
WWII, far from contradicting a Keynesian analysis, completely vindicates it. The economy recovered because of massive deficit-financed government spending on the war. Waging war is the epitome of "diverting such a hugh proportion of the nation's wealth into non-productive efforts".
WWII proves precisely what I said it proved. The industrial capacity of the US was largely dormant throughout the '30's because of government diversion of wealth away from private industry. Once it was needed, the switch was flipped and it started right back up. That could have been done at any point during the entire 1930's. Economically, there was no differnce between 1940 and 1933. The weatlh was there, the capacity was there and the resources were there and but for the government's foot on the the throat of capitalism, the full recovery would have been there also. ALl those massive governemnt programs were not needed, they achieved nothing but taking the US one major step towards socialism.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
Stan Shannon wrote:
That too preposterous to even respond to. It was called "The Great Depression" for a reason. The only thing that improved was government control. I don't recall my parents talking about how great the economy was in 1938. My dad worked in the CCC at some point in the mid to late '30's because he could not find normal employment.
That is utterly preposterous, but I'll respond anyway. What you seem unable to get into your thick skull is that the economy was in a diabolical state in 1933 and steadily improved thereafter, except for a blip around 1937 when Roosevelt took steps to balance the budget. If a metaphor helps, think of a seriously injured soldier. He doesn't get better in days. It may take years.
Stan Shannon wrote:
The industrial capacity of the US was largely dormant throughout the '30's because of government diversion of wealth away from private industry.
No, it was dormant because of a lack of private sector demand. Government spending kept much more capacity in use than would otherwise have been the case.
Stan Shannon wrote:
Once it was needed, the switch was flipped and it started right back up. That could have been done at any point during the entire 1930's. Economically, there was no differnce between 1940 and 1933.
And what constituted the flipping of the switch? Answer: massive government spending on the war. In the 30s, just as now, ignorami like yourself made it politically impossible to undertake the level of government spending necessary to restore the economy. But since making war is the only form of government spending that Republicans are really enthusiastic about, the outbreak of WWII made it politically possible to undertake the level of spending that would restore the economy to health. And that is just what happened. You are right on one point. Economically there was little difference between 1940 and 1933. What was different was the politics. WWII made your intellectual forebears pull their heads in and let the government get on with fixing things. Have a look at this chart of government spending from 1920 to 1950 and then go and hang your head in shame for talking such nonsense. http://www.usgovern
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John Carson wrote:
WWII, far from contradicting a Keynesian analysis, completely vindicates it.
Do you think that the bailout under Bush was a clear indicator that we (the US) have moved to a Keynesian approach to the economy? A friend of mine who is doing his economics post doc at Yale tends to think we began moving to a Keynesian approch before that when Greenspan started manipulating the rates in 02 (or was that 03?). Not that it really matters I suppose.
Sovereign ingredient for a happy marriage: Pay cash or do without. Interest charges not only eat up a household budget; awareness of debt eats up domestic felicity. --Lazarus Long Avoid the crowd. Do your own thinking independently. Be the chess player, not the chess piece. --?
modified on Wednesday, March 4, 2009 10:42 PM
Chris Austin wrote:
Do you think that the bailout under Bush was a clear indicator that we (the US) have moved to a Keynesian approach to the economy? A friend of mine who is doing his economics post doc at Yale tends to think we began moving to a Keynesian approch before that when Greenspan started manipulating the rates in 02 (or was that 03?).
These are somewhat semantic points. The stereotypically "Keynesian" approach is to manage the economy through variations in government spending (primarily) and taxation (secondarily), increasing spending and cutting taxes in a slump and doing the reverse in a boom. However, economists who would consider themselves Keynesian will happily deploy a range of instruments. Bailouts and interest rate cuts are not specifically Keynesian, though in general Keynesian economists tend to be more pro-intervention than non-Keynesians. On the other hand, they don't necessarily all agree on what an appropriate intervention would be (that goes for both groups of economists).
John Carson
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Stan Shannon wrote:
That too preposterous to even respond to. It was called "The Great Depression" for a reason. The only thing that improved was government control. I don't recall my parents talking about how great the economy was in 1938. My dad worked in the CCC at some point in the mid to late '30's because he could not find normal employment.
That is utterly preposterous, but I'll respond anyway. What you seem unable to get into your thick skull is that the economy was in a diabolical state in 1933 and steadily improved thereafter, except for a blip around 1937 when Roosevelt took steps to balance the budget. If a metaphor helps, think of a seriously injured soldier. He doesn't get better in days. It may take years.
Stan Shannon wrote:
The industrial capacity of the US was largely dormant throughout the '30's because of government diversion of wealth away from private industry.
No, it was dormant because of a lack of private sector demand. Government spending kept much more capacity in use than would otherwise have been the case.
Stan Shannon wrote:
Once it was needed, the switch was flipped and it started right back up. That could have been done at any point during the entire 1930's. Economically, there was no differnce between 1940 and 1933.
And what constituted the flipping of the switch? Answer: massive government spending on the war. In the 30s, just as now, ignorami like yourself made it politically impossible to undertake the level of government spending necessary to restore the economy. But since making war is the only form of government spending that Republicans are really enthusiastic about, the outbreak of WWII made it politically possible to undertake the level of spending that would restore the economy to health. And that is just what happened. You are right on one point. Economically there was little difference between 1940 and 1933. What was different was the politics. WWII made your intellectual forebears pull their heads in and let the government get on with fixing things. Have a look at this chart of government spending from 1920 to 1950 and then go and hang your head in shame for talking such nonsense. http://www.usgovern
John Carson wrote:
Have a look at this chart of government spending from 1920 to 1950 and then go and hang your head in shame for talking such nonsense.
And if all of that happened in a political, economic and social vacume you might have a point, but they did not. That is a single snap shot of a single set of values taken in isolation from everything else that was occuring at that same time. FDR began a more friendly attitude towards business well before the US entered WWII, American industrial might was beginning to be felt prior to the massive spending on the war. If the US had never entered the war, the recovery would have been just as profound (ignoring any attacks on the mainland, of course). Obviously spending on the war caused full employment. But that employment was for non-productive purposes just as it would have been if it had been done earlier. The government would have had to continue to spend at that level forever to sustain the economy. Capitalism would have never re-started. The issue of private demand is valid. But it could no longer be held back with the needs of defending the world being so pressing. It had to be released. It was being purposefully held back before that. We are about the relearn all these lessons the hard way. Except now, our society is no longer held together by the same moral values that held it together in the '30s. This era will be far more difficult than the previous era because of economic decay, social decay and massive political incompetence.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
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John Carson wrote:
Have a look at this chart of government spending from 1920 to 1950 and then go and hang your head in shame for talking such nonsense.
And if all of that happened in a political, economic and social vacume you might have a point, but they did not. That is a single snap shot of a single set of values taken in isolation from everything else that was occuring at that same time. FDR began a more friendly attitude towards business well before the US entered WWII, American industrial might was beginning to be felt prior to the massive spending on the war. If the US had never entered the war, the recovery would have been just as profound (ignoring any attacks on the mainland, of course). Obviously spending on the war caused full employment. But that employment was for non-productive purposes just as it would have been if it had been done earlier. The government would have had to continue to spend at that level forever to sustain the economy. Capitalism would have never re-started. The issue of private demand is valid. But it could no longer be held back with the needs of defending the world being so pressing. It had to be released. It was being purposefully held back before that. We are about the relearn all these lessons the hard way. Except now, our society is no longer held together by the same moral values that held it together in the '30s. This era will be far more difficult than the previous era because of economic decay, social decay and massive political incompetence.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
Stan Shannon wrote:
FDR began a more friendly attitude towards business well before the US entered WWII, American industrial might was beginning to be felt prior to the massive spending on the war.
Yes, the economy started to recover in 1933 when FDR was elected. And it fully recovered when government spending exploded.
Stan Shannon wrote:
If the US had never entered the war, the recovery would have been just as profound (ignoring any attacks on the mainland, of course). Obviously spending on the war caused full employment.
You are contradicting yourself.
Stan Shannon wrote:
But that employment was for non-productive purposes just as it would have been if it had been done earlier.
Public construction projects are investment. Some government spending is for consumption purposes, but so is most private spending.
Stan Shannon wrote:
The issue of private demand is valid. But it could no longer be held back with the needs of defending the world being so pressing. It had to be released. It was being purposefully held back before that.
This is tinfoil hat nonsense. Government spending boosted private demand by putting people and firms to work.
Stan Shannon wrote:
We are about the relearn all these lessons the hard way.
That is way too optimistic a perspective. People like you never learn.
John Carson
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Stan Shannon wrote:
FDR began a more friendly attitude towards business well before the US entered WWII, American industrial might was beginning to be felt prior to the massive spending on the war.
Yes, the economy started to recover in 1933 when FDR was elected. And it fully recovered when government spending exploded.
Stan Shannon wrote:
If the US had never entered the war, the recovery would have been just as profound (ignoring any attacks on the mainland, of course). Obviously spending on the war caused full employment.
You are contradicting yourself.
Stan Shannon wrote:
But that employment was for non-productive purposes just as it would have been if it had been done earlier.
Public construction projects are investment. Some government spending is for consumption purposes, but so is most private spending.
Stan Shannon wrote:
The issue of private demand is valid. But it could no longer be held back with the needs of defending the world being so pressing. It had to be released. It was being purposefully held back before that.
This is tinfoil hat nonsense. Government spending boosted private demand by putting people and firms to work.
Stan Shannon wrote:
We are about the relearn all these lessons the hard way.
That is way too optimistic a perspective. People like you never learn.
John Carson
John Carson wrote:
Yes, the economy started to recover in 1933 when FDR was elected. And it fully recovered when government spending exploded
Yeah, it recovered all the way to ... what? ... 17% unemployment? Wow, thats what I call progress.
John Carson wrote:
Public construction projects are investment. Some government spending is for consumption purposes, but so is most private spending.
I agree that a certain level of infrastructure spending is entirely productive. But there is a limit to how much is actually needed. You cannot just keep building infrastructure and expect it to be something people actual need to use. Most of FDR's projects were simply not needed and did nothing to advance the economy. The only true productive form of spending, the kind that really builds an economy, is that produced by private industry.
John Carson wrote:
Government spending boosted private demand by putting people and firms to work.
No it didn't. It inhibited it. Every time the economy was poised to take off, it was beaten back into submission by FDR.
John Carson wrote:
People like you never learn.
I am perfectly willing to allow you and Obama to teach me the lessons that I, and the world, need to learn.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
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John Carson wrote:
Yes, the economy started to recover in 1933 when FDR was elected. And it fully recovered when government spending exploded
Yeah, it recovered all the way to ... what? ... 17% unemployment? Wow, thats what I call progress.
John Carson wrote:
Public construction projects are investment. Some government spending is for consumption purposes, but so is most private spending.
I agree that a certain level of infrastructure spending is entirely productive. But there is a limit to how much is actually needed. You cannot just keep building infrastructure and expect it to be something people actual need to use. Most of FDR's projects were simply not needed and did nothing to advance the economy. The only true productive form of spending, the kind that really builds an economy, is that produced by private industry.
John Carson wrote:
Government spending boosted private demand by putting people and firms to work.
No it didn't. It inhibited it. Every time the economy was poised to take off, it was beaten back into submission by FDR.
John Carson wrote:
People like you never learn.
I am perfectly willing to allow you and Obama to teach me the lessons that I, and the world, need to learn.
Chaining ourselves to the moral high ground does not make us good guys. Aside from making us easy targets, it merely makes us idiotic prisoners of our own self loathing.
Stan Shannon wrote:
Yeah, it recovered all the way to ... what? ... 17% unemployment? Wow, thats what I call progress.
It recovered from 25%. That is progress. And, as I have already said, it recovered more slowly because of a lack of government spending, a situation that was corrected in WWII. It also briefly got worse when Roosevelt prematurely tried to reduce the deficit in 1937.
Stan Shannon wrote:
I agree that a certain level of infrastructure spending is entirely productive. But there is a limit to how much is actually needed. You cannot just keep building infrastructure and expect it to be something people actual need to use. Most of FDR's projects were simply not needed and did nothing to advance the economy. The only true productive form of spending, the kind that really builds an economy, is that produced by private industry.
This last sentence is voodoo (and contradicts the first sentence). Both government spending and private sector spending involve a mix of consumption spending and investment spending. If the private sector won't spend, the government must spend in its place or income and employment fall.
Stan Shannon wrote:
No it didn't. It inhibited it. Every time the economy was poised to take off, it was beaten back into submission by FDR.
Let's look at government spending and national income through the 30s. National income on the left, government spending on the right. Year GDP Total Gov't Spending 1929 103.6 11.70 1930 91.2 12.06 1931 76.5 12.19 1932 58.7 12.44 1933 56.4 12.62 1934 66.0 12.81 1935 73.3 14.78 1936 83.8 16.76 1937 91.9 17.22 1938 86.1 17.68 1939 92.2 19.05 1940 101.4 20.42 Here we see a precipitous decline of GDP from 103.6 billion in 1929 to 56.4 billion in 1933. Government spending barely changes --- it increases by less than 1 billion. Then from 1933 to 1940, government spending grows by 8 billion and GDP grows by 45 billion, with the lion's share of the growth obviously being in the private sect