Gary North on Keynsian insanity

[grapejelly]

Re: Gary North on Keynsian insanity

If your thinking were correct, the private sector would have built the Golden Gate Bridge and the banks would have been competing with each other to fund the project. BUT THEY DID NOT. The people of San Francisco had to take it upon themselves (by mortgaging their own homes as collateral) to build the G.G. Bridge.

If your thinking were correct, George Bush and his Republican policies would have been a success story in the U.S. :rolleyes::rolleyes::confused:;)

the GG bridge perhaps shouldn't have been built when it was...if there was a demand, then the bridge would be built with private funds.

I don't know what you mean about George Bush and the Republicans. They are as far from the free market as Stalin.

[Chomsky]

Re: Gary North on Keynsian insanity

the GG bridge perhaps shouldn't have been built when it was...if there was a demand, then the bridge would be built with private funds.

This sort of facile response is typical of the ideological garbage "free marketers" parrot, and it's just so tedious.

Oftentimes, public works projects like the Golden Gate Bridge CREATE new demand by connecting two separate but related local economies together, the sum being greater than its parts, and far outweighing whatever cost is incurred in executing the project. But you know that.

[grapejelly]

Re: Gary North on Keynsian insanity

This sort of facile response is typical of the ideological garbage "free marketers" parrot, and it's just so tedious.

Ad hominem attack. Sigh.

Oftentimes, public works projects like the Golden Gate Bridge CREATE new demand by connecting two separate but related local economies together, the sum being greater than its parts, and far outweighing whatever cost is incurred in executing the project. But you know that.

That may be true, in fact, it is true. But that doesn't mean that private actors wouldn't build the bridge. I am sure they would have built it.

[Starving Steve]

Re: Gary North on Keynsian insanity

Back in 1934, the banks wouldn't lend, and the private companies wouldn't build. Things were at a stop.

Do you see shipping companies that for half-a-century have profited from the St. Lawrence Seaway now invest money to dredge the seaway to modern standards? Apparently, when it comes to things that may benefit all, the private sector leaves those things to government. ( Apparently, nothing has changed since 1934. )

[mickeyc21]

Re: Gary North on Keynsian insanity

Grape Jelly and TMungerFan:

You need to read what I wrote a little more carefully.

Grape Jelly your points are so obvious I wont repeat them - anyone that would argue against what you are saying hasn't considered the issues. What you are talking about however is a kind of demand that is repressed by prices being too high. I was talking about a far more basic point that other writers seemed not to understand: that creating magic money does not equal real demand. You are talking about demand from people who presumably have already provided value to an economy as they have money saved ready to deploy when prices get lower (correct me if I'm wrong).

TMungerFan the same applies to your reply. That you can borrow and repay is so obvious to not need pointing out. The distinction that you did not make - which is the difference between a life of wealth or a life in the poor house - is that the borrowing must be capable of producing additional wealth above the cost of money borrowed. The idea that has been popularized is simply that borrowing and spending will "stimulate" an economy and everything will work again.

Our economy is fundamentally flawed. Simply following Keynesian thought and digging holes in the ground and re-filling them (this is an actual suggestion from Keynes) is ludicrous. If we borrow to stimulate our current economic path it will have the effect of motivating idiots: we will simply do stupid things faster.

[Munger]

Re: Gary North on Keynsian insanity

That may be true, in fact, it is true. But that doesn't mean that private actors wouldn't build the bridge. I am sure they would have built it.

You are quite sure? Then I am convinced.

But seriously - just because you religiously believe something does not make it true. Markets are not perfectly efficient, and in fact, are not even very efficient. Try reading anything published on economic theory in the last 40 years. I would specifically direct you to information economics.

Don't confuse parroting free-market dogma with understanding.

[grapejelly]

Re: Gary North on Keynsian insanity

You are quite sure? Then I am convinced.

Keynsian economics is based upon stimulating demand by government's spending people's money for them.

The following are its premises:

1. The idea that government can better spend money than the people to whom it belongs...

2. If people aren't spending enough money, that is bad...

3. If prices are falling, that is bad...

4. That the market cannot be trusted because without government stimulus, people would hoard money and that is bad...

5. Hoarding money (e.g. savings) is bad and if left alone, it will lead to a death spiral.

If building the GG bridge was profitable, AND if people were allowed to accumulate their own savings without the government spending it for them...then obviously, private people would have built the GG bridge.

It is impossible for money to be left lying on the road, and not have someone who happens by to bother picking it up.

There are numerous examples of private companies building great works. The fact that the private builders often turned to government subsidy was because they themselves, the very people who built these great works, controlled parts of the government and they used their control to gain favors.

But under Keynsian doctrine, the government taxes and spends huge amounts of money (taxes directly and through money printing), so private stores of capital are not allowed to accumulate.

Keynsian economics is AGAINST savings, AGAINST accumulating private capital, AGAINST investment.

Government is the biggest single consumer, so government LOVES Keynsian doctrine because it backs up government's claims to the private economy.

It is for this reason that economists of the last x years are mostly in league with Keynsian economics. They are born and bred in government financed schools, funded by government grants, and captive to government dogma.

Duh.

[The Outback Oracle]

Re: Gary North on Keynsian insanity

/typical bald assertion sans evidence

If you had taken the time to think this through or read some economic thought that was not from the Von Mises institute you would know better.

If all wages fall by a certain percentage, let's say 20%, then prices will have to fall at the same percentage, 20%. Canceling out any supposed employment gains.

Fractional reserve banking.

Bah blah blah, productive vs. unproductive vs. consumptive etc etc ad nauseum strawman rinse repeat.

"typical bald assertion sans evidence"

Your whole post is just that.

[Scot]

Re: Gary North on Keynsian insanity

If you had taken the time to think this through or read some economic thought that was not from the Von Mises institute you would know better.

If all wages fall by a certain percentage, let's say 20%, then prices will have to fall at the same percentage, 20%. Canceling out any supposed employment gains.

Wages and income are not the same thing. That's important, since employers are interested in an income, but not a wage. Falling wages mean rising income for employers. That stimulates demand for employees, increasing employment.

And it doesn't follow that prices will have to fall the same percentage as wages. Given that income and wages are not the same, we really can't say what will happen to prices. Some may go up, some may go down. It depends on the shifts in demand and on new supply created from increased employment.

[LargoWinch]

Re: Gary North on Keynsian insanity

For readers, more info about Robert Higgs here:

http://en.wikipedia.org/wiki/Robert_Higgs


GJ refers to "Crisis and Leviathan":
http://www.amazon.com/Crisis-Leviath...1034892&sr=1-1

but I also recommend, "Against Leviathan":
http://www.amazon.com/Against-Leviat.../dp/0945999968