Opinion of Keynesian Economics

[vanguard96]

Worst thing ever

Feudalism and Stalinist state capitalism are much worse.

[vanguard96]

We are (still) all Keynesians now. Even monetarism is just a flavor of Keynesianism. Its one acceptable capitalist alternative, goldbuggery, is profoundly stupid.

Why don't you like the gold standard?

[vanguard96]

We are (still) all Keynesians now. Even monetarism is just a flavor of Keynesianism. Its one acceptable capitalist alternative, goldbuggery, is profoundly stupid.

Why don't you like the gold standard?

Because it's the kind of policy that appeals to downscale libertarian (Paulbot) types, but would absolutely decimate business interests, and consequently the economy, if actually enacted.

What is good for business is almost by definition the only good. And gold isn't.

You're an advocate of the military-industrial complex and the Fed's destruction of the common person's means of savings, then?

[vanguard96]

We are (still) all Keynesians now. Even monetarism is just a flavor of Keynesianism. Its one acceptable capitalist alternative, goldbuggery, is profoundly stupid.

Why don't you like the gold standard?

Because it's the kind of policy that appeals to downscale libertarian (Paulbot) types, but would absolutely decimate business interests, and consequently the economy, if actually enacted.

What is good for business is almost by definition the only good. And gold isn't.

You're an advocate of the military-industrial complex and the Fed's destruction of the common person's means of savings, then?

I'm an advocate of capitalism, which the re-introduction of the gold standard would destroy in short order.

Do you accept the status quo?
If not how would you improve it?
If yes, why do you accept the status quo? Do you have a person in Washington or the state house now? That's what it's coming to. 'We need to get in the game' is what they are saying or else.

[vanguard96]

The idea in itself is sound, but generally works horribly as most governments only follow Keynesian partially not fully.  Otherwise they run deficits during a recession, but continue to run them during growth.  Keynesian says you spend more during recessions to stimulate the economy, but cut back during growth however governments very rarely do the latter thus why it often hasn't worked well.  If they followed it fully instead of partially it would work well.

Why do you think it is sound?

Governments are made up of people too which are irrational actors. Why give them the keys to the economy when they do not have perfect information? Why not let individuals and companies decide in the marketplace? On the scale of an entire country of the size of the US with 320 million people it is hard to ask for someone to really know what is the right mix of spending in the market at any time in the business cycle.

The Fed's own admittance of failing to understand why inflation is the way it is and the yet they still have a reading of the economy and decide to raise rates or hold. It paints the picture of the dangers of the lack of information in the monetary field as well as the trust in technocrats to plan the economy. It is a similar one in the fiscal policy field and government dollars during the recession are coming either from the Treasury - tax collection or from the printing press.

It is telling that Keynes himself even after bank run warning signs were going off that he saw nothing wrong and failed to see the looming Depression.

Likewise, many neo-Keynesians such as Paul Krugman were in the dark on 2008 and then later spun info like the Obama stimulus where it was a case where the economy further worsened to say 'well it would have been even worse without it.' Or for 2013 during the timing of the sequester by the Republicans was the talk of the day he mentioned about not wanting to be like Europe with their experience with austerity cuts but when the economy did not sink as he predicted he turned around and credited it to Obama's stewardship of the economy.

[vanguard96]

The idea in itself is sound, but generally works horribly as most governments only follow Keynesian partially not fully.  Otherwise they run deficits during a recession, but continue to run them during growth.  Keynesian says you spend more during recessions to stimulate the economy, but cut back during growth however governments very rarely do the latter thus why it often hasn't worked well.  If they followed it fully instead of partially it would work well.

Why do you think it is sound?

Governments are made up of people too which are irrational actors. Why give them the keys to the economy when they do not have perfect information? Why not let individuals and companies decide in the marketplace? On the scale of an entire country of the size of the US with 320 million people it is hard to ask for someone to really know what is the right mix of spending in the market at any time in the business cycle.

The Fed's own admittance of failing to understand why inflation is the way it is and the yet they still have a reading of the economy and decide to raise rates or hold. It paints the picture of the dangers of the lack of information in the monetary field as well as the trust in technocrats to plan the economy. It is a similar one in the fiscal policy field and government dollars during the recession are coming either from the Treasury - tax collection or from the printing press.

It is telling that Keynes himself even after bank run warning signs were going off that he saw nothing wrong and failed to see the looming Depression.

Likewise, many neo-Keynesians such as Paul Krugman were in the dark on 2008 and then later spun info like the Obama stimulus where it was a case where the economy further worsened to say 'well it would have been even worse without it.' Or for 2013 during the timing of the sequester by the Republicans was the talk of the day he mentioned about not wanting to be like Europe with their experience with austerity cuts but when the economy did not sink as he predicted he turned around and credited it to Obama's stewardship of the economy.

Economics isn't about some fantasy perfect alternative that libertarians/Austrian School types present, economics is about choosing among a limited selection of imperfect alternatives. Keynesianism/fiat money 'backed' by central banks has its imperfections, but the alternative you support is a joke.

I see the state as a very poor and inefficient benefactor. It's pretty easy to see this on a daily basis.

Your ad hom on Austrian economics is beside the point...
 
Keynesianism's models depend on so many aggregates and assumptions in consumption function that is revealed as threadbare when compared to real life

Here's a quote from Murray Rothbard's Spotlight on Keynesianism:

"This failure of the Keynesian model is a direct result of misleading aggregative concepts. Consumption is not just a function of income; it depends, in a complex fashion, on the level of past income, expected future income, the phase of the business cycle, the length of the time period under discussion, on prices of commodities, on capital gains or losses, and on the cash balances of consumers.

....

Thus, aggregative economics is a drastic misrepresentation of reality. The aggregates are merely an arithmetic cloak over the real world, where multitudes of firms and individuals react and interact in a highly complex manner. The alleged "basic determinants" of the Keynesian system are themselves determined by complex interactions within and between these aggregates."

Check yourself before you wreck yourself...

[vanguard96]

Keynes died in 1946, so he may not have the end all answers to contemporary economics, but he was more right in his lifetime than anyone has the right to be. And his ideas are certainly better than the Austrian and neoliberal ones that followed.

Except that Austrian ideas were around before (Menger and Bohm von Bawerk in the 19th century) and were gaining strength contemporaneous to Keynes. You may know of the Hayek-Keynes rap battle YouTube video.

It was the smearing of classical liberalism as being the cause of the depression - when it was plainly not - as well as the forces of the left rising in the 1930's that saw the Austrian school fail to win many converts despite predicting the Depression which is something that Keynes whiffed on. Austrians were able to also explain stagflation of the 1970's - something that Keynesian & neoclassical followers had a tough time getting around.

They were never discredited, it just went underground in the pre-war years. Having socialist economic policy-friendly fascists who absolutely hated classical liberalism about as much as they hated Jews did a lot to break up the original movement in Austria. Especially when the leader of the movement, Mises, himself was Jewish. Then alongside but not entirely in lockstep with the rise of the new post-war conservative movement the Austrian school saw a new flowering in the 1960's and early 1970's alongside the Chicago school led by Milton Friedman. 

The Keynesian views, flawed as they are, fit in with the idea of increasing state power so of course your lot will prefer it. The Austrian views fit in with the idea of decreasing state power so they were at odds with both the socialist and nationalist views that predominated in the 1st half of the 20th century.

Thus any tenuous connection to the Austrian school is a guilt by association thus Margaret Thatcher's record despite not following the tenets of classical liberalism is considered a black stain on Austrian economics.

I guess if you want a large corporatist economy working hand in hand with a large bureaucratic government then Keynesianism is perfect even though the model has so many assumptions that put it so far from reality.

It all fits in together quite well with interventionist Wilsonian democracy abroad. Intervention by the government with fiscal policy as per Keynesian economics, intervention by the quasi governmental Federal Reserve in monetary affairs. Both together have a mission to manage the economy (looking at inflation & unemployment). Now we've seen our debt go to 20T and the deficit is a hellish $666B - and a ruinous crisis ten years ago. Yet we're still going to the same well.

It's disheartening.