Uh oh, I think John took it personally when some people accused him of dishonesty and/or ignorance. (Words hurt, kids.) Remember, the issue here is that John in his latest Christmas video is taking on the “fallacy” (his term, which he attributes to Keynes and others) that consumption drives the economy, and that if everyone just consumed more, the economy would be fine. Some people said this is a total misreading of Keynes, and that Keynesianism says no such thing. So John defended his honor and struck back with this in the comments over at Daniel Kuehn’s blog (I’m not going to bother fixing the hyperlink formatting):
Here’s LAURA D’ANDREA TYSON and OWEN ZIDAR in the NY Times:
“These demand-side forces explain why consumption goes up much more after tax cuts for the bottom 95 percent than after equivalently sized cuts for the top 5 percent. An increase in consumption, which still accounts for about 70 percent of G.D.P., fuels increases in demand, and that leads companies to create more jobs.”
Here’s Paul Krugman in the NY Times:
“No, what the economy needs now is something to take the place of retrenching consumers. That means a major fiscal stimulus. And this time the stimulus should take the form of actual government spending rather than rebate checks that consumers probably wouldn’t spend.”
Shouldn’t he be talking about retrenching business spending? Ehem. Yeah.
Here’s Henry Blodget:
“American consumers — the folks who account for ~70% of the spending in the economy.
Almost every dollar these folks earn in salaries gets spent — on food, clothing, houses, education, entertainment, cars, and other goods and services that big American companies produce. So, if, instead of hoarding their wealth by hiking their profit margins ever higher, companies invested more in employees and equipment, they would help the whole economy.”
Sure sounds EXACTLY like Thomas Malthus to me, there, Gene. The rich capitalists should pay their worker more since workers consume more as a share of their income. Why not just take a page from William Spence (before Malthus) and have the rich pay the poor to blow glass bubbles and then smash them?!?!?
I could go on and on and on right through Christmas day. I’ve produced a video aimed at confronting a very real fallacy being put forward by economists who should, as you note, know better and a broader media class who disseminates an even cruder version of it.