Argentina: Another In a Long Line of Keynesian Blogger Success Stories
An excerpt from my latest Mises CA post:
This sort of thing happens a lot with Keynesian policy recommendations. In addition to this latest episode involving Argentina, let’s not forget that Krugman in 2002 infamously called for a housing bubble (and then later tried in vain to walk it back). That didn’t turn out too well.
Also remember that Krugman in 2011 pointed to the VA as a “huge policy success story, which offers important lessons for future health reform.” Speaking of health care reform, let’s circle back to Matt Yglesias, who predicted in July 2013 (!): “I’ve got a new column up about the White House’s plans for the rollout of the Obamacare exchanges and I wanted to once again take the opportunity to lay down a marker and say once again that Obamacare implementation is going to be a huge political success.”
Yes, I agree with Krugman that there is an important lesson here, and it is this: Read Krugman and Yglesias religiously, then do the OPPOSITE of what they recommend.
“This sort of thing happens a lot with Keynesian policy recommendations. In addition to this latest episode involving Argentina, let’s not forget that Krugman in 2002 infamously called for a housing bubble “
Except that — even if Krugman did call for an asset bubble — that is not Keynesian economics. Keynesian economics doesn’t call for asset price bubbles. You’re being deliberately misleading.
What Keynes actually said about speculative bubbles:
“Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise become the bubble on a whirlwind of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.”
The General Theory of Employment, Interest and Money..
And even universal health care isn’t Keynesian per se either.
A lot of modern economic policy going under the general Keynesian banner is far removed from what Keynes wrote. Not sure who to blame for that, but probably not the Austrians.
You mean things like paying down debt when times are good. Stop priming the pump when times are good.
I don’t agree with Keynes when he says to pay down debt, rather, governments should avoid most debt. Debt just lets them spend more.
The ideal situation( absent anarchy) is very low taxes and then when you take debt, taxes go up for the exact term and amount of the debt. Keep it clear and simple. Every debt should be tied to new tax and then both the debt and tax should sunset.
If government could achieve counter-cyclic debt it would be very useful, but there’s a problem. If any individual could make counter-cyclic investments that individual would be very wealthy. Neither government nor individual can see the future, so neither one can reliably optimise their approach.
Think of it as an individual driving around in a little compact car while wearing a blindfold. Now and then the car bumps into stuff and the individual must back up and try a different direction. Government “solves” this by driving a great big truck also while wearing a blindfold. The truck can push most obstacles out of the way (including any individuals and their compact cars) which doesn’t improve their driving.
In a nutshell, the information problem remains. This is why Keynesian practice never meets Keynesian theory.
Bravo, Keynes was not completely wrong, in fact most of what he wrote has a place in economics because it was well thought out and articulated. It is just that it has been so far shredded from what it was supposed to be. I do not care is a Government sees there is an excess of labor, fast tracks a few public works projects that have value, and pays less now than it would later because it can get the labor for less money currently due to a slackened labor market.
However that money then needs to be repaid when the economy recovers with the money that would have been used to fund those projects later. Instead Government says, ‘well since it is already in the budget…
Anyway, still think Keynes had his head on straight when it came to balance of trade and the defining of a new class of displaced worker etc. I simply disagree with people like Krugman who rather than seeing what Keynes wrote and why perverts it to some kind of socialistic agenda. Often times doing things that Bob points out all too often.
1) Bob is clearly referring to **keynesians**, not to Keynes himself.
2) Using your own argument, if:
Keynes rejected to use asset bubbles -> Krugman endorses to use asset bubbles -> Krugman is not doing keynesian economics.
then:
Keynes endorsed marginal efficiency of capital -> LK rejects marginal efficiency of capital -> LK is not doing keynesian economics.
You have blatantly admitted that you, and a lot of post keynesians, don’t actually do keynesian economics. Fantastic.
(1) “Bob is clearly referring to **keynesians**, not to Keynes himself. “
First, I did not say Murphy was referring to Keynes himself, but to Keynesian economic theory and policy prescriptions.
And he is, as we can see:
“This sort of thing happens a lot with **Keynesian policy recommendations”**
You would seem to have reading problems, there, Guillermo Sanchez.
(2) “Keynes rejected to use asset bubbles -> Krugman endorses to use asset bubbles -> Krugman is not doing keynesian economics.”
That is not my argument. I used the Keynes quote to illustrate the **general point** that Keynesian economic theory and policy prescriptions (in either the neoclassical or heterodox form) do not support or prescribe causing asset bubbles as a viable policy.
That is correct, despite Murphy’s misleading insinuations to the contrary.
You’re totally wrong as usual LK. See below.
LK:
Keynesian theory does in fact call for asset bubbles. It does so by way of advocating for the cause of them.
This is an Austrian analysis of Keynesian economics. Murphy isn’t suggesting that Keynes was a clear and non-contradictory thinker nor is he suggeating that Keynes explicitly called for bubbles using that exact word. Nor is it the case that Keynes had to have explicitly advocated for bubbles in order for it to be correct to argue that Keynes advocated for bubbles.
Keynes wrote:
“It may, of course, be the case — indeed it is likely to be — that the illusions of the boom cause particular types of capital-assets to be produced in such excessive abundance that some part of the output is, on any criterion, a waste of resources; — which sometimes happens, we may add, even when there is no boom. It leads, that is to say, to misdirected investment. But over and above this it is an essential characteristic of the boom that investments which will in fact yield, say, 2 per cent. in conditions of full employment are made in the expectation of a yield of, say, 6 per cent., and are valued accordingly. When the disillusion comes, this expectation is replaced by a contrary “error of pessimism”, with the result that the investments, which would in fact yield 2 per cent. in conditions of full employment, are expected to yield less than nothing; and the resulting collapse of new investment then leads to a state of unemployment in which the investments, which would have yielded 2 per cent. in conditions of full employment, in fact yield less than nothing. We reach a condition where there is a shortage of houses, but where nevertheless no one can afford to live in the houses that there are.
“Thus the remedy for the boom is not a higher rate of interest but a lower rate of interest![5] For that may enable the so-called boom to last. The right remedy for the trade cycle is not to be found in abolishing booms and thus keeping us permanently in a semi-slump; but in abolishing slumps and thus keeping us permanently in a quasi-boom.”
When an Austrian reads that, they know that because central banks goosing the economy with artificially low interest rates causes asset bubbles, they know that Keynes, whether he himself was able to comprehend this or not, advocated for bubbles.
That quote you provided is not Keynes admonishing bubbles per se, but only the “animal spirits” aspect of market activity, the “speculative furvor” and “casino” mentality that turns capital development sour. Notice in the first sentence he says there is no harm from bubbles (on a steady stream of enterprise). This is the “permanent quasi-boom” impossible utopia.
Austrians argue that it is impossible for men with badges to, once elected, have the intellectual wherewithal to separate good booms from bad booms, when and what to regulate and where so that they can tame a constant moderate and permanent bubble. Austrians say this cannot be done because the only way anyone can know is through free market prices just how far in each direction economic activity ought to go.
Keynesians want bubbles and expect morons with guns to prevent the huge kind of destructive bubbles through vague “regulation!” catch phrases. Austrians say that the central bank causing bubbles cannot be regulated away. If the regulators put direct or indirect price controls over here and here, then the monetary pressure will find its way into those areas not under that exact direct or indirect price control.
So Murphy is absolutely 100% correct to associate bubbles with Keynesian theory, Keynes himself, and monetarists as well for that matter.
You’re right about healthcare not being a part of Keynesian theory, but, this does not mean that “We’re in a recession, so the government should print or borrow money and increase its spending on healthcare related products and services and labor” isn’t a Keynesian argument. It is a Keynesian argument. Keynesianism does preclude ANY specific types of government spending. Keynes said spending on wars is stimulative. Keynesianism lumps all government spending levels as equally stimulative for any given recession.
As usual a masterpiece of confusion and distortion.
The “boom” that Keynes speaks of is not an asset bubble, but increasing real output and real capital investment.
The “Speculators may do no harm as bubbles on a steady stream of enterprise” statement does not advocate bubbles, but merely points out, correctly, that minor speculative bull markets (“bubbles on a steady stream”) in a strong economy with real output growth and real capital investment generally do no harm. No doubt you’re going to tell us next that bear markets are just great for business expectations and optimism.
“Keynesianism lumps all government spending levels as equally stimulative for any given recession.”
All government spending levels? lol
Oh, so now you think that Keynesians believe contractionary spending is “stimulative for any given recession”? Is that right?
“…but increasing real output and real capital investment.”
Unfortunately this is just your dream. How would you be able to tell what a “real” boom is based on sustainable production, and what is not? Are you able to look in peoples heads? Are you a non-fallible investor genius? Do you know the implications of subjective value theory?
You can’t! Everything (Keynesian policy recommendations) you do to keep some arbitrary macro figures in the “boom” area is shooting in the dark…
LK:
As usual the argument went right over your head.
Again, what Keynes claimed can boost capital investment, namely the government bringing about more and cheaper credit expansion from the central banking system, is what Austrians know causes asset bubbles.
It doesn’t make one bit of difference whether Keynes knew all the consequences of his own policy prescriptions. It doesn’t matter if he set his sights only on capital investment booms. The point is that what he wanted, and what Keynesians of all stripes continue to want, is a particular government action that, again whether they realize it or not, causes asset bubbles to form.
“The “Speculators may do no harm as bubbles on a steady stream of enterprise” statement does not advocate bubbles, but merely points out, correctly, that minor speculative bull markets (“bubbles on a steady stream”) in a strong economy with real output growth and real capital investment generally do no harm.”
Right, THAT particular statement is not an advocacy of bubbles. Like I said, it is a statement that Keynes was not against bubbles per se, which goes against your prior claim that Keynes “rejected” them. Tolerating something is not a rejection of that something.
What IS an advocacy for bubbles is an advocacy of the cause of bubbles, namely, central banks goosing credit and lowering interest rates. Keynes advocated for that, exactly like today Keynesians advocact that central banks should lower interest rates during recessions and then depending on morons with guns to regulate the consequences away as if they have any clue just how much asset booms have to go before they pass that magical line of “now it is a bubble!”
“Keynesianism lumps all government spending levels as equally stimulative for any given recession.”
“All government spending levels? lol”
All equal spending levels. Missed a word.
$10 billion spent by government on war is, in orthodocpx Keynesian theory, as equally as stimulative as $10 billion spent by government on schools for blind children.
“Oh, so now you think that Keynesians believe contractionary spending is “stimulative for any given recession”? Is that right?”
Keynesian theory states that every $1 of government expenditure is equally as stimulative during a recession no matter what that $1 is spent on.
Hitler was a Keynesian. Keynesian theory is a political advocacy.
If you excuse me and if you’ll pardon me, I mean no offense, but Keynesian theory does not exclude calling a governmental expenditure on building gas chambers a “stimulus” to a slumping economy, that we’re supposed to support.
Keynes advocated for WARS if statesmen would otherwise reduce their spending during a recession. Just think about that. He preferred death and destruction on massive scales over some people being temporarily unemployed but free to figure out a way to produce and sustain themselves. The guy was, and his theory is, psychopathic to the 1st degree. Advocate of war, bubbles (that he was too dense to even realize or understand), over-consumption and impoverishment, initiations of violence but only from men with badges, and let us not forget pro-eugenics, predator of young sex slaves in third world countries away from prying eyes, anti-semite, and he was a notorious douchebag to people.
His theory is directly responsible for the industrial gutting of the US, as it was government deficits that drastically reduced the ability of investors to save and invest sufficiently to replace worn out and used up capital.
His theory is, economically, a way for violent thugs to misappropriate resources for their own anti-social boondoggles and crusades.
His theory is sick, evil, and twisted. The mile high stench is covered and soaked with copious amounts of bleach that is meant to convince people that resources directed to government use is good for everyone, that it is a benevolent theory of allowing everyone to have their cake and eat it too.
(1) A credit boom is not a sufficient for an asset bubble. On the contrary, you need loans of a certain type for that to happen and this can be prevented by financial regulation.
(2) “Keynes advocated for WARS if statesmen would otherwise reduce their spending during a recession. Just think about that. He preferred death and destruction on massive scales over some people “
So, Bob Murphy, does it concern you at all that you have such an outrageous liar on your blog?
Imagine if Keynesians on your blog went around saying this:
“Mises always advocated for FASCISM if statesmen couldn’t stick to classical liberalism. Just think about that. Mises preferred mass murdering TOTALITARIAN FASCISM to an interventionist government “
Would you tolerate these lies on your blog?
Correction:
**”not a sufficient condition**
http://consultingbyrpm.com/blog/2010/03/the-faux-fretting-for-frums-firing.html#comment-932
(1) A credit boom is not a sufficient for an asset bubble. On the contrary, you need loans of a certain type for that to happen and this can be prevented by financial regulation.
An credit boom caused by printing money *is* the bubble. Where that money goes from there causes bubbles *there*.
It’s a bubble because inflating nominal prices isn’t the same thing as wealth creation. The prices aren’t reflecting individuals’ subjective preferences.
They’re fake prices. Which is why they correct.
… this can be prevented by financial regulation.
Or, you could just not cause bubbles in the first place, and get out of the way of those who are trying to correct the Fed-fueled mistakes they were tricked into making.
Also, when people notice that they’re about to lose money, you’re not helping the economy by preventing them from escaping the coming crash.
For example, the subprime mortgage crisis wasn’t caused because there wasn’t enough regulations preventing people from betting against government-induced bad lending standards.
Some people saw the crisis coming and sought a way out:
Why the Meltdown Should Have Surprised No One
[www]http://mises.org/daily/3493
And I knew, just by looking at it, that Fannie and Freddie were going to have to go bankrupt. I knew they guaranteed 50 percent of the mortgages, and I knew that those mortgages were not worth anywhere near what Fannie and Freddie thinks.
I knew what people were borrowing to buy these houses, so I knew that ultimately, when people didn’t pay, the companies would have to go under.
And I knew about the securitization process. I knew because, at the time, I was helping a guy set up a hedge fund in 2005 that was shorting subprime mortgages.
…
The reason that it was so easy for people to borrow all this money to buy houses was because of securitization.
At first it started with Freddie and Fannie. If it wasn’t for Fannie Mae and Freddie Mac, Americans couldn’t have borrowed all this money to buy houses. The only reason they did it was because the US government was co-signing their mortgages.
Peter Schiff on Politics, Precious Metals and President Obama’s Second Term
[www]http://thedailybell.com/exclusive-interviews/28624/Anthony-Wile-Peter-Schiff-on-Politics-Precious-Metals-and-President-Obamas-Second-Term/
And, of course, they didn’t want to give me credit for shorting subprime mortgages. They didn’t point out, “How much money did people make who took my advice and shorted subprime mortgages in 2007?” They cleaned up.
There’s no need for financial regulations.
(1) No it cannot, because the government cannot know which assets nor how much these asset prices can rise on the basis of credit expansion, in order to prevent asset bubbles. Faith in regulation is a chimera. No government has prevented the business cycle.
(2) What I said is not a lie. Keynes wrote:
“Pyramid-building, earthquakes, even wars may serve to increase wealth, if the education of our statesmen on the principles of the classical economics stands in the way of anything better.”
Book 3, Chapter 10, Section 6 – The General Theory.
According to Keynes, if politicians would otherwise reduce spending during a recession, it would better for them to start wars instead.
Your n
Your interpretation of what Mises wrote is erroneous, and it is a false analogy.
Mises did not say that if politicians can’t or won’t impose classical liberalism, that even totalitarian fascism would increase wealth, or be better for the people. But that is what he would have had to say if your usage of that passage in Liberalism is to stand as the “oh ya? Well by your interpretation of Keynes, we can say THIS about Mises!”
I can say without lies or contradiction that Keynes preferred war over temporary unemployment due to government reducing spending, and that Mises did not prefer fascism if classical liberalism could not be had.
(1) wrong. governments have in the past successfully controlled asset bubbles by regulating how banks grant credit.
(2) you have totally missed the point of my statement:
““Mises always advocated for FASCISM if statesmen couldn’t stick to classical liberalism. Just think about that. Mises preferred mass murdering TOTALITARIAN FASCISM to an interventionist government “
Since Mises didn’t *always* support fascism (but merely said *once* that Mussolini’s fascism saved European civilization and was a short term solution) it is clear that that statement is a lie and I am not saying I agree with it
at all.
It is just an example of the same type of absurd lie that you have just spouted: that Keynes preferred war to civil fiscal stimulus on useful public works.
Even the passage you quote from Keynes does not even support your ridiculous lie:
““Pyramid-building, earthquakes, even wars may serve to increase wealth, if the education of our statesmen on the principles of the classical economics stands in the way of anything better.””
That is not a moral endorsement of war over civil stimulus: it is a mere factual statement that “wars may serve to increase” real output and employment.
That is no doubt true, but it does not follow from that that Keynes gave his moral endorsement to war over civil stimulus. That is just a pathetic lie dreamed up by you.
(1) Still false. No government has had its central banking system expand credit, artificially lower interest rates, bring about a boom and then stop the business cycle through “regulation.” Not even your cherry picked and oft touted non pure laissez faire and non pure Keynesian policy period of 1946-1970 US, that benefited from all sorts of non-Keynesian policies in addition to suffering under imperfect Keynesian policies, and experiencing a correction in 1971 because of what took place prior, experienced asset bubbles and busts during yhat period as well. The morons with guns back then also did not know how to use coerce the population into stoping the bubbles and busts.
(2) I’ve already explained that the analogy doesn’t work. All you’re doing is writing a lie, and saying “That’s what you’re doing with Keynes!” But that isn’t what I’m doing because unlike you, I gave documentative evidence that shows if politcians are austerians, who would otherwise reduce their spending, Keynes argued it would be better for the people to suffer from earthquakes, or build useless pyramids, or engage in destructive wars. Nowhere did Mises say or imply, that if politicians won’t behave classically liberally, that it would be better for them to behave fascistically. What he did say was that in the case of Austria, the country was saved from foreign economic comminists by the domestic government imposing economic fascism.
Remember, Mises defined economic communism and ownership and control over the means of production, and economic fascism as control over but not full ownership but retaining all the managers and former owners as nominal owners. Yes this is de facto ownership in my personal view. But Mises knew that communism would be far worse, so while he said fascism saved Austria, fascism itself is untenable, and if transformed into a permanency, would literally destroy all civilization.
This is totally different from what Keynes argued about war. Keynes argued that starting war is better than what is effectively some people experiencing temporary unemployment. It cannot even be associated with a reduction in standard of living, because fewer resources directed by coercion, and more resources directed voluntarily, increases the individual’s standard of living by definition.
LK:
“That is not a moral endorsement of war over civil stimulus: it is a mere factual statement that “wars may serve to increase” real output and employment.
“That is no doubt true, but it does not follow from that that Keynes gave his moral endorsement to war over civil stimulus.”
I didn’t claim he gave any MORAL endorsement. I said Keynes believed war would be better than temporary unemployment. This is not a claim that he believed people ought to fight wars over being temporarily unemployed.
Also, apart from Keynes’ writings on the matter, it is absurd to believe Keynes was morally opposed to war over temporary unemployment , while writing that he believed war would make people wealthier if the alternative were reduction in government spending. For that would imply Keynes did not think policies that his own policy prescriptions were morally justified.
(1) “No government has had its central banking system expand credit, artificially lower interest rates, bring about a boom and then stop the business cycle through “regulation.””
And since I never said that, you’re clearly reduced to throwing straw man arguments.
Also, 1945-1970 did see bear and bull markets but these were not the asset bubbles seen before and since the dismantling of effective financial regulation.
(2) “Keynes argued it would be better for the people to suffer from earthquakes, or build useless pyramids, or engage in destructive wars.”
” I said Keynes believed war would be better than temporary unemployment”
More shameless lying. No, Keynes did not say that. He said:
“Pyramid-building, earthquakes, even wars may serve to increase wealth,“
That is not a endorsement of pyramid-building, earthquakes, or wars over civilian stimulus — just a statement that such things may actually increase real output and employment during a depression, which is a factually correct statement.
“But Mises knew that communism would be far worse, so while he said fascism saved Austria,”
False. Mises was speaking of Mussolini’s fascism in the famous quote , not Austria:
“It cannot be denied that Fascism and similar movements aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history.”
—-
Of course, no doubt you’ll be too dishonest to admit your mistake graciously.
LK:
“And since I never said that, you’re clearly reduced to throwing straw man arguments.”
You aren’t expected to say anything before my argument is valid. I made an argument about Keynes’ writings and you chose to participate and debate the point.
That point is that Keynes’ advocated for bubbles, by advocating for the cause of them, and even welcoming them under certain faith based “the government can give us the good and regulate away the bad” conditions, which I insist are not realizable, despite your claims to the contrary.
“Also, 1945-1970 did see bear and bull markets but these were not the asset bubbles seen before and since the dismantling of effective financial regulation.”
So there were bubbles then.
So you’re changing your story and claiming that ok, they were bubbles, they just weren’t “like” the bubbles before or since. Well, first off, we can’t separate this particular time period from post-1970, because the world did not begin in 1970. What happened post-1970 was a consequence of actions and events that took place prior, (as well as during). One cannot a priori rule out the possibility that the steep recession of 1971 was a consequence of the government succeeding in delaying the corrections that otherwise would have taken place prior to make them appear “like” the recessions prior, by accelerating inflation and credit expansion. The fact that the Fed was not able to redeem dollars for gold at par by 1971, such that Nixon eliminated the gold window, suggests that a portion of this “golden era” was unsustainable. And far from this showing that leaving the final link to gold was prudent, the bubbles and busts since this “golden era” have become more pronounced. Of course you want to impute your faith based belief that these post golden era cycles would have been like the golden era ones if only the government pulled a rabbit out of its hat and regulated the negative effects away, but retained all the positive effects like temporary boosts in output and employment.
Austrians argue that government no longer having any commodity constraint to money printing, is the main cause for the run ups in asset bubbles, and that the “deregulation” was in fact a series of law changes that allowed the federal reserve cartel to inflate more, to expand credit more, to allow more nominal interest income to be earned. These are not deregulations. Deregulation would mean less government involvement, meaning less control over money. Leaving gold was a massive increase in regulation, and what you call “deregulation” was in fact a change to existing regulations that enabled more money issuance than what would otherwise have been possible in a free market. Licensed and government backed bankers by law who push for other laws that enables them to expand more credit given this oligopoly privilege, is not a movement towards deregulation and free markets. It is a movement towards realizing the inner seed of the new fangled government power of unlimited money printing. If those bankers were constrained to free markets from the start, then even if they pushed for laws that enabled them to inflate more, market forces would prevent them from doing what they could have done with the powers that they actually had in actual non laissez faire history.
It is a butchering of the meaning of the term “deregulation” to associate it with movements towards more inflation that is only made possible with government oligopoly power and backstop. Actual deregulation would have been a reduction in government power and control, which means at the very least a movement away from pure fiat money, not towards it.
The constraint the government had 1945-1970 in not being able to print as much money, due to the constraints of Bretton Woods, played an important role in reducing what would otherwise have been larger and more pronounced bubbles. If the government had fiat control over money post 1945 as they did post 1971, then we would be sitting here talking about how large the bubbles and busts were from 1945 on, and you would have been saying ineffective regulation was the culprit.
“Keynes argued it would be better for the people to suffer from earthquakes, or build useless pyramids, or engage in destructive wars.”
” I said Keynes believed war would be better than temporary unemployment”
“More shameless lying. No, Keynes did not say that. He said:”
“Pyramid-building, earthquakes, even wars may serve to increase wealth,“
That is what I quoted him writing. Saying to me “No, this is wgat he wrote”, right after I myself quoted that exact same sentence, plus the additional part about if government would not spend more during a recession, is indeed an endorsement of these things if that “if politicians are austerians” caveat is the only other counter-factual (which is not observable anyway, which means it is possible even within utilizing Keynesian theory, that war would be started even if more counter-factuals other than just “austerity” would actually have been chosen by government, if the existing politicians changed their minds at the last minute. War could be started, and we would be told by Keynesians that it helped, and we would be told the reason it helped is that the only other alternative was in fact austerity. And oh look, that is in fact what we have been told by Keynesians regarding WW2. We are supposed to use Keynesian theory and argue that the war spending helped on the basis that Keynesians have an ability to see into the practically infinite counter-factual worlds and conclude that the only other possible course of action was austerity.
“That is not a endorsement of pyramid-building, earthquakes, or wars over civilian stimulus — just a statement that such things may actually increase real output and employment during a depression, which is a factually correct statement.”
Once again, Keynes’ POLICY PRESCRIPTIONS do not distinguish between what the government actually spends money on. Keynes’ advocated for government spending during recessions. If that means spending to engage in war, then that is following Keynes’ advocacy. Krugman calls this “weaponized Keynesianism.”
If Keynes advocated for increased government spending during recessions, and within government the only choices are government increasing spending by engaging in war, or not increasing spending, then according to the normative aspect of Keynesianism, apart from the question of growth in wealth, the unavoidable conclusion is that war is advocated in Keynesian theory.
Keynesianism is not purely wertfrei. It presupposes an ethic because it presupposes government is morally legitimate.
There are no Keynesian anarchists, or moral nihilist Keynesians. This is because Keynesianism is an economics for governments. Keynes even admitted that his theory is best suited for totalitarian governments.
Keynes did not merely claim that governments starting wars could increase wealth. First, it is actually not true, contrary to your sneaky taken for granted claims, that war can increase wealth, since wealth, the value of it, is subjective, not objective, so if war succeeds in encouraging the production of more “stuff” because some individuals impose their subjective values and eliminate other individual subjective values, that does not mean that “wealth has increased” or that “society is wealthier.” A person can be poorer with a giant pyramid than with a single apple. And yet if 1 million times more spending goes into the production of a pyramid because some individuals initiated coercion to get it done, then by your logic we’re supposed to conclude the pyramid makes people wealthier, including the guy who would have preferred an additional apple instead of a share in the pyramid.
This is the cold hard truth that explodes the entire Keynesian doctrine. Keynesianism mistakenly includes coercive spending results with voluntary spending results, and then claims that in the absence of additional voluntary spending, additional coercive based spending can cause the same results and SHOULD be implemented by what you call “powerful demand stabilizing institutions.”. You also advocate for war LK. You do so if you ever found yourself believing that the only other option is government reducing its spending during a recession. That is what the theory you have chosen to guide your thinking explicitly states.
If you don’t agree with that, if you seriously believe that given a choice between government reducing its spending during a recession, versus them starting a war, or, in general, if given the choice between sitting back and watching money hoarding increase throughout the population and watching reductions in consumption and investment expenditures, versus them increasing spending on war, if this is the choice, and you seriously would prefer choosing not war, then I can tell you right now that you would be contradicting the core of Keynesian theory. For you would be preferring, and hence valuing, and hence judging as wealthier defined as your subjective values of things in the world, and hence claiming there would be more wealth, if the government did the opposite of what Keynesian theory prescribes. You would be realizing that ll that extra “stuff” brought about by government coercion, that is according to spending metrics more plentiful, and/or according to size of goods metrics more plentiful, you would understand it all as symbols of impoverishment, because they are the result of some individual values violently superceding other individual values. There can be no claim of total wealth increase, which requires Pareto movements.
“But Mises knew that communism would be far worse, so while he said fascism saved Austria,”
“False. Mises was speaking of Mussolini’s fascism in the famous quote , not Austria:
“It cannot be denied that Fascism and similar movements aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history.”
Yes, Mises regarded the Italian iteration as the most grandoise and tightly diasciplined version of fascism. Yes he believed various forms of fascism throughout Europe was a makeshift savior.
But he still believed Austrian fascism stopped the bolsheviks from taking over Austria. That is the point I made. I was not thinking that the “famous quote” you just posted included Austria only and not Europe. I know it said Europe. But Europe is a collection of states. Fascism in Italy stopped the bolsheviks from taking over Italy. Fascism in Austria stopped them from taking over Austria. Etc. Mises was a “patriot.”. He did not want to see Austria fall to the bolsheviks, and thanked fascism as a makeshift, but itself an inherently evil and destructive policy, in stopping communism from taking over Austria.
” You also advocate for war LK. You do so if you ever found yourself believing that the only other option is government reducing its spending during a recession. “
No, M_F. that is utterly shameless, laughable lie.
If there was a choice only between (1) war and (2) reduced government spending in a recession, I would rather see (2) than war, even if war did in fact increase output and employment.
In general, one can only marvel at the straw man arguments, red herrings, and plain lying of this bizarre rant.
““Also, 1945-1970 did see bear and bull markets but these were not the asset bubbles seen before and since the dismantling of effective financial regulation.”
So there were bubbles then.”
So every bull market in human history was a bubble?
lol.. You have just shot yourself in the foot, because if true, then your re-definition proves that any Rothbardian anarcho-capitalist system with bull markets would be experiencing bubbles.
Therefore it follows that in advocating Rothbardian anarcho-capitalism, you, M_F, are advocating bubbles.
Hoist on your own petard — in this case the unhinged tactic of redefining every word you don’t like.
… even if war did in fact increase output and employment.
So you would rather let the politically-connected, stimulus-propped banks crash than for people to kill government regulators for violating their liberty to liquidate as they see fit (cutthroat competition, wage reductions, lay-offs, mergers, etc.)?
LK:
“No, M_F. that is utterly shameless, laughable lie.
If there was a choice only between (1) war and (2) reduced government spending in a recession, I would rather see (2) than war, even if war did in fact increase output and employment.”
If you had kept reading, you would have seen me say “If you disagree with this”, meaning I was leaving it to you to decide.
Just that problem that still remains: Value is subjective. What people value is determined by their actions. Their actions are seeking gains and avoiding losses. If you prefer A to B, then by definition there is more “wealth” represented by A than there is B.
As I explained above, choosing government austerity over war is you showing you value what occurs with austerity MORE than what occurs with war.
As far as you are concerned, you are claiming that you perceive more wealth with no war than you do with war. It makes no sense to say that you believe war might serve to increase wealth, and to prefer no war when prompted. Your preference IS your valuation of wealth.
If I preferred sitting at a desk reading a book, over building a pyramid the size of my house, then that is me putting higher subjective value on my desk, my lamp and my book, compared to the pyramid. Thus, and this is a real world thus, the desk, lamp, and book represent more wealth than a pyramid. It would represent a reduction in wealth for me to instead build a pyramid. Yes there would be more “stuff” if I was coerced and someone else built the pyramid, but there would be a reduction in wealth as subjectively value.
Governments initiating coercion to start a war, cannot possibly increase wealth, because the means are necessarily destructions of wealth as valued by individual actors.
Take it to an extreme: If I have a billion dollars buried in my backyard, and you steal that money to finance a factory, wealth would still have been destroyed, because I preferred my backyard to have a billion dollars buried in it and left untouched. It represents more wealth than digging it up and financing a factory. If the factory represented more wealth, then I would have financed the factory myself.
What you can say that I will not argue with is that stealing the money and using it to hire currently unemployed people, can reduce unemployment. But having said that, whatever those newly unemployed people produce, cannot be claimed as increasing wealth. It is a reduction in wealth as per the first part of this argument. So the net effect would be more labor that goes towards destroying wealth. It destroys wealth because it destroys my subjective valuation no longer possible due to the coercive change to my backyard.
“Also, 1945-1970 did see bear and bull markets but these were not the asset bubbles seen before and since the dismantling of effective financial regulation.”
“So there were bubbles then.”
” So every bull market in human history was a bubble?”
I was only referring to the 1945-1970 period.
Glad you admit there were bubbles during that time period.
“You have just shot yourself in the foot, because if true, then your re-definition proves that any Rothbardian anarcho-capitalist system with bull markets would be experiencing bubbles.”
Good thing I didn’t claim, and good thing I do not believe, that even laissez faire, voluntsry backed savings bull markets are bubbles.
“Therefore it follows…”
Dude, you’re getting way ahead of yourself.
“As far as you are concerned, you are claiming that you perceive more wealth with no war than you do with war. It makes no sense to say that you believe war might serve to increase wealth,”
Yet another pathetic fallacy of equivocation in which the word “wealth” is shamelessly redefined contrary to the sense in which it is used by Keynes and then by me.
Fallacies of equivocation do not win arguments, and indicate intellectual bankruptcy.
“” So every bull market in human history was a bubble?”
I was only referring to the 1945-1970 period.
First you should answer the question.
Secondly, since you seem to be saying that any bull market in any system with FR banking or a central bank is a “bubble”, it follows that you think every bull market in modern economic history has been a “bubble”
This is further proof that you are a serial abuser of the fallacy of equivocation: every word you do not like used by your opponent is arbitrarily redefined to win the argument.
MF “What people value is determined by their actions.”
Not being nit-picky here, as I am still trying to understand the praxeological perspective. Did you mean that people’s actions are determined by what they value? Or *I* understand what other people value by observing their actions?
“Take it to an extreme: If I have a billion dollars buried in my backyard, and you steal that money to finance a factory, wealth would still have been destroyed, because I preferred my backyard to have a billion dollars buried in it and left untouched. It represents more wealth than digging it up and financing a factory. If the factory represented more wealth, then I would have financed the factory myself.”
Your view is that there would be less wealth, but the view of a great many others may be that wealth had increased. From *my* perspective it seems that wealth has increased.
Mises and Rothbard made it clear that your desire to bury the money need have no rational justification, nor must the results of your actions be the ends you desire. Only the action is of necessity rational, and humans are prone to err in their judgement of the best course of action to achieve their ends. Say your ultimate objective was to build as many factories as you could. You believed that pixies told you to bury the money and they would double it. You claim that wealth is maximised by your actions, because you prefer to bury the money than finance one factory. Yet this action (assuming there are no pixies) contradicts your greater purpose of building as many factories as possible. If LK steals your money (because he sees you are deluded about the pixies), then your wealth would increase according to your own definition -one factory instead of none.
LK:
“Yet another pathetic fallacy of equivocation in which the word “wealth” is shamelessly redefined contrary to the sense in which it is used by Keynes and then by me.”
“Fallacies of equivocation do not win arguments, and indicate intellectual bankruptcy.”
Did you not read what I wrote? I know how Keynes understood wealth. I explained this is detail. I said if the metric is spending, and/or the size, then yes, governments printing and spending money can increase “wealth” defined by those metrics. Did you not read my example of the apple and pyramid?
I am not redefining anything, but rather introducing a different theory than the one you are using to understand what wealth is. I know what you mean by wealth. I know what Keynes meant. If you define wealth the way you define it, then yes, Keynesian policies can increase “wealth”. But this “wealth” is not the same wealth as individuals defining wealth for themselves. It is not wealth that arises from individuals respecting each other’s notions of wealth and whether the individual thinks they are wealthier or poorer.
The reason I brought up a different, what I consider to be superior theory of wealth, is to show you that you do not determine what makes other people better off materially. Governments do not detwrmine this. Keynes did not determine this.
In the real world, the individual determines it for themselves. Period.
This recognition of what wealth actually is, and my explaining it to you, is in no way whatsoever a “shameless redefining”. YOU and the rest of the Keynesian ilk have shamelessly redefined wealth to be determined in the end by government coercion. Keynes shamelessly redefined wealth to include pyramids financed by theft and coercion.
All I am doing is bringing the meaning of wealth to the forefront where you cannot cope with it. I gave the example of me having a backyard with a billion dollars buried underneath, and then someone coming along and digging it up and stealing it. NO MATTER what the thief does with the money, not even if he finances a cure for cancer that ends up saving the lives of millions, who can then work and produce, can it be said that wealth has increased. Wealth is subjectively determined. My wealth was destroyed, while someone else’s wealth, which could very well at some point become partly my wealth, has increased. That is all that can be said. It cannot be said “total” wealth increased, or “social wealth” increased, or “aggregate wealth increased”. Wealth only increases for the individual. Wealth only decreases for the individual. This is real world factual analysis.
When you say increase in wealth in the macro sensez what you almost always mean is some people’s wealth decreasing, other people’s wealth increasing, with the added fallacy grounded on identifying wealth by physicality, or amount of spending on it, and concluding “total” wealth has gone up. You then totally ignore the individuals who lost wealth, and hope to guilt trip your interlocutor into accepting that looting the wealthy solely because they are wealthy is morally justified, and then covering that over with flawed claims of total wealth increasing and so oh that just a factual statement of wealth, and then hope that nobody would possibly challenge that lest they appear as anti-wealth or some other nonsense.
“So every bull market in human history was a bubble?”
“I was only referring to the 1945-1970 period.”
“First you should answer the question.”
First you should engage the argument about whether there were bubbles and busts 1945-1970, and we should first settle that issue before starting the one you asked, which is at this moment a red herring. The first issue is not settled, and it goes directly into your question.
“Secondly, since you seem to be saying that any bull market in any system with FR banking or a central bank is a “bubble”, it follows that you think every bull market in modern economic history has been a “bubble”.”
It is the other way around. I think that every economy with a central bank whose cartel members expand credit and artificially lower interest rates, causes bubbles.
“This is further proof that you are a serial abuser of the fallacy of equivocation: every word you do not like used by your opponent is arbitrarily redefined to win the argument.”
Nope. You are just avoiding the argument when you don’t like where it is headed. You change the subject and then straw man me, and then consider the debate settled in your favor. You do this far too often.
(1) “If you define wealth the way you define it, then yes, Keynesian policies can increase “wealth”. “
So finally after all your nonsense and red herrings, you concede the point.
(2) Instead of risible evasions, answer the question: is every bull market in any system with FR banking or a central bank is a “bubble”, according to you? Yes or no.
Lack of a straight answer is just further proof of the lack of any substance to your endless ramblings.
Hey LK,
I would normally edit your comment to remove the unnecessary harshness, but then there would be little left of it. Can you please chill out?
Harold:
“Did you mean that people’s actions are determined by what they value? Or *I* understand what other people value by observing their actions?”
In that context, the latter.
“Your view is that there would be less wealth, but the view of a great many others may be that wealth had increased.”
“From *my* perspective it seems that wealth has increased.”
Right, so wealth has not increased. I have less, and you have more. Every individual either gains or loses.
“Mises and Rothbard made it clear that your desire to bury the money need have no rational justification, nor must the results of your actions be the ends you desire. Only the action is of necessity rational, and humans are prone to err in their judgement of the best course of action to achieve their ends. Say your ultimate objective was to build as many factories as you could. You believed that pixies told you to bury the money and they would double it. You claim that wealth is maximised by your actions, because you prefer to bury the money than finance one factory. Yet this action (assuming there are no pixies) contradicts your greater purpose of building as many factories as possible. If LK steals your money (because he sees you are deluded about the pixies), then your wealth would increase according to your own definition -one factory instead of none.”
You mean all the factories will be my property? Also, how would LK know what kind of factories I want? Where I want? Who to hire? What to make? You mean I would explain this all to him right?
You cannot know that LK stealing my money will get me what I want. Only by observing my actions can you know. No, merely knowing I want to “build factories” isn’t enough.
If my money is stolen, but the factories do not belong to me, then not only would it be a loss to me because I lost the money, but it is also a loss to me because the factories are not what I asked for, and they are not even my property to boot. Egads, you just perfectly described the statist mentality. He average person is a dimwit who believes in magic, and it is up to intellectuals with guns to get to the people what they are too stupid to get for themselves.
Have you ever questioned that approach in detail? I mean if you want me to have factories, why do not accept my desire to keep money buried in the backyard even if I am a nutcase who thinks the factories will be built on their own? What, if someone tells you they are trying to lose weight, but you notice them eating cheeseburgers and ice cream all day long, does that mean his utility will be increased if you point a gun at him and steal his food and replacing it with tofu, and keeping him chained to his house until he loses the weight he claims he wants to lose? Where does it end? Since when did using force to change people’s peaceful actions so that they can get only some of what they wanted?
I don’t just want a factory to be built, I also want my cash to remain buried and to have freedom from theft. If I err, let me err, if you want to help, then address my reason, not my fears and ignorance.
LK:
“So finally after all your nonsense and red herrings, you concede the point.”
I never challenged the point.
“(2) Instead of risible evasions, answer the question:”
Nope, not until we settle the argument already started that you continue to “risibly” evade.
Lack of an engagement would be just further proof of the lack of any substance to your endless ramblings.
“You mean all the factories will be my property? “
To clarify this point, after LK builds the factory he gives it to you.
“Also, how would LK know what kind of factories I want? Where I want? Who to hire? What to make? You mean I would explain this all to him right?”
Lets stipulate that the exact nature of the factory was unimportant to you. All you want is factories. The only thing that is important is that you employ people to make something that other people want and you can do so at a profit. You explain this to LK.
“You cannot know that LK stealing my money will get me what I want. Only by observing my actions can you know.”
By observing your actions I can not know what you want. We have stipulated that you want factories. Your action is to bury money. There is no way I can deduce the former from the latter.
“No, merely knowing I want to “build factories” isn’t enough. If my money is stolen, but the factories do not belong to me, then not only would it be a loss to me because I lost the money, but it is also a loss to me because the factories are not what I asked for, and they are not even my property to boot.”
They will be yours and they will be what you want becasue we have stipulated this to be the case.
“Egads, you just perfectly described the statist mentality. He average person is a dimwit who believes in magic, and it is up to intellectuals with guns to get to the people what they are too stupid to get for themselves.”
I did not mention guns, but so what if I have? Do you not agree that wealth by your own definition would be increased?
“I don’t just want a factory to be built, I also want my cash to remain buried.”
You only want your cash to remain buried because you wrongly believe it will get you what you want – factories. Your wealth will be lower if you leave it buried because you will not have a factory.
“and to have freedom from theft.”
Indeed, but this has nothing to do with wealth. Do you wish to have freedom from theft, or do you wish to have more wealth? In the example you cannot have both.
“ if you want to help, then address my reason, not my fears and ignorance.”
I agree it would be even better to address your false belief in pixies. Then you would go and build your own factory, and LK can get on with criticising Austrians, or whatever it is he would rather do. However, the existence of a third option does not prevent the comparison of the other two – namely let you leave your money buried or let LK dig it up and build you a factory.
You claim that wealth is maximised by your actions, because you prefer to bury the money than finance one factory. Yet this action (assuming there are no pixies) contradicts your greater purpose of building as many factories as possible.
There is no contradiction.
You’re unintentionally borrowing from MF’s scenario to make a point about your new scenario, here.
In MF’s scenario, he prefers to bury his money *rather than* build factories:
(MF: “If the factory represented more wealth, then I would have financed the factory myself.”)
Whereas in your new scenario, he prefers to both bury money and build factories.
You only want your cash to remain buried because you wrongly believe it will get you what you want – factories.
No, he just prefers to bury his cash. He gets a kick out of it.
Wealth is having the means to satisfy your preferences. It is subjective to the individual (preferences being subjective, and all).
In his scenario, he has accomplished his goal of burying cash, and is therefore more wealthy.
Harold:
“clarify this point, after LK builds the factory he gives it to you.”
OK. Not sure what is in it for him, but for the sake of continuing with this hypothetical, I’ll assume I get the factory.
“Let’s stipulate that the exact nature of the factory was unimportant to you. All you want is factories. The only thing that is important is that you employ people to make something that other people want and you can do so at a profit. You explain this to LK.”
OK.
“By observing your actions I can not know what you want. We have stipulated that you want factories. Your action is to bury money. There is no way I can deduce the former from the latter.”
So this thought is ultimately not derived from you knowing what I want, but rather you are “stipulating” what I want.
Are you not “stipulating” away a necessary requirement for you to know whether what you are doing is actually a gain to me?
“They will be yours and they will be what you want becasue we have stipulated this to be the case.”
Well let’s not get carried away. It is you “stipulating” this, not “we”.
I could just as well “stipulate” that the factory will not be what I wanted. I don’t see how or why one stipulation should overrule another, without there being something to ground these stipulations on besides might makes right.
“I did not mention guns, but so what if I have? Do you not agree that wealth by your own definition would be increased?”
No, I don’t agree. Here’s why. If I want a factory, but I am not willing to give up my money buried in my backyard, then my wealth has not actually increased if you steal the money and give me a factory. For consider, what I actually value in terms of my actions concerning my property, and thus as you agreed earlier the only way you can know what I want is by observing my actions, what I value the highest is my money buried in my backyard. If I tell you I want a factory, AND my money buried in my backyard, then my actions are only consistent with a valuation of my money buried in my backyard as worth more than you stealing it and financing a factory.
Try going in the extreme the other way now. Suppose that what I also wanted in addition to my buried money, is an ability to teleport. Suppose you believed you could do it, and you stole my money to try and finance research to figure out a way.
Suppose the research did not succeed. Would you say that NOW I lost? If so, why does my gain or loss depend on what you do, and not what I do? In terms of what I do, I lost when you took the money. In terms of what you do, I only lost once you failed to do something after you stole the money.
“I don’t just want a factory to be built, I also want my cash to remain buried.”
“You only want your cash to remain buried because you wrongly believe it will get you what you want – factories. Your wealth will be lower if you leave it buried because you will not have a factory.”
But my wealth will be lower if you steal the money because I want the money KEPT buried for however long I want it kept buried.
Yes, you have stipulated I am only burying it as a means to acquire a factory, but that doesn’t mean I am willing to give it up. Even if my judgment is flawed to you, taking my money is a loss to me because I end up with a factory when I wanted both money and the factory.
“and to have freedom from theft.”
“Indeed, but this has nothing to do with wealth.”
Oh but it does. The buried money is also wealth. To be free from theft is to be free from coercive reductions in wealth.
“Do you wish to have freedom from theft, or do you wish to have more wealth? In the example you cannot have both.”
I can. I can have more wealth and more freedom by keeping my money buried. Relative to factory plus money it is less wealth, but it is more wealth relative to no money plus a factory. It is less wealth because by my actions having the money and no factory is worth more to me than no money plus whatever you do.
You cannot stipulate away my desire to keep the money. Stipulating that away would mean I am willing to give it up for a factory, which of course just means I am engaging in a voluntary trade that you can see as me gaining wealth because that is what I chose to do.
“ if you want to help, then address my reason, not my fears and ignorance.”
“I agree it would be even better to address your false belief in pixies. Then you would go and build your own factory, and LK can get on with criticising Austrians, or whatever it is he would rather do. However, the existence of a third option does not prevent the comparison of the other two – namely let you leave your money buried or let LK dig it up and build you a factory.”
I do not want LK to dig up my money though. It would be a loss to me if he did.
Guest – I know I am using a different scenario from MF’s. In mine, he does prefer factories to the money.
“Are you not “stipulating” away a necessary requirement for you to know whether what you are doing is actually a gain to me?”
In practice I would have no direct way of knowing what you want. It is only in the hypothetical that I know because I have set it up that way. I have this god-like power in my narrative.
“Well let’s not get carried away. It is you “stipulating” this, not “we”.”
True, true.
“I could just as well “stipulate” that the factory will not be what I wanted.”
Now we have got you started on stipulations too! Yes, there are very many possible scenarios. Clearly it is possible to come up with scenarios where you lose by having your money stolen. I am trying to see if there is at least one where you win.
“For consider, what I actually value in terms of my actions concerning my property, and thus as you agreed earlier the only way you can know what I want is by observing my actions, what I value the highest is my money buried in my backyard. ”
The only way I would know if I were inside the narrative is by your actions. But as I am creating this narrative, I know. From all possible preferences I am saying that in this hypothetical world you have these ones. Within the narrative LK would not have such an assurance, and so if he would never know for certain whether he had provided you with what you want. So whether LK *should* take such action is a different question from whether your wealth would be greater.
I am comparing only two situations. 1) You leave your money buried. 2) LK digs it up and builds you a factory. In which is your wealth greater?
You say in 1) because that is in accordance with your actions. I say 2) because it is in accordance with your preferences. In 1) you don’t get what you want (a factory) in 2) you do get what you want.
Just another twist – what if you never discovered the money had been removed and you never dug it up? LK gives you a factory and you believe your money is buried awaiting the pixies magic. Win – win?
The teleport scenario is different because you do not get what you want (teleporting) if I take your money. It depends on what I do rather than you because that changes the outcome.
It’s the season of summer reruns.
Recall that LK is MR. EMPIRICAL:
all this is like arguing about how many angels can fit on the head of a pin: ultimately, it is of very little interest to AN EMPIRICAL ECONOMICS CONCERNED WITH THE REAL WORLD, rather than unrealistic abstract models.
http://socialdemocracy21stcentury.blogspot.com/2014/07/john-hicks-on-hayeks-business-cycle.html
An empirical economics concerned with the real world would take into account all of the central bank holdover nonsense from WWI that Stockman and others have described in detail.
Recall LK’s formal proof of the failure of the “free market”:
That’s logical…..
Claim #1: We Keynesians are “scientific” and only deal with actual evidence and events.
Claim #2: The free market has never existed.
THEREFORE….
From the actual existing factual evidence, we know the free market cannot work.
and
Claim #1: We Keynesians are “scientific” and only deal with actual evidence and events.
Claim #2: The free market has never existed and can never exist.
THEREFORE….
From the actual existing factual evidence, we know that most economic problems in the world are the fault of the free market and must be fixed with Keynesian funny money emissions and government spending and debt.
I never get tired of reading that.
Exactly, Roddis! That’s exactly what these economic nationalists always spout.
“Austrians say this cannot be done because the only way anyone can know is through free market prices just how far in each direction economic activity ought to go.”
Where did that “ought” come from? This would depend on your objective. If you wanted,say, to bankrupt a country then how far in each direction economic activity “ought” to go would be very different than if you wanted maximum growth.
LK wrote:
You’re being deliberately misleading.
LK, look at the very title of my post. I said “Keynesian Blogger.” It would have been more pithy just to say “Keynesian.” But I didn’t, because I thought that would be unfair to academic scholars in the Keynesian tradition.
So you say:
“This sort of thing happens a lot with Keynesian policy recommendations. In addition to this latest episode involving Argentina, let’s not forget that Krugman in 2002 infamously called for a housing bubble “
You are now saying that what you meant by these words was in essence:
“This sort of thing happens a lot with policy recommendations by Keynesian bloggers (even though some of those “policy recommendations” are not necessarily derived from Keynesian economics) …”?
So what you are saying, in essence, by quoting what you believe Dr. Murphy is saying, in essence, is that Krugman can not be called a Keynesian blogger since Krugman called for a housing bubble on his blog, but he still can be called a Keynesian economist.
Parsing words is fun!
http://krugman.blogs.nytimes.com/2013/11/18/the-new-keynesian-case-for-fiscal-policy-wonkish/
Krugman thinks of himself as Keynseian.
http://www.amazon.com/Ron-Paul-vs-Krugman-Keynesian/dp/1470070723
Outsiders see Krugman as representing the Keynesian side.
Only when he’s right Tel, only when he’s right.
http://www.nytimes.com/2012/06/17/books/review/end-this-depression-now-by-paul-krugman.html?pagewanted=all
Other Keynesians see Krugman as Keynesian.
But Krugman cannot call himself a Keynesian blogger. The guardian of Keynesian Truth, LK, stated that advocating for a housing bubble:
Just curious, why can we not say that calling for asset bubbles is Keynesian economics? Seems fair to me since somewhere some “Austrian” says hyperinflation is imminent and it doesn’t materialize, or an Austrian economist loses an inflation bet, then folks like LK says Austrian economics is totally discredited.
“Seems fair to me since somewhere some “Austrian” says hyperinflation is imminent and it doesn’t materialize, or an Austrian economist loses an inflation bet, then folks like LK says Austrian economics is totally discredited.”
I have never said that. You don;t know what you are talking about.
http://www.huffingtonpost.com/2013/03/13/paul-ryan-paul-krugman_n_2869126.html
Leftist politically correct pundits trying to catch Republicans in a gottcha moment think of Krugman as Keynesian.
http://www.realclearmarkets.com/articles/2014/02/10/unemployment_data_brutalize_krugman_and_keynes_100890.html
Right wing, hard nose, anti-welfare, deficit hawks see Krugman as Keynseian.
Of course Krugman is a Keynesian blogger — a Keynesian economist who blogs.
At the same time, he can hold opinions and advocate policies not necessarily derived from Keynesian economics.
Murphy wrote a passage implying that causing asset bubbles in housing is standard Keynesian policy. Now even he seems to be saying that he did not mean this — so I appear to be correct.
What does “Keynesian policy recommendation” mean? Does it mean any policy recommendation of any sort at any time by anyone who is a Keynesian? No, it means a recommendation made on the basis of what is recognized as Keynesian theory.
Bob’s words in the first paragraph imply that Krugman’s advocacy of a housing bubble is a Keynesian policy. But it is only a Krugman policy.
LK is right.
No, it’s a Keynesian policy.
http://consultingbyrpm.com/blog/2014/08/argentina-another-in-a-long-line-of-keynesian-blogger-success-stories.html#comment-767446
Has it been 3 months already?
Ken is back! Doesn’t the time fly, tell us about your holiday.
His name is Band.
Ken Band.
😀
Welcome back, man.
Oh goodness. Well, I can’t handle Ken B. and Philippe at the same time. Goodbye.
Well Tel, I see nothing is changed here.
🙂
Ken B. wrote:
Bob’s words in the first paragraph imply that Krugman’s advocacy of a housing bubble is a Keynesian policy. But it is only a Krugman policy.
LK is right.
And so it begins.
Wonderful to see you back, Ken B!
It has been a long, painful 3 months in your absence reading the comments section here.
We are such slave drivers.
Stop complaining or I’ll make you go back and read them all again! [makes whip cracking noise] whtsh! whtsh!
Ken B,
Serious question: Regardless of the circumstances surrounding your ban, and regardless of how you believe you’re being treated now after the ban, do you really think you are going about this the right way now?
You haven’t posted in months, and some of the first things you say after posting again is Bob pulls tantrums and that FA is dissent=trolling.
If you want to keep posting here, which I assume is the case, then some FA for you: I am pretty sure that the stuff you’re saying now is similar to the stuff that got you banned a first time. Maybe tone it down a bit, and develop some thicker skin?
MF
Not the first thing I posted actually. Bob quoted one of my earlier posts.
I responded to razer. I did not accuse Bob of anything sua sponte. But that is I believe a fair characterization of what happened, and a pertinent rejoinder to razer.
As for the trolling equation, I was not responding to a comment about me but about another poster, so skin thickness isn’t an issue. Just look at how many examples there are of what I complained about.
Ken B:
If you feel unfairly singled out, then I hope you still keep in mind that razer isn’t flaming or antagonizing the dinner host, and he didn’t call you a name or cussed at you.
Murphy’s rules were clear, and as owner of this blog, he is entitled to those rules being respected, even if you perceive them correctly or incorrectly as unfair or prejudicial.
He asked that we behave as dinner guests. Do you really believe that one guest saying another guest was “humiliated” for being banned from the dinners for 3 months is any way on par with a guest saying the dinner host pulls tantrums? Even if they’re both undesirable at a dinner table, I hope you can understand that the guest who says crap about the dinner host, is likely going to be the first person who is focused on regarding the house rules.
Did you know that there is a way to say everything you just said since you’ve been back, that is nowhere as near as flaming or antagonistic? You can use that vocabulary you have.
That’s what liberty is all about, there’s Ken’s way, and there’s Bob’s way.
Wait a minute there buddy, Ken subtlely accused me of sarcasm! Really!! What is the world coming to?
Hey, that reminds me, in Australia we are arguing about rule 18c which is where people can bust your arse for hurting their feelings over racial issues (hint religion is strangely also a race from time to time). Looks like free speech is losing the battle (not just on Bobś blog either, but everywhere).
In other news, Russians now require popular blogs to register with the government and follow a bunch of regulations to prevent diversity of opinion. Again, not “this is my personal blog and I decide that happens” but more like “this is your personal blog and we decide what you get to say, because we have guns.”
Tel wrote:
Looks like free speech is losing the battle (not just on Bobś blog either, but everywhere).
For your sake Tel I really hope you know what “free speech” means and are just being funny.
Ya Tel, free speech does not mean you can use the property of another in a way he does not approve, such as making sounds or writing symbols that he does not to hear or see.
Other than the natural right of a person to own themselves, all other property is a matter of convention between people. A general agreement if you want to call it that. Conventions can change, and so they do.
At the moment the convention is changing away from individual freedom, and away from private ownership of property. You can have any belief in property that you want to have, but it won’t help if the vast majority of people think differently.
Given that I sell servers for a living, it suits me that customers believe they own what they paid for (makes them happier to buy). However the forces moving against this concept are not only in Russia I assure you. You can search for “Finkelstein Inquiry” where a recent Australian government started making plans to take over blogs. So far, only plans, but what we have discovered in Australia is our new government is remarkably similar to our last. You should read up on it, might as well know what’s coming.
http://blogs.telegraph.co.uk/news/danielhannan/100208264/media-regulation-will-give-us-a-continental-press-supine-conformist-and-unhesitatingly-pro-eu/
It’s happening in the EU as well.
As I mentioned earlier, you can have any definition of freedom that you like. Pretty soon it won’t matter much. Freedom means what the majority says it means.
Tel:
“Other than the natural right of a person to own themselves, all other property is a matter of convention between people. A general agreement if you want to call it that. Conventions can change, and so they do.”
If the right of a person to own themselves is a natural right, why not ownership of the non-biological requirements also needed to sustain life? It makes no sense to say that you are respecting the natural right of a person by vaporizing their property without touching their persons.
The argument that property rights are a convention is one particular view, but it isn’t the only one. Why can’t I say that property rights are natural, and can only ever be respected or violated, but never destroyed? That “convention” can either include prevalent respect for them, or prevalent violations?
“At the moment the convention is changing away from individual freedom, and away from private ownership of property. You can have any belief in property that you want to have, but it won’t help if the vast majority of people think differently.”
You don’t think THAT very notion of property rights is a major reason for why property rights is being disrespected more and more? If property rights are only a convention, and people who want to steal, defraud, loot and live as parasites somehow convince enough people to believe that property rights are just a convention and come join me in the pillage, then that would make property rights violations impossible to stop, because as soon as the convention moves towards more violations, right away that becomes the new moral normal. ANY violations would be permitted in the extreme, if the “convention” for whatever reason went that way.
Who could possibly stop this if the only argument that they would have is “it’s a convention”, and the convention contradicts what they think people ought to do differently? They would appear as dogmatic ideologues who refuse to believe that everything real is rational and everything rational is real.
Apathy, dejection, and passivity, cannot and will never shrink evil.
“All that is necessary for the forces of evil to succeed/triumph is for enough good men to do nothing.” – Not Edmund Burke
As I mentioned earlier, you can have any definition of freedom that you like. Pretty soon it won’t matter much. Freedom means what the majority says it means.
I apologize for thinking negative thoughts about Hitler, then.
You can have any belief in property that you want to have, but it won’t help if the vast majority of people think differently.
The justification of a particular view of property rights and the recognition of a view as just, are two different things.
Just because a majority of people believe a certain way doesn’t make it so.
As I’ve noted before, the justification of property rights is the fact that you own yourself.
And since it costs you your time and labor to transform some unowned thing into something that you find useful, for someone to utilize it without your permission would be to comandeer your labor for his own purposes – making you out to be his slave.
Also, “majority rule” is the fallacy of Argument from Authority.
Trading with people does not a society make. If you want to trade, great: I owe you nothing after the transaction. Now multiply that by billions of people: Nobody owes anyone anything by simply trading with each other.
Note that the government of Argentina has been understating the rate of inflation there by a factor of 2 between late 2007 and early this year. I wonder where the Real GDP statistics for Argentina Krugman’s using are coming from.
http://www.pricestats.com/argentina-series
Just more proof that Keynesianism, and positivism in general, is at root incapable of conclusively eliminating any crackpot policy prescription.
If human action continues, there are always new events, new information, new technologies, and new knowledge, new choices, new actions. Pundits like Yglesias and Krugman will do what their theory allows them to do: point to new events and say “You can’t blame me for not foreseeing THAT! My theory was only supposed to apply to such and such conditions.”
At least Austrians are honest about it. At least they don’t play this ridiculous game of pretending to measure their own claims up to predictive power when they guess right, and falling back on abstract a priori logical relations when they guess wrong. At least Austrians are humble enough to refrain from believing that they have the knowledge that enables central planners to solve “macro” “problems”.
Murphy made a good point here:
“Yes, I agree with Krugman that there is an important lesson here, and it is this: Read Krugman and Yglesias religiously, then do the OPPOSITE of what they recommend.”
Like that Seinfeld episode.
That advice worked very well for my short, stocky, bald-headed friend.
http://www.nytimes.com/2003/03/11/opinion/a-fiscal-train-wreck.html
Krugman recomended fixed rate mortgages, I was going to follow his advice but got talked into a variable rate mortgage, and (so far) I’ve done pretty well out of it. Personally, I can’t complain. Kounter-Krugman investment strategy has been OK for me.
Wow, he has done such a 180 since MMT has been bashing his head in.
Obama’s Former Chief Economist Has Some Words Of Encouragement For US Workers
http://www.zerohedge.com/news/2014-08-01/obamas-former-chief-economist-has-some-words-encouragement-us-workers
•*KRUEGER SAYS WORKERS NEED TO ‘RATCHET DOWN WAGE EXPECTATIONS’
Yeah, he has done a 180, so it probably is about time I also changed strategy and moved to a fixed rate mortgage.
A few more future success stories.
http://finance.yahoo.com/news/11-countries-near-bankruptcy-223350842.html
A smashing success indeed.
re: the VA overhaul bill just passed:
“The measure includes $10 billion in emergency spending to help veterans who can’t get prompt appointments with VA doctors to obtain outside care; $5 billion to hire doctors, nurses and other medical staff and about $1.3 billion to lease 27 new clinics across the country.”
overhaul
overhaul
overhaul
http://krugman.blogs.nytimes.com/2014/02/01/macroeconomic-populism-returns/
Seems reasonable to me.
Right CC, I know that’s their position: “Go ahead and run deficits and devalue your currency when it doesn’t seem to have any big problems, but then–whoa!–when your country is experiencing 20% price inflation, your forex reserves are dwindling, and you’re defaulting on your bonds…then change course. The future is yours.”
http://www.wattpad.com/53631295-jokes-first-time-flyer
Same, joke but maybe fits the situation slightly better, your choice.
http://www.jokebuddha.com/joke/Jumping_Santa_1
Depends on whether you’re facing an AD or AS shock.
Not sure what you’re getting worked up about.
Yeah, it all depends on whether you are stepping off the cliff or hitting the ground. Either could happen, but one hurts more.
Keynes, or as I like to call it, “economic base jumping”.
Krugman doesn’t understand ISLM
Even the main argument of this post about Argentina may not be true:
“Although the news media reports that Argentina has defaulted to the restructured bondholders, this is not clear. The government did make the latest $539 million payment to these bondholders, but Judge Griesa is not allowing the New York bank that received this money to pay the bondholders. Griesa is defaulting, not Argentina.”
http://nakedkeynesianism.blogspot.com/2014/08/eileen-appelbaum-debt-ruling-shows.html
————————-
All in all, there is not really much left of the original post.
Every time you say “all in all”, your arguments are weak and desperate. Coincidence?
LK, if a US judge is even in a position to advise the government in enforcing payment to hedge funds “first” before the rest of the 93% bond claims, such that the rest of the 93% won’t actually be paid if the hedge funds are not paid, is sufficient proof that there is not enough bond payments to satisfy bond holders.
Imagine a judge ruling that Bank of America has to pay $10 to Jim the bondholder first, before paying every other bondholder. If BofA has sufficient funds, this ruling cannot hold up payments to other bondholders.
The fact that this kind of conflict is even possible over Argentinian bond payments, means there aren’t enough payments to satisfy all bondholder claims. That is the definition of default.