gut;1481628 wrote:That's a myopic view. That's the hijacked keynesian philosophy. It's a view in a vacuum that ignores past history and expectations. Yes, that fundamental principle is correct, and largely accepted. But in the REAL world - after years or even decades of annual deficits - context matters. I've stated this before - you cannot continue to cite a theory for which the assumptions are clearly violated. You cannot pretend that Keynesian economics predicts austerity measures are bad when Keynesian economics are not being practiced. You can't cherry-pick the theory. You are making assumptions assumed under the Keynesian model that do not reflect reality, and drawing conclusions from that alternate reality.
You are making assumptions assumed under the Keynesian model that do not reflect reality, and drawing conclusions from that alternate reality. - I had to repeat this, because it's symptomatic of the layman. You don't realize that once your assumptions are blown up, you're done - you have nothing. You are trying to pound a square peg into a round hole, and then denying it (much like Obama or Holder would).
And in context, the "keynesian" view is an abject failure. Extending your logic basically says countries only go bankrupt because they didn't spend enough, and that prosperity is only unbridled govt spending around the corner. LITERALLY. And if you have an ounce of academic integrity you can acknowledge this is simply retarded, which is the nearly irrefutable conclusion most economic circles have had to acknoweledge past 5 years.
The rest. I'm, sorry, I'm just tired of trying to educate you. I'm sorry if you feel that is condescending. Learn to read (AND understand) divergent economic philosophies.
It isn't "hijacked"...it is reduced to its fundamental level. It's weird that you would even accept it (which you did) because a conservative/neoclassical/someone who accepts ricardian neutrality (as you've claimed to in the past) would say "that fundamental principle is incorrect" and would predict that a current tax cut wouldn't change behavior. Or, a hardcore supply-sider would say the only way a tax cut works is encouraging people to work more hours...not because people would spend more money in their pocket. Experience proves this wrong and you pretty much acknowledge it in the post I'm quoting (but you can't square it because you don't want accept keynesianism, IMHO).
The bold that I highlighted does not follow at all. Notice your insertion of the word "unbridled". You're making it a strawman. The argument is enough dollars in the private economy, whether from more government spending or lower taxes until full employment is achieved. Encouraging incentives on the supply side is important and not to be dismissed, but it's not the only thing that matters like Supply-Siders suggest and in the real world, ricardian neutrality doesn't hold much and people will spend more money in their pocket if they get a payroll tax cut...They're not going to save up for the expected future tax raise.
The level of dollars placed into the private economy that is needed differs depending on the trade balance and the private sector's aggregate desire to save/level of output. Nothing about that is "unbridled". And yes, the context of deficits matters in that it depends on what type of country we're talking about.
It can be problematic for a non-monetary-sovereign like Greece or California or Ohio or Spain to run persistent annual deficits (although again worth noting that Spain was fiscally virtuous following your prescription of balanced or surplus budgets and wound up in a disaster) because they issue debt denominated in a currency they don't control. The U.S., Japan, the U.K., Australia, etc. these countries don't have that problem because they issue debt in a currency they issue on demand and can set the interest rate they pay at whatever they want.
I understand divergent economic philosophies. You don't seem to
want to understand keynesianism when you constantly claim it calls for
unbridled, unlimited, government spending now and forever. The limit is the real capacity of the economy. And, as I've said before, there's a difference between Keynesian economics and Big gubmint socialism as a political philosophy and you often conflate the two. You don't have to accept big gubmint when you accept that the Keynesian model is correct.
There's no reason, in the aftermath of the crises, why a Republican couldn't accept that Keynesians have been right in their predictions about deficits, inflation, growth and simply orient that framework around a smaller government political philosophy. That was Keynes' whole point in arguing why it was necessary to support demand for the entrepreneur!
For example, no reason why you couldn't call for more cuts in gubmint spending but be keynesian with payroll tax cuts alone.
And, you simply can't say that the world economic community considers keynesianism has been an abject failure. The IMF, the FED, the World Bank...all of these major Treasury View type institutions have become
more keynesian after the spectacular failure of austerity and the failure of predictions of inflation, debt crises', etc. over the last couple of years.
But please keep "educating" me. It is fun. I enjoy our conversations. And, you're condescending because you come off like a jerk because I disagree with you and it's unnecessary. It's possible for reasonable people to agreeably disagree.
