Showing posts with label John Maynard Keynes. Show all posts
Showing posts with label John Maynard Keynes. Show all posts

Sunday, June 29, 2014

NPR Plays The Cult of Both Sides

Last Friday, the president spoke in my hometown and NPR in Minnesota aired a post speech analysis. At about the 12 minute mark, Keith Downy, chair of the Minnesota Republican party joins the conversation and, thus, any criticism of NPR being liberal goes directly out of the fucking window. For the next few minutes, Downy spins the usual yarn about how the free market can just sort itself out. If we had only left the government out of it in 2008, all would be well with our economy today.

What fucking planet are these people living on?

Worse, he's being terribly dishonest because he would have done the exact same thing the president did. I'd like Mr. Downy or any other free market fundamentalist to point to real world evidence of their theory. Show me a recession that was that bad and then show me how doing nothing worked out.

Of course the real treat of the segment was Andy from Sioux Falls, a small business owner fed up with federal taxes, who comes in at around 14 minutes into the segment. After hearing his remarks, I have to question whether or not this man was an actual small business owner or whether he was a Tea Party troll calling in to wax Ayn Rand. No business owner (large, medium, or small) turns down making more money because they are worried about paying federal taxes. What a ludicrous bunch of nonsense! After Downy's ad hom on the woman the president met with to discuss local economic concerns, I was left to wonder how NPR let themselves get into such a position.

When will the "liberal" media stop playing the cult of both sides? Sometimes there is only one side to a story. Supply side economics doesn't work. Even the guys that came up with it (David Stockman, Bruce Bartlett) have admitted they were wrong. You can't simply ignore aggregate demand and pretend it doesn't exist. The problem with our economy today is that there are not enough people buying things so businesses don't hire people. There isn't enough population at the top to support our economy.

The middle class is the engine that drives our economy and when they have more money, our economy will improve.

Monday, March 03, 2014

Fannie Mae Pays Back With Interest, US Makes Profit

Fannie Mae has paid back the United States government all of the $116.1 billion dollars it borrowed after posting an eighth straight quarterly profit. Earnings were at $84 billion dollars, the highest ever for the firm. The total amount paid ended up being $121.1 billion dollars.

“Obviously, it’s good news for taxpayers that Fannie Mae is profitable,” Chief Executive Officer Timothy J. Mayopoulos said on a call with reporters.

“For the last five years, the employees of Fannie Mae have come to work with the goal of reaching this accomplishment for the taxpayers,” said Mayopoulos, 54. “I’m very proud of what our employees have achieved and I’m very, very happy for the taxpayers.”

I seem to recall shrieks of doom and rolling in boiling pits of sewage over Fannie Mae. Hmm....

Tuesday, February 25, 2014

Keynes and Hayek A Go Go

A recent discussion in comments reminded me of this piece from a while back that I never posted. There were a couple of good points in it.

The problem with the Hayekian position is that it’s relentlessly negative: spending doesn’t work, stimulus doesn’t work, all we can do is suffer a nasty bout of deflation and trust in the invisible hand to eventually get us back to work again. 

Right. Then, there was this highly familiar point...

For the Hayekians, the Manhattan Institute’s Diana Furchtgott-Roth was particularly revealing: she would take a question about rescuing the financial system and duck it by talking about how rescuing the auto industry was a bad idea. Or she would ridicule high-speed rail by saying that no one wants to take the train from New York to L.A.—a route that precisely no one is proposing. In other words, the Hayekians were more comfortable with straw men than with messy reality. 

Pretty much sums up every discussion I've every had with these sorts of folks. 

But I remembered that the main reason why I didn't is that is seemed far too bipolar. The answer isn't always simply "Keynes" or "Hayek." In fact, in the current age of globalization, neither fully apply. I've always been one to take a more constructivist approach to any issue of the day. New ideas that are people driven, not "school of thought" driven. For example, both liberalism and realism completely failed to predict the collapse of the Soviet Union. They didn't figure that Gorbachev would simply give up and call it a day. Is there an economist out there or world leader who will finally leave behind both Keynsian economics as well as the theories of Friedrich Hayek? In my view, it's long overdue. How does one stimulate aggregate demand when we have a world economy? This implies that all of the world's governments would have to act in concert to achieve this end and, given the reality of the international stage and conflicting interests, this hardly seems likely.

And there are far too many misconceptions about John Maynard Keynes that have sadly taken root. The thing that people forget about Keynes is that only called for increased government spending in times of contraction. When economies were doing well, he did call for austerity and reduced spending. The anti-spending anaphylactics tend to forget that. These same people also forget that Ronald Reagan was a Keynsian by both cutting taxes (which increases aggregate demand) and increasing spending. "I'm not worried about the deficit. It's big enough to take care of itself," he once quipped. Richard Nixon famously said, "We are all Keynsians now" and, to a certain extent, he was right.

My biggest beef with Hayekians is that can't point to a real world example of how his theories work in practice. Like the libertarian fantasists, where was the utopia of which they dream? How would it work today, given globalization? Certainly, they can point to austerity measures taken during boom times but that's honestly Keynes, not Hayek. The reality is Hayekians just don't like the government. Their emotions about it have clouded their judgment and inhibited them from seeing that different circumstances dictate different paths of solutions.

Sometimes you can't plug a square peg into a round hole. Shocking, I know!

Wednesday, November 21, 2012

The Productivity Dividend

Getting back to Stiglitz.

Many years ago Keynes posed a question. For thousands of years, most people had to spend most of their time working just to survived-for food, clothing, and shelter. Then, beginning with the Industrial Revolution, unprecedented increases in productivity meant that more and more individuals could be freed from the chains of subsistence living. For increasingly large portions of the population, only a small fraction of their time was required to provide for the necessities of life. The question was, How would people spend the productivity dividend?

This is that quote from Chapter 4 that I wanted to pull out and examine on its own. The reason for this is that it ties directly into our economy. In the United States, people spend that productivity dividend on consumption and, as Stiglitz notes, their consumption relative to others. This is where that whole "Keeping up with the Jones'" comes into play. In particular, he notes that Europe opted for more goods AND more leisure while America opted for less leisure and more goods.

So, are we really working harder and harder "for the family?" Or are we simply playing a continual game of catch up with no end regarding consumption? No doubt that our economy is heavily based on consumption but is that a good thing? Should we consider more leisure time and less of keeping up with the Jones'? As we  consider how to mend our economy, we should examine the basic question of the productivity dividend.

Another idea that came out of this quote was the issue of fear and anxiety about the future. There are many on the Right that believe America is going to end soon because of the president and the Democrats. Would they be worried about this if they had to provide the basics (food, clothing, shelter)? Further, would anyone worry as much about all the silly stuff we fret over if this were the case?

I doubt it.