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Why Keynes Was Wrong
Forbes ^ | July 29, 2010 | Warren Meyer

Posted on 07/30/2010 12:24:16 PM PDT by rightwingintelligentsia

I have given up on macroeconomics.

Certainly it is a worthy field of study. But the science is too young, the systems it studies are too complex, and its practitioners are too often politicized for me to take its prescripts seriously in most policy debates.

Last week President Obama visited a new stimulus-funded electric-vehicle battery manufacturing facility in Michigan. The factory produces a product for which there is virtually no market, where worldwide manufacturing capacity already outpaces demand by a factor of three, and whose sales will depend on the government heavily subsidizing its customers.

Nobel prize-winning economist Paul Krugman often writes that only by authorizing much more of exactly this kind of government spending can we pull out of the current recession. Apparently, the way to economic growth is to have the operator of the Post Office, rather than private individuals, invest money. Hearing this, I can't come to any conclusion except that the field of macroeconomics is lost.

(Excerpt) Read more at forbes.com ...


TOPICS: Business/Economy
KEYWORDS: economics; keynes
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1 posted on 07/30/2010 12:24:19 PM PDT by rightwingintelligentsia
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To: rightwingintelligentsia
Canada disagrees with Keynes and Krugman.
2 posted on 07/30/2010 12:28:45 PM PDT by csmusaret (A government that can dictate how much water flows into a toilet is a powerful government indeed.)
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To: rightwingintelligentsia
The a$$hat press needs to stop prefacing Krugman’s name with that mention of that stupid Nobel prize.

The idiot was given the award due to his leftist politics and not for any real work or cogent thought.

Then, again, I know a couple of leftist PhDs who insist on being called “Doctor.” I make it a point not to and when they complain I tell them that if they do not have the title “MD” after their names they are not real doctors. It winds them up pretty good!

3 posted on 07/30/2010 12:35:02 PM PDT by OldMissileer (Atlas, Titan, Minuteman, PK. Winners of the Cold War)
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To: rightwingintelligentsia
I wish that Milton Friedman was still alive to help put the final wooden stake into the heart of Keynesian economic policy. Just like communism, socialism and mongrelism...it DOESN'T work.
4 posted on 07/30/2010 12:35:40 PM PDT by JPG (Journolist diva, Sarah Spitz? No, she swallowed the whole Mongrel agenda.)
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To: rightwingintelligentsia

Krugman was at one time an economist. He is now a columnist. Don’t confuse the two.

They aren’t the same.


5 posted on 07/30/2010 12:36:30 PM PDT by texmexis best (My)
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To: rightwingintelligentsia
"Why Keynes Was Wrong"

Keynesian Economics can NEVER start with a ZERO GDP Economy. You always have to start with a BIG Pile of Other Peoples Money.

6 posted on 07/30/2010 12:40:18 PM PDT by Falcon4.0
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To: rightwingintelligentsia

Obama and Orzag are wrong?

We cant buy our way out of a recession?


7 posted on 07/30/2010 12:58:16 PM PDT by NoLibZone (Liberals are right. The AZ situation is like Nazi Germany. Mexico is Germany and Arizona is Poland)
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To: rightwingintelligentsia

Kenyan economics. Not working.


8 posted on 07/30/2010 1:02:57 PM PDT by Retired Greyhound
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To: rightwingintelligentsia

Three words: Broken Window Fallacy. Explains it all, just analogize taxes and regs to breaking windows. Lots and lots of windows...


9 posted on 07/30/2010 1:15:43 PM PDT by piytar (Those who never learned that peace and freedom are rare will be taught by reality.)
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To: rightwingintelligentsia

Green Jobs Destroy Good Jobs

http://www.commonwealthfoundation.org/research/detail/green-jobs-destroy-good-jobs

Excerpt:

A Spanish study concluded that subsidizing renewable energy leads to a loss of 2.2 jobs for every one green job created. The study also found Spain needs to increase the cost of electricity by 31 percent to pay for its deficit, largely caused by renewable energy subsidies. Spain’s unemployment is 19 percent, indicating green job growth is not an effective way to stimulate an economy. A similar study in Italy found each green job displaced 4.8 jobs in the overall economy


10 posted on 07/30/2010 1:27:55 PM PDT by preacher (A government which robs from Peter to pay Paul will always have the support of Paul.)
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To: OldMissileer

“I make it a point not to and when they complain I tell them that if they do not have the title “MD” after their names they are not real doctors. It winds them up pretty good!”

Do you also tell the M.D.’s that they have trade school degrees?


11 posted on 07/30/2010 1:36:58 PM PDT by A Strict Constructionist (Oligarchy...never vote for the Ivy League candidate.)
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To: csmusaret

The only way that Keynes logic works is if money is actually moved in time to pay for things that would have been purchased by the government anyway at a later date.

That said, you are still stuck with equal government taxation and less government spending later, so even then it is questionable.


12 posted on 07/30/2010 2:03:19 PM PDT by SampleMan (No one should die on a gov. waiting list., or go broke because the gov. has dictated their salary.)
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To: csmusaret

More remarkable when you consider that the Canadian economy is tied to the U.S. economy. When the U.S. catchs cold, Canada sneezes.


13 posted on 07/30/2010 2:08:22 PM PDT by Lonesome in Massachussets (The naked casuistry of the high priests of Warmism would make a Jesuit blush.)
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To: SampleMan

I think it only works if government already has the money; spending a surplus for example. Borrowing to spend is sucking money out of one pocket and putting it back in the other.


14 posted on 07/30/2010 2:08:22 PM PDT by csmusaret (A government that can dictate how much water flows into a toilet is a powerful government indeed.)
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To: aflaak

Ping


15 posted on 07/30/2010 2:51:07 PM PDT by r-q-tek86 (It isn't settled because it isn't science)
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To: csmusaret
I think it only works if government already has the money; spending a surplus for example. Borrowing to spend is sucking money out of one pocket and putting it back in the other.

Assuming you cut spending later, borrowing would work to front load the economic effect. However, you are then in a bidding war with private industry over available capital, so that is a negative that has to be taken into account. At the end of the day, the government is not the economy, its a giant tick that can only move money (and debt) around in time.

16 posted on 07/30/2010 3:43:30 PM PDT by SampleMan (No one should die on a gov. waiting list., or go broke because the gov. has dictated their salary.)
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To: SampleMan

Whether you borrow to spend, or spend rather than lend (as in the case of a surpluss) doesn’t matter, it comes out of the private economy either way. The only way you can have it work is if you are able to access funds that the private economy would be unable to get at, like if you are able to borrow money from China which they wouldn’t have othervise lendt to business or private individuals. Even then, it would have been more effective to simply subsidise borrowing from abroad, and let the market allocate the funds.


17 posted on 07/30/2010 4:38:00 PM PDT by Norwegian Libertarian
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To: piytar

It’s been renamed, it’s now called cash for clunkers.


18 posted on 07/30/2010 4:38:12 PM PDT by Norwegian Libertarian
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To: Norwegian Libertarian

Yes, when everything is averaged out over time, it doesn’t take rocket science to understand that it will average out (no net gain). That is why I said they can only move money through time, kinda like me using a credit card to double my income. The now is better, the later sucks.

The only government spending that has been proven to boost an economy every single time, is when the funds are plundered from other lands. But even then it averages out to zero or less if you consider the impact on all parties.


19 posted on 07/30/2010 5:17:00 PM PDT by SampleMan (No one should die on a gov. waiting list., or go broke because the gov. has dictated their salary.)
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To: SampleMan

We are already so far in the hole that “further” borrowing doesn’t stimulate anything. Our government sucks so much investment capital out of the private economy that entrepeneurs and businesses can’t get the credit they need to finance operations or expansion. Banks have been warned that they better not put taxpayer dollars at risk so they are content to finance the government instead of private enterprise. We are way past the point where government spending has any positive effect what so ever.


20 posted on 07/30/2010 6:47:36 PM PDT by csmusaret (A government that can dictate how much water flows into a toilet is a powerful government indeed.)
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