tag:blogger.com,1999:blog-2546602206734889307.post5213897387209048091..comments2024-03-29T12:16:15.785+00:00Comments on mainly macro: Ideology and Demand DenialMainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2546602206734889307.post-31771250151099259352012-01-14T22:37:21.858+00:002012-01-14T22:37:21.858+00:00"That it could explain much social injustice ..."That it could explain much social injustice and apparent cruelty as an inevitable incident in the scheme of progress, and the attempt to change such things as likely on the whole to do more harm than good, commanded [sic] it to authority."<br /><br />The thing is, government intervention to alleviate poverty or address gross inequality also commended itself to authority in the early decades of the 20th century, as a way to defer the spectre of communism that was generally agreed to be "haunting Europe" at the time.<br /><br />Keynes's argument here appears to be that if a particularly theory has conspicuous survival-enhancing attributes (that is, it is a well-equipped meme) then we can be suspicious of its intrinsic truth. It has survived not by demonstrating its veracity in the wild, but more like an exhibit in a zoo, by demonstrating its usefulness to its keepers.<br /><br />But how is this specifically an effective criticism only of "small government" advocacy, given that government intervention in the economy is frequently found to be a useful political device?<br /><br />It's a symmetrical situation, much like the climate change "debate", in which both sides constantly dismiss each other with the argument, "Oh, well you only think that because you depend on X for your personal income" where X is oil money or climate research grants, depending on the target.<br /><br />And the use of the term "denial" here is unavoidably reminiscent of that debate also! Is demand denial really accurate?<br /><br />"Keynesian economists do not deny that productivity or other supply side shocks can often be important. On the other side there appears to be, among many at least, a belief that Keynesian economics is never relevant."<br /><br />The "other side" to Keynes is a pretty wide category. It includes Friedman, who was influential as an antagonist to Keynes's status, but didn't he retain a commitment to the need to stimulate demand through expanding money where necessary (it just so happened that during Friedman's ascendency inflation was the more pressing problem)?Danielhttps://www.blogger.com/profile/11384619047799752406noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-14459384022101271722012-01-14T04:05:22.967+00:002012-01-14T04:05:22.967+00:00"Now while I think seeing economics as a mora..."Now while I think seeing economics as a morality play is generally unhelpful, in the case of fiscal policy there is a problem of deficit bias: governments over the last few decades have tended, on average, to spend too much or tax too little."<br /><br />Using the US by example... this is incorrect...<br /><br />Since 1913, the problem was spending too much, and since 1980 the GOP has figured out they can short circuit spending - and weaken the left - by taxing too little.<br /><br />The issues is "who started it?" and the answer is Democrats.Morgan Warstlerhttps://www.blogger.com/profile/16938589106562557110noreply@blogger.com