John Maynard Keynes
Bret Stephens has written a nice opinion piece in the Wall Street Journal of December 23. He cites poet Rudyard Kipling and author George Melloan who wrote The Great Money Binge: Spending Our Way to Socialism.
Melloan’s work, according to Stephens, shows “in exacting detail, not only how we came to our current crisis—thank you, Barney Frank, Chris Dodd, Alan Greenspan and Tom DeLay—but where [their flawed logic] is destined to take us again.”
All four of these politicians—yes, Greenspan is one of them—seem to subscribe to Keynes’s theory of what some have called “demand-side economics.” This theory says that consumption is the answer to an economic bust cycle, and that it’s okay to create the credit to pay for it through central-bank-created funny-money.
Stephens, citing Melloan I presume, and parodying Kipling, counters Keynes’s theory using the supply-siders’ argument:
”’[C]onsumption must be paid for with production” … if you don’t work (i.e. produce) you die (i.e., can’t consume).”
Stephens and Melloan have understood the evils of Keynesian spending-for-prosperity, to be sure; but they have missed an essential point, which is this:
Consumption is purely a mechanism by which producers share among each other what they have already produced.
(See this post and the subsequent two posts for a more detailed example of this process.)
This is a great video follow up to the full-page ad CATO published listing hundreds of economists who don’t believe that a “stimulus package” is the best option for American taxpayers.
As Henry Paulson recently stated, an economic crisis of this magnitude only comes around once or twice a century. I’m not exactly sure what the basis for such an argument might be other than looking at a sample size of… about one century. Whether there is merit in this assumption or not, we certainly are facing an economic crisis. In times like these, our government leaders look to policy experts and lessons of history - and possibly listen to them more than usual. This doesn’t mean they stop looking to lobbyists and the next election.
The “We the People” petitions that can be created on the White House website have become incredibly popular in recent months. Through this site, a user can submit a petition and elicit a response from the White House once it has crossed the 25,000 signature threshold.
The site picked up recognition because of petitions created asking the White House to let states peacefully secede after President Obama won re-election in November. Other petitions that have been created include calls for the White House to legalize marijuana, allow Americans to opt-out of ObamaCare, and to support the NRA’s “National School Shield” prgogram.
There have also been some humorous and rather asburd petitions created. But perhaps the best one was the petition urging the White House to build the Death Star.
With the debate over the taxes intensifying between House Republicans and the White House as part of the “fiscal cliff” negotiations, Paul Krugman weighed in yesterday floating the idea raising tax rates to 91%, back to levels seen in the 1950s. His rant is based on digs at conservatives and the same old “fairness” drivel that has been used by the Left since the 2001 and 2003 tax cuts were passed.
Most of us who read Krugman’s missive probably laughed it off. After all, this is the guy who, in the wake of the tsunami in Japan last year, said that the disaster would spur economic growth. He said the same of 9/11 when it occured. Krugman also called for a fake alien invasion to ramp up government spending, which he believed would have helped the economy. This, of course, defies a rule of economics called the “broken window fallacy.” But that’s just an example of Krugman’s crazier side.
There is no denying at all that Mitt Romney reverses positions as frequently as the wind changes. We can go through and cite numorous examples. But that doesn’t absolve or excuse President Barack Obama from his own reversals in matters of public policy, including his flip-flop on raising taxes during tough economic times.
During his weekly address on December 11, 2010, President Obama, who was pushing a two-year extension of existing tax rates, explained, “By putting more money in people’s pockets, and helping companies grow, we’re going to see people being able to spend a little more, we’re going to spur hiring - we’re going to strengthen our entire economy.” Obama also Truer words could not have been spoken.
Indeed, the strength of our economy rides on the back of small businesses. But they are currently being threatened by President Obama’s proposed tax hike, which has already cleared the Senate. But this is counter to what President Obama said in 2009, when he noted that “[y]ou don’t raise taxes in a recession.”
Bloomberg News tends to be a slightly more left-leaning economic news source. They often mix ‘green energy’, ‘poverty reduction’ and aid for the ‘third world’ into their news pieces. Normally I do not listen too closely, to these liberal Wall Street syndicate news-sayers. Although they have a neat free radio show in the morning, they do not interview enough American investors for my taste. But this last Monday, I was surprised that good news was again being shown.
A roughly half-hour clip, had Republican Presidential candidate Ron Paul squaring economic knowledge against a New York Times columnist: big government Kaynesian, Paul Krugman. The moderator left the debate open to its flow, did not meddle with too many specifics and let the Texan politician play with ‘Krusty Krug’ like a voodoo doll. Paul Krugman seemed ill at ease, and frightfully underprepared. Over and again, Krugman tried to drown Paul in bombast, but his facts and claims lacked historical accuracy.
Contender Ron Paul looked sprightly, fresh and well-off to making his best talking points, Krugman couldn’t make him vascillate. One thing that liberals like to do, when talking about economic issues, especially spending and taxation; is set their own agenda. They do this by single-mindedly picking vantage points from the historical record. Revising history and economics for us all, as though what happened before WW2 carries no meaning. Only those out of touch with reality, make the mistake of thinking they could ‘regulate’ the economy, the world, society or anything else.
On this day in 1899, Friedrich August (F.A.) Hayek was born in Vienna, Austria. Over the course of his long life, Hayek, along with others, brought a new way of thinking to economics, challenging statists that sought more debt and spending.
Hayek laid down his economic beliefs in his book, The Road to Serfdom (1944), explaining that the predominant views of the day were essentially fascism. Hayek won the Nobel Prize for economics in 1974 and was awarded Presidential Medal of Freedom by President George H.W. Bush in 1991.
He went head-to-head against John Maynard Keynes, whose economic theories were anathema to the free market. And while both economists have been gone for some time, we’re are still waging war over their views today. This battle was the focus of two videos put out by Econstories; the first being “Fear the Boom and Bust”:
And the latter being “Fight of the Century,” which focused on the after-effects and failures of economic stimulus and bailouts:
On Monday evening, saw a battle of two schools of economic thought — Keynesianism and the Austrian school — in a brief battle between Paul Krugman and Rep. Ron Paul (R-TX).
While it wasn’t the educational videos put out by Econstories that have actors playing the parts of John Maynard Keynes and F.A. Hayek giving a defense of these schools of thought, it’s among the closest thing we’ll see to a real debate between the ideals of statism and economic liberty.
H/T: Club for Growth
Just in time for Christmas, EconStories, the folks that brought us the Hayek/Keynes rap videos (“Fear the Boom and Bust” and “Fight of the Century: Keynes vs. Hayek Round Two”), have finally rolled out some swag, including t-shirts and coffee mugs: