Friday, February 13, 2009

You Guys Rock

Lovin' the comments... Keep 'em coming.

Some random thoughts:

1) Chicagogoeble is a chick, Wright, ya sexist. :)

2) Wright should not be encouraged, Chicagogoeble!

3) If we put Wright and Cate in the same room together, the resulting explosion would probably tear apart the very fabric of the universe. Like matter and anti-matter. Of all the people I know, I'd say that you two are the most polarly opposite, philosophically. Therefore, we should call Cate, "Lefty," as Wright is already aptly named (directionally, anyway).

4) I love my fascinating, diverse, extremely intelligent group of friends!! I don't know why all of you braniacs hang around with dopey ol' me.

5) Wright, if Keynesian economics work so well, why are things as bad as most living people can ever remember them being in our economic history NOW, when we're at war? Shouldn't that military consuming machine be running at full throttle, pumping tons of money into the economy, enough to offset the mortgage crisis, etc.?

6) I was prepared for the "Dr Phil..." post to devolve into an abortion debate. I never saw the political debate coming.

7) I am totally pissed off at Arby's. They have ceased to produce the Southwest Chicken Salad, which was, quite possibly, the best salad in the history of fast food. Bastards.

8) I have no idea what dilifag means.

9) Mary Grace had her Valentine's day party at school, and when we got home she was so sweet about sharing her candy and her cards with Claire that it almost made me cry. (I have to put SOMETHING about the kids in this post...)

10) I need to get to work!


Wright said...

1. Sexist? No. I just assume everyone is a guy on the internet. Safer that way.
2. I need no encouragement to bloviate about things I’ve spent far too much time researching.
3. Two men enter, one man leave…
4. What, this isn’t where all the cool kids hang out? Damn, I knew I shouldn’t have left the soda shop.
5. I’ll explain below.
6. Reasonable people can rarely agree to reasonably disagree about abortions. Therefore it is easier to just ignore the subject.
7. Lies, there are two vastly superior salads. First, the Asian Seasame Chicken Salad from Panera. Second, the Chicken Pasta Salad with lots of hot sauce from Brooster’s at the corner of Finley & 22nd in Lombard, IL. Don’t get the dressing and use lots of their hot sauce.
8. Dilligaf = Do I Look Like I Give a Fuck
Keynesian Economics by itself is hit and miss and it’s very very very easy to go off the rails with it. In otherwords, it’s not a panacea by any stretch.
1. The government is the largest single consumer we have, but too much government spending crowds out private consumers. What we mean by that is that the wildly divergent consuming interests of private individuals require a vast array of goods to satisfy, but the government is more focused in its needs and is there for cheaper to produce for at a profit. Therefore, if the government is spending a _LOT_ people will produce for the government, leading to a much smaller pool of products for the invidiual to consume. This in turn leads to supply shortages and demand increases and inflation as more people clamor for fewer goods & services.

So should the situation continue for a long period of time, you will have an economy geared only towards the State and depredation for the average citizen. For a practical application of this, the Soviet Union and the Eastern Bloc. However, if you favor a social situation where people spend billions of collective hours a year standing in line for the basics, then this is your system.

2. While Social Spending Keynesianism sounds nice “hey! Let’s put them all to work!”, it doesn’t work in the long term and proves to actually be very damaging in a number of ways. At first you will get plenty of people working, but it’ll be inefficient and poorly done as people have no idea what they are doing. Next, no one will buy the stuff because there is no market for it. Finally, you are stuck with a big ass debt because it didn’t pay for itself.

The debt part is what put the final nail in the coffin of the New Deal to that point that even FDR abandoned it. After spending all that cash on nifty buildings, murals in post offices and what not, they were out of projects and damn few of those projects saw a return on investment. So they had to raise taxes to pay for it. And that is what kept us in the Depression.

There is also a very very high social cost to Social Spending Keynsianism, namely, it makes people dependant on it. But that is a philosophical debate, but it does exist, see the aforementioned new mother of 14. She will not bear the cost of those children even though she has no capacity to care for them other than by begging. Yet that didn’t stop her because she knew society would bear the cost.

3. Military Keynesianism also offers the potential of running off the rails as well. It works best in the vent of mammoth, total war where the entirety of the economy is devoted to feeding the machine of war. Like with the Civil War, World War 1, and World War 2. But it doesn’t work so well with low to mid level wars, such as Korea, Vietnam, and Iraq. In those cases it requires enough to chew up extra consumption, create extra debt, and drain out labor, but doesn’t produce the benefits of 100% employment and a huge return on investment from new ‘opened’ markets.

In other words, it works best if you have a peaceful era with large, seemingly “pointless” peacetime military spending, as we’ve had for the past 60 years on the whole or with a huge god awful freakin war. However, on the whole, no question it’s worked well for us in terms of keeping the economy trending upwards and keeping us from having to play patty cake with some wackjob with an industrial economy at his back.

On the whole, Keynesian economics also suffers from the problem of being badly applied by ill prepared politicians who do see it as a panacea. LBJ, Nixon, Clinton, Bush Deux, and now Obama, and their accompanying Congresses, have all failed to see the pitfalls of the Keynesianism. Worse though, they all did it in willful ignorance of its past successes and failures.
In the 1930’s America, 1950’s & 60’s China, and 1990’s Japan all tried Keynesian approaches to solving things and all of them ultimately failed. What is worse now is that Obama, Pelosi, and Reid are trying not just a Keynesian approach, but they are literally trying to recreate the New Deal by combining big government spending with big social reform all in an emergency package.
What is going to result is that we are going to spend all this money in a rather haphazard way, just as in the New Deal, we will get lots of bridges that we don’t need, just as we did in the New Deal and Japan got in the 1990’s, and in the end we will have no return on our investment. So we will then be faced with a very substantial tax increase to pay for it all which, since there will be no recovery produced, will drive us deeper into recession if not outright depression for a decade or more. Which is exactly what happened in the 30’s and the 90’s in Japan.
So… no, Keynesianism won’t solve our current problems by any stretch. Historically speaking, sensible re-regulation, tax cuts to job creators (tax breaks to those without a job do exactly jack and shit), effective and active monetary policy, and government serving as a big consumer to take up the slack without overdoing things is what gets you out of recessions. But unfortunately 1, 2, and 4 aren’t on the table, and the Federal Reserve is almost out of ammunition for monetary policy mechanisms.

But who knows… we might get lucky! Plus the Fed is much more active these days in printing money, and that never backfires.

Anonymous said...

8. I like my off-the-cuff guess better than the definition I found for dilligaf via Google. I guessed it was a combination of the Dilley sextuplets and gaffe -- therefore, the faux pas of having multiple births.

Anonymous said...

Okay, it's a little scary that Wright's favorite salad a la Broosters is 5 min from my house! Small world!!