Keynesian Economics

Hello, this thread is for discussing the pros and cons of Keynes's economic theory and not for any other economic theory unless its to rebuttal a pro Keynes post.

I am going to say that Keynesian stimuli work and heres my evidence:

GDP of the United Kingdom As you can see from this graph, the GDP of the UK rose in 2009 which coincided with massive borrowing done by the British Government

inb4 Keynesian haters and mindless criticism of Krugman.

Keynesian Economics. N. Defined as: an unknowable and extremely, mind-fuckingly complex religion, whose god is known to laymen as "Tomu." Extremely pervasive, but also very controversial. The average person also does not care about it in the slightest.

Lulz.

Actually I think the real question regarding Keynesian economics might be something that could be seen as a reverse Laffer-curve question. Does the additional tax revenue spent for Keynesian spending get recouped down the road as additional tax revenue over how the economy would normally recover on its own? It's probably too complex and hypothetical of a question to answer :p

But the general theory behind it is sound. In economies with diminishing demand, government action to reverse that trend will result a spiral up instead of a spiral down.

Double Lulz. It's actually not that complex. It's basically government spending to turn decreasing demand into increasing demand in order to spur economic growth. (Companies need to grow to handle the increasing demand, which increases demand even more, and so on)

I wonder how much the effects of Keynesian theory is affected by offshoring...hmmm...probably substantially.

edited 24th Aug '11 9:10:34 AM by Karmakin

Look, even Republicans believe that government spending creates jobs. You have jobs plans put forth by Michelle Bachmann of all people that say "OH HAY WE'RE GUNNA CREATE SOME JOBZ!" but then when the White House says "Okay" they flip their tune because OH NOZ OBAMAZ TAX N SPENDZ DEMOCRATZ!

Opposition to Keynesian economics is not something based on reason. It is a guttural reaction that reinforces things that need to be done being considered politically unfeasible.

It's almost entirely political.

Tomu, thats why the US political system needs to be reworked so the POTUS can do the necessary thing instead of the bullshit what happened with the debt ceiling.

How does Keynesian economics look at microeconomic levels?

Well see, I think the POTUS is doing his job exactly as it is supposed to be. I don't want a power-abusing president.

The issue here is that congress isn't doing the right thing.

I think there's only two key things about Keynesian in comparison to the usual counter part of Monetarist/Classical.

• Short-term matters
• Government should intervene in case of market failure

Bad idea is bad...

Why is bad idea bad? The Prime Minster of the United Kingdom has almost unlimited power.

Not just that but Keynesian economics says the government should drive economic growth when companies are too afraid to spend.

I don't trust Keynesian economics, because it takes two parts. You have to run a deficit during economic busts and a surplus during booms. If progressives are in power and sink the surplus into feel-good social programs or conservatives are and cut taxes, you just get perpetual debt that increases with every downturn.

Because the UK is unitary. The US is federal. Main government shares with the states, and the main government is set up so that none of the branches have too much power over all the others.

We don't want a super-powerful executive. That was shot down when the Constitution was drafted, it was never a good idea, and it still isn't...

Exactly.

That's why Captain Centrist is need. Or Bill Clinton.

Well you could technically make the same argument of socialist regimes who have to constantly spend money to keep the system up but all the northern European countries are doing great. I trust in empirical evidence, so I'm more ready to have the government intervene since they've been highly successful in many cases.

@Rott: Why exactly are we expected to be able to cut deficits in a time when our revenues are basically shit, but not when we're actually taking in enough money?

Clinton's administration had a Surplus. It was there! It was the Bush administration that turned it into a deficit. Clearly, we just need to get rid of all the Bush type politicians. Especially the ones that claim deficits matter only when they're the ones in power.

Of course, if we actually had democrats that were actually Keynesians, it might help a little bit.

^Eh, Europe is having its own financial crisises, though they're tightening their belts too right now, which is the exact opposite of what we should be doing.

edited 24th Aug '11 9:37:17 AM by TheyCallMeTomu

Northern! NORTHERN!

They are doing fine and have no austerity measures and faced no banking crisis because of tough regulations.

I think if you take a step back about Keynesian you just end up following zero ideology. Basically you just say, "I'll do whatever appears to work best for the economy even if it means the government stepping in"

Tomu, we already had a stimulus though before belt tightening.

Edit: The austerity measures are just flat lining the economy as a opposed to a double dip recession.

edited 24th Aug '11 9:39:49 AM by whaleofyournightmare

Who is we, again?

Even America had a stimulus act-if you can call the ARRA that.

edited 24th Aug '11 9:40:44 AM by TheyCallMeTomu

~grits teeth~

The United Kingdom of Great Britain and Northern Ireland, which is currently the 6th largest economy in the world.

edited 24th Aug '11 9:41:22 AM by whaleofyournightmare

Right-a large part of your success is that you have your own currency, as I recall. The british pound?

Yeah, I think so.

Edit: the ARRA stimulus was only $787 billion, no bloody wonder it didn't work.

edited 24th Aug '11 9:44:24 AM by whaleofyournightmare

What Tomu said. There's actually no evidence that a modern progressive in a boom time will expand the debt in terms of social programs. Actually, the big thing that progressives want along those lines, single-payer health care, will probably shrink the deficit/debt.

[1]

That's a pretty good place to start.