Kurdish-Swedish perspectives on the American Economy.
Nice piece. All sorts of excuses have been offered, including that government spending did not actually increase all that much above what it would have been otherwise. I do not find them persuasive either.Clearly, there is a debt constraint. Now, if you only had referred to the Market Monetarists (updated followers of Milton Friedman), the piece would have been near perfect :)
Tino, problemet med att använda begreppet aggregerad efterfrågan är att inga ekonomiska kriser har startat med att konsumenterna har minskat sina inköp av konsumentprodukter. En minskning av konsumenternas efterfrågan har alltid varit den faktor som uppkommit sist när en kris har uppkommit.Dessutom har konsumentvaruindustrin alltid varit den bransch som har har drabbats minst vid en kris. Därför kan inte en minskning av konsumenternas efterfrågan vara orsaken till kriserna utan vara en verkan av kriserna.Dessutom är företagens efterfrågan ifrån andra företag troligvis dubbelt så stor, i kr eller dollar, som konsumenternas efterfrågan av konsumentprodukter. Företagens efterfrågan ifrån andra företag minskar alltid före konsumenternas efterfrågan.Ekonomiska kriser är ett mikroekonomiskt problem och inget makroekonomiskt problem. Kriserna startar inom vissa branscher och dessa branscher drabbas alltid hårdast av kriserna.I slutet av 1700-talet observerade engelska ekonomer att det uppkom snabba uppgångar i ekonomin och ännu snabbare nedgångar. Problemet var att bankerna har möjligheten att sänka räntan under den naturliga räntan och att detta gör att den tunga industrins investeringar ser ut att vara lönsamma på lång sikt.Huvudproblemet är att produktionsresurserna är knappa. Det går därför inte att öka investeringarna i alla branscher samtidigt. Om investeringarna ökar kraftigt inom konsumentvaruindustrin, så kan investeringarna inte samtidigt öka kraftigt inom industrier som tillverkar råvaror, halvfabrikat och industrier som tillverkar investeringsvaror.Detta leder till att vissa industrier inte får tag på resurser och att priserna på resurserna stiger. Alla investeringar kan inte vara möjliga att genomföra eller vara lönsamma att slutföra. De investeringar som framförallt drabbas av dålig lönsamhet i denna situation är stora investeringar som görs inom den tunga industrin.Eftersom produktionen sker i en viss ordning måste investeringarna också göras i en viss ordning. Först produceras råvaror, därefter halvfabrikat och därefter investeringsvaror till dessa industrier.Om resurserna är knappa i en ekonomi måste resurserna först frigöras ifrån de branscher som säljer konsumentprodukter (och andra sena branscher inom produktionsstrukturen) och överföras till de tidiga branscherna i strukturen. Därefter måste det ske investeringar i rätt ordning inom strukturen fram till den bransch som ligger sist (försäljning av konsumentprodukter).
Tino,I like the fact that you refer to the non falsifiable hypothesis in reference to Paul Krugman. However I have found that the case with any economic action which makes the non falsifiable idea, non falsifiable lol. I have often struggled with Keynes, I love the concepts put forward in the reclassification of those who are looking for employment but cannot find it. I do not however believe that is what this cycle is all about. Capital stopped flowing. The Government made it worse by passing regulation and adding major prosecution on just about every industry. Look and see the number of pending cases the Government has against businesses and it is staggering.Still a good overall article, however I am not as sure as I once was that Keynes had it right. I think the main problem is that we as a society moved to an industrial complex funded by capital investment and this caused the creation of a new kind of worker which in turn created a need for Keynes new classification of unemployed. However this is simply Hyperbole.
I like to cut through the disagreement and say that even using the Keynsian's own numbers, the cost per job saved/created is much too high. Why not instead target the problem (unemployment) more closely with a wage subsidy.
I always found it rather entertaining that Keynes himself disapproved of the flagship political programme supposedly inspired by his ideas: http://newdeal.feri.org/misc/keynes2.htm"In particular, I cannot detect any material aid to recovery in N.I.R.A., though its social gains have been large. The driving force which has been put behind the vast administrative task set by this Act has seemed to represent a wrong choice in the order of urgencies. The Act is on the Statute Book; a considerable amount has been done towards implementing it; but it might be better for the present to allow experience to accumulate before trying to force through all its details. That is my first reflection--that N.I.R.A., which is essentially Reform and probably impedes Recovery, has been put across too hastily, in the false guise of being part of the technique of Recovery."It's also quite amusing how this parallels Obama's term and activities while in office. Raising healthcare costs in the middle of stagnation sure was a good idea. So was tacking on a 848 page abomination of new mandates and regulations in Dodd-Frank.I suspect that not one of the morons voting for it actually read the thing, much less analyzed the impact of what it would do to the financial sector or the economy in aggregate.
You seem to pay close enough attention to Krugman, but if this is so are you unaware that from the very beginning he said that the stimulus was in fact not a stimulus at all? On Keynsianism you increase spending above prior spending levels in an economic downturn. Federal spending increased, but state spending decreased even more. On net there was no stimulus. For this reason Krugman told us it would not work, though it should be expected to slow the bleeding. Krugman has consistently predicted continued slow growth and a slow or nonexistent emergence from this downturn. I read Mark Perry's blog. He's with the AEI. It's non stop optimism. In fact he was optimistic prior to the 2008 crash. If this is a failure of Keynsianism, why has Krugman consistently told us that he's not expecting us to emerge from the downturn?What I find baffling is that people still reject Keynsianism in the light of recent history. Some countries have followed the austerity path, which is a basic right wing economic prescription. Efforts to reduce deficit spending by slashing services to the poor (the welfare state). We've seen this in Greece, Italy, Spain, and Ireland. These are the places that continue to struggle in the wake of their downturn and drive the European collapse.A couple of places specifically rejected these solutions. Iceland and Argentina (which was back in 2001). They expanded the welfare state and sustained redistributionary policies. Argentina's economy soars. Iceland, while not exactly booming, is doing decent given the extremely bad place they found themselves in in 2008. Do people not see this happening?And it's not like this is any different from what has been going on for decades. Latin America, Haiti. These place have seen leftist governments violently ousted and replaced with right wing juntas that impose the "Washington Consensus" (the neoliberal austerity program). They remain the worst economic performers in the world, while China and India, which aggressively reject neoliberalism and instead pursue industrial policy, have been the world leaders in economic growth over the last 30 years. I find the right wing unwillingness to recognize what is playing out right in front of their eyes rather baffling. In light of all this failure the right wants austerity for the US.
" Federal spending increased, but state spending decreased even more. "Well that's certainly not true. State and local spending are above their pre-recession levels. Does it get better from there, or are you less than completely full of shit?
And the only significant drop in total government spending before a few months ago was when they finished the census and laid off almost all the census workers.