On Jul 18, 2012, at 3:30 PM, Bryan Atinsky wrote:
> One of my rare Tea Party Libertarian loving cousins sent me this
> article and the data about real growth rates during the Reagan
> period and Supply Side Economics compared to the post war period up
> to the 1970's seems wrong from what i have heard, but i don't have
> the data to back this up and poke holes in this argument... Anyone
> care to take a stab at it?
>
> http://www.forbes.com/sites/peterferrara/2012/07/12/obamanomics-the-final-nail-in-the-discredited-keynesian-coffin/3/
>
> Keynesian economics is the false vision of human action which says
> the way to promote economic recovery and renewed growth is through
> increased government spending, deficits and debt. If that sounds
> nuts, that’s because it is.
>
> The idea is that the increased government spending...will increase
> demand in the economy for more production...
Just point out that "increased government spending" obviously *does* "increase demand in the economy for more production," because, for the government to spend more, production of the goods and services it "demands" has to increase. As long as there is "excess capacity" (ie., unemployment) in the "economy" those goods and services will be forthcoming without subtracting anything at all from private productive activity. The question is *what* goods and services-- useful or destructive, green energy or weapons,--the government will spend for. Economics is about the allocation of real resources, and the determination of how resources are to be allocated is a supremely *political* question. "deficits and debt" are red herrings. Deficits don't matter in the least as long as substantial underutilized real resources (ie., unemployment) persist, and the level of public debt *never* matters in a monetarily sovereign country where the government can always borrow as much as it needs from its central bank.
Shane Mage
"scientific discovery is basically recognition of obvious realities that self-interest or ideology have kept everybody from paying attention to"