Yet, there are many people who will spend on necessities as long as they can. If economics is judged only through the eyes of the very wealthy, Keynes may not make much sense. What Keynes can do is get money from the very wealthy, and re activate it in the economic system. In the laissez faire system, inflation, and stock market crashes can do a magnificent job of redistributing a nation's wealth. But with that goes is a huge amount of pain, of those who are not expected to be active in the system, widows, and orphans. Unfortunately, prior to the thirties, there were a number of Capitalists, who supported a government that permitted them to behave in an unsustainable manner, and definitely not in their own long term best interests. And it is the long term that is important.(A period that would generally last longer than the US presidential term... and well past the next congressional election--say five or six years) The Keynesian system is far more like that which Joseph gave the Pharaoh, that in the seven fat years, some of the wealth is put in storage, in anticipation that there will come a time of shortage, when having the stockpile of necessities will keep everyone involved solvent. (and well fed.)
On Jan 9, 8:26 pm, "M.A. Johnson" <[email protected]> wrote: > "Capitalism, of course, is not saved by Keynesian economics but contradicted > by it. The reason is that capitalism requires full respect for the voluntary > exchanges in a free market place. When government prevents this from > happening, capitalism is sacrificed. And how might Keynes' proposal prevent > the voluntary exchanges of the free market place? By taxing and borrowing -- > without proper collateral -- and similar policies that counter what people > would do of their own free choices. The people want to save, so expropriate > their money and use it to fund projects the people don't choose to fund. > Build pyramids no one wants, spend on hospitals even if most people are > healthy, spend like mad even if most people are pleased enough with what they > have and therefore choose not to spend so much for the time being."The > Keynesian ConceitTibor R. Machan > Jan. 8, 2009 > From the frying pan into the fire, the saying goes, and it applies well to > the way John Maynard Keynes suggested we deal with economic uncertainty and > to the advice his followers are now foisting upon Barrack Obama. > An assumption of some prominent economic theorists involves that we can > pretty much calculate how the future will turn out and, therefore, tell the > difference between very risky and not so risky investments. This, however, > does not hold true when arbitrary forces enter the market place. And the most > important such force is government action. This is because governments act by > way of mandates, or outright force, not voluntary agreements. > Sure, even with a system of voluntary agreements as the foundation of the > economy nothing is completely certain -- after all, who can tell what the > weather will be, or if there will be an earthquake or something else that has > serious economic consequences quite apart from human decisions which are, > themselves, often unreasonable and, thus, unpredictable. But only government > can try to go against widespread human choices that mainly determine the > economy since only government can impose its decisions by force, without the > consent of the governed. And when it does so, the reasonable, albeit not > absolute, certainty of how the future is going to turn out is completely > undermined. > In the face of economic upheavals it is widely believed that most people will > reduce their spending, including their risk-taking. While this is not a bad > assumption, it doesn't tell the full story. After all, those who specialize > in wealth management will be aware of the assumption and will often go > counter to it so as to gain a bit from the widespread caution. Second > guessing human behavior is one skill in which wealth managers specialize. And > they will often figure out just what the government is likely to do, too. But > then governments will impose their might to counter the effect of the > managers' maneuvering. And so it goes. > Keynes wanted to put a stop to all the guesswork that goes into economic > thinking by advising that government spend when ordinary folks would act > cautiously and save. Since Keynes believed that economic prosperity is mainly > a function of spending money, of an aggressive consumerism, he found it > disturbing that "the possession of actual money lulls our disquietude," so > people refuse to do the spending that would keep the economy healthy and > instead put their money away for later use (which, by the way, still doesn't > mean it will be idle). > One of Keynes's contemporary followers, Robert Skidelsky, wrote that "There > was only one sure way to get an increase in spending in the face of an > extreme private-sector reluctance to spend, and that was for the government > to spend the money itself. Spend on pyramids, spend on hospitals, but spend > it must." As Skidelsky noted, "This, in a nutshell, was Keynes's economics." > And he added, "His purpose, as he say it, was not to destroy capitalism but > to save it from itself." > Capitalism, of course, is not saved by Keynesian economics but contradicted > by it. The reason is that capitalism requires full respect for the voluntary > exchanges in a free market place. When government prevents this from > happening, capitalism is sacrificed. And how might Keynes' proposal prevent > the voluntary exchanges of the free market place? By taxing and borrowing -- > without proper collateral -- and similar policies that counter what people > would do of their own free choices. The people want to save, so expropriate > their money and use it to fund projects the people don't choose to fund. > Build pyramids no one wants, spend on hospitals even if most people are > healthy, spend like mad even if most people are pleased enough with what they > have and therefore choose not to spend so much for the time being. > So the Keynesian remedy to occasional dips in economic activity is to put a > gun to people's heads and force them to spend. And it sounds plausible, when > you remove from it the criminal factor and one other thing: government > stupidity. Even if it were not a blatant violation of peoples' basic rights > to expropriate their money, the assumption that governments will know how to > spend it so as to boost economic activity is completely off. This is the > fallacy of thinking of government as some kind of God, some Supreme Being who > knows better than ordinary mortals what to do, how to spend resources, when > to save and when not to do so. This monumental -- what F. A. Hayek, Keynes's > friend and critic called "the fatal" -- conceit is the age old idea that the > state is supreme. And this is the theory that is now being championed by > Barack Obama & Co.http://tinyurl.com/773nfp --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. 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