Comments on: John Maynard Keynes: The Damage Still Done by a Defunct Economist

By: Steve Witham

Steve Witham — Thu, 01 Oct 2009 20:42:58 +0000

Michael on 2 June 2009 said: “Keynes’ actual method of analysis is spot on. The man single-handedly invented macro-economics as a science.”

(The phrase “macro-economics as a science” has me searching for a comparable monstrosity.)

“However, the work he did was very, very specific, and it runs into the problem that he couldn’t figure out the long-run consequences of his policy prescriptions. That those consequences have turned out to be detrimental is unfortunate, because there was so much promise in his original theory.”

By raiding the granary today, you can eat for today. That’s an economic theory whose long-term consequences haven’t been thought out. A theory that’s obviously false is annoying, but an impossible-to-understand but false theory that shows “so much promise” is infinitely worse. People sometimes criticize economists for looking at equilibria, but an equilibrium is at least a first approximation to sustainability.

By: Al Brown

Al Brown — Sun, 16 Aug 2009 06:00:42 +0000

I\’d like to see taxpayers get some real power over how their money is spent.

I\’m a big fan of proportional representation. It is more democratic and reduces the ability of lobbyists to influence.

But we also need a legislative house where taxpayers have a say on spending and borrowing in proportion to how much tax they pay. Its their money after all.

The people who\’ve earned the money aren\’t going to throw it away. We need some institutional protection against the desire to spend other people\’s money.

By: Sonia

Sonia — Tue, 04 Aug 2009 09:42:16 +0000

Mr Richard M. Ebeling, you are an idiot. I have never seen such misleading conclutions from great theory. Feel free to write me so I can explain you what keynesian theory is about.

It is not about being right or wrong. Economist can have as many different opinions as people does. But your explanations do not rely in a good comprehension of the theory.

Study more. Speak less.

By: someguy

someguy — Wed, 17 Jun 2009 03:46:34 +0000

you guys are all missing a very distinct root point

who profits ? who loses ? from the policy in the end ?

privately owned central banks = win

they print the money of which decreases the value of the money in exisistance like a tax more like treating the paper as if thier stocks dividing thier value and keeping a portion that is basiclly
robbery all buisnesses must then raise prices to eventually keep up

fiat money is a idea based on the idea of money as debt not money as value ie useing this money printed that has no value of its own the person who prints the money controls everything.
this is not a new idea look back to solon of greece and draco of crease this is were the word draconian comes from this is the post era of greace were this ideology lead to slave and master in the worst possible sence kennedy even quoted it in his last speach before he was assasinated the truth is in 1908 we switch from the federal gold standard to the privatly owned fiat system and we have been haveing serious problems ever since

gold cannot be inflated as some may argue
how can you inflate gold or silver ? alchemy ? it has a value all of its own gold is rare maluable it doesnt rust it has shine it is distinct paper is wood i can make it out of sawdust compare gold prices now and then

the whole concept of fiat is to give something worthless to take something of worth

for example:
as gold goes up in value it takes more dollars to buy it
were in the past if gold goes up
if all your money was made of coins containing gold or silver
the value of the money in hand went up that is the difference between money with value and money with debt get it !
everyone in the world needs american rescources yet we are getting poorer and poorer no we are being increasingly robed my freinds thru this monitary policy of fiat money

the fed which its name is as deceptive as possible
wont even submit m4 reports to the federal goverment anymore

By: Kipkirui K'Telwa

Kipkirui K'Telwa — Tue, 16 Jun 2009 12:11:56 +0000

There is an historical link between Obama’s election and FDR and their economic policies. We must also admit that politics is about selling and buying of ideas. Unfortunately, politician has to give out nothing of his own. So he gives out what belongs to all for no one, in particular, will complain. If Obama wants to remain electable in future he has to give to all what belongs to all in the name of saving industries and jobs. Even if it means rescuing firms that, in most stable conditions, would collapse.
I have never been among the people in lynch mob, especially if the target is a scholar. Keyne wrote a book at the most appropriate time and did not compel the President to read and use it.
Kipkirui K’Telwa

By: Michael

Michael — Sat, 06 Jun 2009 04:30:29 +0000

I am currently taking an economic course, Keynes\’ work is, of course, highly regarded, in fact, taught as absolute truth. I don\’t know as much as some of you who have posted here, but it sure seems to me that if what we are living now is any indication of what his philosophy produces it will amount to servitude to some debtor which will inevetibly be some foreign power not to sympathetic to the sufferings of our populace.

By: Michael

Michael — Tue, 02 Jun 2009 17:47:43 +0000

I\’m going to mostly go with Jeremiah here: A lot of posters (and the article\’s author) seem not to understand Keynes. That\’s not that big a crime, however, very few people understood Keynes. Keynes himself didn\’t get the time (he died early) to puzzle out the exact implications of his work. Had he not done it in the middle of the Great Depression, he probably would have been a tad bit more reluctant to suggest some of the things he did.

Regardless, Keynes\’ actual method of analysis is spot on. The man single-handedly invented macro-economics as a science. However, the work he did was very, very specific, and it runs into the problem that he couldn\’t figure out the long-run consequences of his policy prescriptions. That those consequences have turned out to be detrimental is unfortunate, because there was so much promise in his original theory. It just goes to show: You can\’t beat the market. You can hold it off for a while, but it always wins in the end because all the market really is is the real world. We can live in fantasy land for a time, but eventually we must return to reality. The post-war Keynesian Consensus unraveled as inflation unhinged in the 60\’s and 70\’s. Japan went and proved that pop-Keynesian economics cannot drive long-run growth in the 90\’s.

Right now economics as a science is going through a sort of crisis of faith. We\’ve found our Newtonian Mechanics don\’t really describe the real world, but no Einstein has showed up to solve the problem for us. So, the best option is to throw control of the economy to the market and provide the necessary basic services to ease any pain that might cause in the medium term. Oh, and shoot all the econo-journalists there are out there. Best way to end our economic doldrums, yep.

By: Jeremiah

Jeremiah — Tue, 02 Jun 2009 15:00:17 +0000

I bet not one of the bloggers above who intend to be anti-Keynes (ad Keynes of their imagination) has read any of Keynes\’s works on eoncomics, including The General Theory of Employment, Interest and Money. That would be hard work so they should try a somewhat more entertaining reading session or three with Vol.2 of Skidelsky\’s great biography of Keynes which will show how litle influence he had on Roosevelt\’s hotchpotch of policies taken from this and that amateur adviser\’s grabbag of panaceas and how he criticised Roosevelt\’s very evident failures, including the total unwinding of the federal deficit from 1936 which lead to 1938\’s severe recession.

By: TQ

TQ — Sat, 02 May 2009 22:34:09 +0000

Henry Jack I\’m curious as to what the \’large number of social problems\’ are in America? I\’m also curious as to how you figure there is a problem with accessibility in healthcare. If we factor out illegal immigrants, something like 90% of American citizens actually have health coverage. Of the 10% that don\’t, some fraction of those have the financial means to purchase health coverage but opt not to. We certainly have a problem with health care insofar as we cannot afford our current socialized healthcare programs. But it is something of a myth that there is lack of access to health care. Even the people who are not covered are able to make use of public hospitals (while the public picks up the tab). I\’m also curious as to the notion of relative poverty. I wonder if you have spent much time in relatively poor neighborhoods in the US? The standard of living of even the poor is the US is pretty ridiculous compared to the rest of the world. Many of them have cars–and even cars that have been customized considerably as this is something of a status symbol among various groups in the US. They have televisions, even nice flatscreens, and cable and internet and cell phones and an embarrassing excess of calories. This is not to say there isn\’t real poverty in the US and people with real needs that are not met, but, having spent my fair share of time in poor neighborhoods in many major US cities, I have not seen anything that approaches the poverty of say our southern neighbor. And I\’m confused as to why inequality is an issue. The standard of living of the poor in the US is very high. The standard of the very wealthy is ridiculous. The standard of everyone in between is pretty much better than just about everyone else in the world. So the top 1% have a majority of the assets. And? There isn\’t actually anything really stopping anyone from also amassing huge fortunes. The majority of very wealthy people in the US did not come from generational money–they made it themselves. Warren Buffet? Self-made. Bill Gates? Came from a pretty well off family, but built a company on his own. Sam Walton? He was a poor farm boy. I could go on through the list of billionaires and it\’s pretty much the same. You get wealthy by an insane drive and work ethic, intelligence, and a lot of luck. Social standing can grease the wheels a little and give you a head start. But, given a free economy, wealth is built by discipline and drive. Period. So of course there is an inequality. The ability to make money is a normal distribution, like just about all humans traits. At the far right end of the tail are your Warren Buffets and Sam Waltons. At the far left end of the tail are your homeless. Left to their own devices, humans will naturally sort into economic inequality based on innate ability. There is equal opportunity, but of course people who are really good at making money are going to make gobs and gobs of it and the rest of us normal folks won\’t have so much. You can truncate the tails by removing the opportunity for people to sort themselves according to ability. That\’s what statists try to do. But it\’s ridiculous. It\’s like saying it isn\’t fair that only exceedingly tall, superhumanly athletic individuals can play in the NBA and that NBA teams need to start employing unathletic, regular sized individuals, along with the genetic freaks. Then what happens? The genetic freaks will steamroll the normals. You can tie Warren Buffets hands behind his back and handicap him in various ways, but he\’s going to win the game no matter what. It\’s what he does. Creating wealth is a skill, much like basketball, or chess, or physics, or mathematics–we don\’t cry foul in other realms of human endeavor, but we want to cry foul when other people are just better at making money? Yeah, this makes sense how?

Lastly, I\’m not sure how you figure America embraces free market economics. The government has meddled massively in the economy at least since the last depression. We haven\’t a truly free market in the US for over 80 years. All of our industries are massively regulated and we are massively taxed. I don\’t really follow how this current economic crisis is really a result of too little government intervention. The housing bubble is a direct result of too much government intervention. And I\’m not even sure there was much of a crisis to begin with. There was a lot of hysteria mongering, but, if Goldman Sachs or Citibank lost their shirts because they made bad bets, ok, what\’s the problem? There\’s no economic collapse. Financially responsible banks jump in to the fill the place of failed financial institutions. And I\’m especially perplexed how you could blame the mess of the US auto industry on too little government regulation. Again, it is quite the opposite. And again, if Chrysler and GM went under, so what? Toyota and Honda and Ford jump in.

The idea that you can control the economy and people is just insanity of the highest order. Humans and their interactions with one another are an exceedingly complex system, but a self-organized one. We are not smart enough to control complex and chaotic systems. Your language says it all–\"an uncontrollable mess.\" Have you looked at how the brain works? Or biochemical pathways? Or weather? Uncontrollable messes. That\’s life. It\’s a sick person that thinks they both can and need to control things that are both entirely out of their power and comprehension. Regulation of cellular metabolism is insanely complex, it isn\’t centrally organized, and it works amazingly well. All levels of biological organization–of which economics is one–work like this. Let it go. People are going to get hurt. It will be \’unfair\’. That is life. Utopia and fairness are for children. You can\’t change the human condition anymore than you can change the cosmological constants of the universe. Which is why statism fails every single time. And that too is part of the human condition.

But hey, we\’re going to see again that Keynesian economic policies and social engineering will fail on an epic scale. Again. Which is why it\’s madness. I know if I jump from the top of a building that gravity is going to win every single time. And we all know that when a politician tries to do anything, the laws of nature win every single time.

By: Henry Jack

Henry Jack — Sat, 18 Apr 2009 23:13:45 +0000

I am surprised by this debate, though then again the paradigms of American economic discussions always seem extreme (and narrow) to someone living in Europe. I would just like to venture, if I may, that Keynes was not a socialist, or a communist, but actually a liberal. His concern was that the excesses of the market actually damaged the economic and social wellbeing of a country, and that government intervention could soften the harsh economic cycle.

America, which embraces free-market economics like no other country, has high inequality, relative poverty, a large number of social problems and a shocking healthcare system (not in quality, but in accessibility) that are a direct result of it\’s economic neo-liberalism.

The current economic crisis is evidence of too little government intervention, as clearly without regulation the banking sector morphed into an uncontrollable mess. Keynes is looking more right to me than Friedman, especially when you consider the developing world.