Part of the reason the Keynesian model won't work is they don't properly define what government should spend money on, Agree or Disagree?

by In Love With Liberty Posted 2012/09/18 01:17:23

Related Topics: Unemployment, Deficit, Food Stamps, Model, Military, Food, Recession, Welfare, Insane, Future, Spending Cuts, The Future

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They just say that in recession government should be making spending decisions for us.

And the money being spent just goes all over the place.

I think the Keynesian model would work better if they defined what money should be spent on.

Deficits can work if your spending on things that you can make a profit off of in the future. So things like the military and infrastructure.

But when government is spending (with deficits) outrageous amounts on short term items that won't have any long term solutions, like unemployment benefits, welfare, food stamps, etc. That money will be going out with little possibility of coming back.

People say spending cuts are insane.

I argue the insane idea is saying we can spend beyond our means for as long as we want.

The Keynesian model is so spending heavy, that to a Keynesian BALANCE is reckless.

Where in truth it's the Keynesian model itself that is reckless.

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Al B Thayer 2012/09/18 02:21:47 (edited)

None of the above

+1
Keynesian doesn't work regardless of how the money is spent. This time around it was a double dip. Barrowed and spent. The government should have just wrote us all a check we could only spend on a bill we owed on. Like back rent or a mortgage. At least the money would have gone in a positive direction. Far less foreclosed homes would have held the price higher. Banks would have still got their money and they wouldn't be forced into the real estate business.

As it stands now. The housing market has to fully recover before the economy starts running on its own. Nothing the government can do will trully help, it only delays recovery. The piper must be paid.

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Veritas CLM *First Sedition* 2012/09/18 01:27:32 (edited)

Disagree

+1
In my view, the inherent flaw in Keynesian economic policy is the basic view that government fiscal policy should, in any circumstance, be used to manipulate economic growth. Chicago school economists like Milton Friedman had very good results in economic expansion in the 1980s and 1990s, primarily through monetarist policies. These policies were arguably less "free market" than a more neoclassical or Austrian approach to economics, though, which generally produce the best chance for prosperity. Basically, Keynesianism doesn't work, or at the very least, the effects of Keynsian policies are never as great as promised.

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In Love... to Veritas... 2012/09/18 01:34:53 (edited)

+2
One thing the Keynesian model is good at, is providing politicians with cover for their own terrible policies.

I consider myself an Austrian school thinker, but I will say Milton Friedman was more successful in getting his ideas mainstream as compared to people like Hayek, Rothbard, and von Mises.

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Veritas... to In Love... 2012/09/18 01:50:55

+2
Agreed. Keynesianism is an idea that is provably ineffective as a tool of macroeconomics. It is useful as a political tool, though, because it shows that politicians are doing "something" to try to "fix the economy".

I'm not exactly a cheerleader for Friedman, and consider myself more of an Austrian school thinker as well. I do, however, give Milton Friedman some credit for the successes of the early 1980s especially. His monetarist policies help combat the terrible stagflation of the 1970s, for which Keynesianism had no answer.

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