in other words, keynesean economic theory works. it has worked in the past and it will work again. but conservatives keep trying the opposite in the hopes that one day, magically, their chicago-school bullshiat will work.

FlashHarry: in other words, keynesean economic theory works. it has worked in the past and it will work again. but conservatives keep trying the opposite in the hopes that one day, magically, their chicago-school bullshiat will work.

...except for all those times when it doesn't work, or the general case doesn't quite fit, or some unforeseen variable wasn't accounted for.

Economic theory is still far more art than science. It still doesn't make any meaningful predictions.

/something something alchemy something

Gordian Cipher: FlashHarry: in other words, keynesean economic theory works. it has worked in the past and it will work again. but conservatives keep trying the opposite in the hopes that one day, magically, their chicago-school bullshiat will work.

...except for all those times when it doesn't work, or the general case doesn't quite fit, or some unforeseen variable wasn't accounted for.

Economic theory is still far more art than science. It still doesn't make any meaningful predictions.

/something something alchemy something

.....

Yeah, but if Keynesian policies have worked 5 times out of the last 5, and "cutting taxes increases jobs" has worked exactly 0 times out of the last 5, why do we keep letting ourselves be conned into a policy of decreasing spending, out of fear of one of your "unseen variables"?

Especially when the evidence is staring us in the face - by all serious accounts, the stimulus was a huge success and probably saved us from an economic dark age. If anything, it should have been twice or three times as big as it was. Yet, it continues to be vilified by the Right as wasteful spending.

Keynesian doesn't always work.

But the alternatives have never worked.

As usual Krugman is right. The idea that taking more money out of an economy that is suffering from a lack of capital will somehow magically create more demand is one of the stupidest things the right has come up with.

xiaodown: Yeah, but if Keynesian policies have worked 5 times out of the last 5, and "cutting taxes increases jobs" has worked exactly 0 times out of the last 5, why do we keep letting ourselves be conned into a policy of decreasing spending, out of fear of one of your "unseen variables"?

Especially when the evidence is staring us in the face - by all serious accounts, the stimulus was a huge success and probably saved us from an economic dark age. If anything, it should have been twice or three times as big as it was. Yet, it continues to be vilified by the Right as wasteful spending.

There are a lot of "conservatives" who are beyond the concept of the Laffer curve and now simply think that taxation = slavery or whatever.

Also, the stimulus was about 40% tax cuts.

Bladel: Keynesian doesn't always work.

But the alternatives have never worked.

actually, this is fair. but when the big one happened, it was keynesean policies that pulled us out. but like true keyeneseans, we also paid it back after WWII. spend in bad times, pay it back in good. we've not been very good at the second half of that concept.

xiaodown: Yeah, but if Keynesian policies have worked 5 times out of the last 5, and "cutting taxes increases jobs" has worked exactly 0 times out of the last 5, why do we keep letting ourselves be conned into a policy of decreasing spending, out of fear of one of your "unseen variables"?

Cutting taxes during a recession *is* Keynesian economics.

You know what is an even worse idea in the face of a depression? Printing money.

Gordian Cipher: FlashHarry: in other words, keynesean economic theory works. it has worked in the past and it will work again. but conservatives keep trying the opposite in the hopes that one day, magically, their chicago-school bullshiat will work.

...except for all those times when it doesn't work, or the general case doesn't quite fit, or some unforeseen variable wasn't accounted for.

Economic theory is still far more art than science. It still doesn't make any meaningful predictions.

/something something alchemy something

See we never seem to do the other half, you know raise taxes and cut spending in the good times, when the private sector can absorb the lost government jobs and they feds can take in cash to pay off debts incurred in the downturn.

Gordian Cipher: FlashHarry: in other words, keynesean economic theory works. it has worked in the past and it will work again. but conservatives keep trying the opposite in the hopes that one day, magically, their chicago-school bullshiat will work.

...except for all those times when it doesn't work, or the general case doesn't quite fit, or some unforeseen variable wasn't accounted for.

Economic theory is still far more art than science. It still doesn't make any meaningful predictions.


Yes and no.

I always trot out this gem whenever someone objects to the idea of economics as an actual science:

First of all, yes it's true that nobody knows how the economy fully works. At least, not with crystal clarity.

The laws of economics are constructs invented by man to explain, predict and record collective human behavior. What that means is that yes, economics is a number-crunching science much like physics, filling in values and numbers and formulas in an impossibly massive equation. Unlike physics, however, the mathematics of economics don't always work the way we think they will because, after all, they are subject to human farking behavior.

So we don't actually know what that equation looks like. We have general ideas of what parts of it look like and how it operates, but no one understands the complete, big picture to mathematical clarity, such that when we make small adjustments to the equation like changing interest rates or deregulating investment brackets, the results surprise us. Because they're almost nothing like what we predicted would happen. Not even supply and demand works the way it should.

Economics is a soft science. The changes people make to the great economics algorithm are always blind, usually self-serving, and won't work the same way forever.

There are men who come forth every now and then -- Keynes, Friedman, Greenspan, etc -- who propose theories and write treatises on how to manipulate the equation to make good things happen, and people put these theories to the test...and the theories always get things temporarily right and partly wrong, but no theory ever gets it completely right.

AcneVulgaris: It works if you pay down debt during the good times, instead of borrowing to the max like we did.

exactly. see: the 1950s and 1960s.

TravisBickle62: We need to throw away more money! Billions is not enough, we have to throw away TRILLIONS!

actually, the stimulus was too small by half and half of that was tax cuts. so, in a way, despite your feeble attempt at argumentum ad infinitum, you're actually right.

still, as small as it was, it gave us a "soft landing" rather than a second republican depression. so it did "work."

qorkfiend: KIA: Japan is entering its' second lost decade

You do realize the first "Lost Decade" was a result of government austerity, right? That Krugman recommended against it and accurately predicted the long-term effects of austerity in Japan?

yeah it's kind of telling that he was able to tack on a forward and a couple of extra chapters to his late 90s book discussing the lost decade and rebrand it as a discussion of the US's current economic issues.

KIA: FlashHarry: keynesean economic theory works

Really? Where and when?


World War II.

Roosevelt's New Deal policies didn't pull the country out of the Depression because 1930s economists underestimated how much money was actually needed to get things going again -- they simply weren't spending enough. And then the war hit, and what was WWII really but the ultimate public works project? War spending dwarfed New Deal spending tenfold. Moreover, it was direct stimulus spending that focused on genuine employment, resource utilization and mass production (and consumption) of tangible units. It put people to work, and then killed them.

Seriously, there is nothing better for a sluggish bear economy than a really big war.

If Europe and America don't fix their shiat within the next decade, desperation levels will reach the point where we will almost certainly have one.

Tingle007: Austerity is not meant to create an economic boom it's meant to pay your bills. If you could spend yourself rich despite massive debt Greece would be Germany.

or the US, circa 1933-1945.

cutting spending, and therefore cutting jobs is the absolute worst thing you can do during an economic downturn. consumer spending is 70 percent of the economy. when you fire or cut the pay of millions of workers, that can only serve to contract GDP.

paying your bills is important (tell that to the GOP, who tried to get america to welch on its debts last summer), but you can tighten the belt during good times, not bad. this is how the theory works in practice. this is how it worked after WWII.