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Thread: Keynes v Austerity - So how's it going?

  1. #1

    Default Keynes v Austerity - So how's it going?

    Since GGT keeps asking me how UK austerity is going and keeps getting surprised that I say well, and since the USA is spending a fortune on Keynesian stimulus as otherwise "unemployment would be over 8%" how's it going?

    Keynesian-stimulus miracle of the USA: 8.2% unemployment
    Nasty severe Tory austerity of the UK: 8.1% unemployment - Source
    Quote Originally Posted by Ominous Gamer View Post
    ℬeing upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  2. #2
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  3. #3
    Quote Originally Posted by RandBlade View Post
    Since GGT keeps asking me how UK austerity is going and keeps getting surprised that I say well, and since the USA is spending a fortune on Keynesian stimulus as otherwise "unemployment would be over 8%" how's it going?

    Keynesian-stimulus miracle of the USA: 8.2% unemployment
    Nasty severe Tory austerity of the UK: 8.1% unemployment - Source
    Not that I agree with GGT on this or any number of other things, but you know this statistic is completely meaningless, right? This is hardly a very good counterfactual.

  4. #4
    I'm just being cheeky to start a thread off and would be happy to go into a deeper and more meaningful discussion (as have many times here) arguing why I believe controlling spending to what we can actually afford is the right thing to do.
    Quote Originally Posted by Ominous Gamer View Post
    ℬeing upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  5. #5
    Quote Originally Posted by wiggin View Post
    Not that I agree with GGT on this or any number of other things, but you know this statistic is completely meaningless, right? This is hardly a very good counterfactual.
    Good, this place would be boring as hell if everyone agreed on everything.

    Quote Originally Posted by RandBlade View Post
    I'm just being cheeky to start a thread off and would be happy to go into a deeper and more meaningful discussion (as have many times here) arguing why I believe controlling spending to what we can actually afford is the right thing to do.
    Unemployment rates are just one factor, and people giving up on the job-hunt can skew the rates artificially downward. Same thing happens when trying to conceptualize standard-of-living, what "poverty" means, and how policies are made. Numbers and stats have limits.

    The US economy is schizoid. Corporate America likes to complain about "the government" interfering, but somehow doesn't consider the Fed part of government.

    Businesses and Wall St. waited with bated breath for The Chairman to speak....they've been compared to crack addicts jonesing for their next cheap money fix...he threw it back to congress and slapped their wrists, but only just a 'lil bit.

    How's it going with your Ex-Chequer and agencies tasked with supervising banks, and LIBOR? You guys may be controlling public spending, to make the books look better, but meanwhile the banks are using fraudulent methods to cook their own books, and manipulate money. Not sure I'd call that successful policy, would you?

  6. #6
    Anywho, I was being a bit cheeky too, Rand. It's too simplistic to say Austerity is good, Keynesianism is bad. It's way too simplistic to use unemployment rates as the best metric of How It's Going. And it's wayyy too simplistic to compare the UK with the US --- not just because your nation is smaller in size than some of our states, but because the UK has totally different public expenditures and taxations.

    During "austerity" measures, your government still maintains a national interest in public health and funding the NHS. Your nation relies heavily on the US-by-proxy, for advances in pharmaceutical and medical innovations, R & D, even military advances. While the US is the biggest global spender on pretty much everything important to its citizens (healthcare, education, military), we're also among the lowest overall taxing nations, all things considered. But our citizens don't enjoy the same quality or access to things like health and education as the other nations we're "assisting". Even the 1% who voluntarily join our military don't get the same services as entire nations. Hell, we've got politicians offering citizenship in exchange for military service, even for "illegal aliens" or undocumented immigrants. We have soldiers who served in Iraq and Afghanistan, awarded Purple Hearts and citizenship post-mortum. Think about that.

    That means that tons of other nations have been "riding on US coattails" so-to-speak. Whether it's the Global War on Terror, benefiting from our space program, our NIH/CDC, the pharmaceutical industry discoveries, our high tech innovations....everything that originated in the US has been shared with the world. That's a good thing. But it can become a self-defeating bad thing, when our own citizens can't access the very life-saving drugs or treatments we discovered, or a large percentage of our population can't afford high-speed internet (or find free WiFi), but we're closing public libraries offering those public services.

    Compare that to Canada, who's made access to the internet a national imperative. Not as a means for private profits, but as an end-goal for all citizens to have the same opportunities in a future that will require computer access.

    The thing about "Austerity" that bugs me to high heaven, is how technocrats have hijacked the tax/budget process. Dollars in, Dollars out. That's too simplistic, and too ideological about money itself. Technocrats ignore social and cultural ramifications, they neglect the connection between 'money' and ordinary citizens.

    That's where pure capitalism is a big fricking fail for national policy, let alone international policy. That's why we're in the middle of a global debate about workers, jobs, employers, profits, out-sourcing, off-shoring, failed states, failing nations.



    I'm not sure if getting into the Olympics would be part of UK "austerity", or reliance on other nations and private funding for a temporary uptick in your national economy.....it didn't do much for Greece to host the Games, did it.
    Last edited by GGT; 07-19-2012 at 01:28 AM.

  7. #7
    Quote Originally Posted by GGT View Post
    Unemployment rates are just one factor, and people giving up on the job-hunt can skew the rates artificially downward. Same thing happens when trying to conceptualize standard-of-living, what "poverty" means, and how policies are made. Numbers and stats have limits.
    Question to RB: Does the UK have a system where people have to do a certain number of applications to get unemployment money?
    "Wer Visionen hat, sollte zum Arzt gehen." - Helmut Schmidt

  8. #8

  9. #9
    Estonia has a population less than 2 million, with a budget less than $6 Billion. Their austerity was required to adopt the eurodollar, and there were currency valuations to consider. What's your point?

  10. #10
    Hating on Paul.
    In the future, the Berlin wall will be a mile high, and made of steel. You too will be made to crawl, to lick children's blood from jackboots. There will be no creativity, only productivity. Instead of love there will be fear and distrust, instead of surrender there will be submission. Contact will be replaced with isolation, and joy with shame. Hope will cease to exist as a concept. The Earth will be covered with steel and concrete. There will be an electronic policeman in every head. Your children will be born in chains, live only to serve, and die in anguish and ignorance.
    The universe we observe has precisely the properties we should expect if there is, at bottom, no design, no purpose, no evil, no good, nothing but blind, pitiless indifference.

  11. #11
    Quote Originally Posted by GGT View Post
    Estonia has a population less than 2 million, with a budget less than $6 Billion. Their austerity was required to adopt the eurodollar, and there were currency valuations to consider. What's your point?
    Living within your means is a good thing and Krugman is a numpty.
    Quote Originally Posted by Ominous Gamer View Post
    ℬeing upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  12. #12
    He's Jewish, actually
    In the future, the Berlin wall will be a mile high, and made of steel. You too will be made to crawl, to lick children's blood from jackboots. There will be no creativity, only productivity. Instead of love there will be fear and distrust, instead of surrender there will be submission. Contact will be replaced with isolation, and joy with shame. Hope will cease to exist as a concept. The Earth will be covered with steel and concrete. There will be an electronic policeman in every head. Your children will be born in chains, live only to serve, and die in anguish and ignorance.
    The universe we observe has precisely the properties we should expect if there is, at bottom, no design, no purpose, no evil, no good, nothing but blind, pitiless indifference.

  13. #13
    Quote Originally Posted by RandBlade View Post
    Living within your means is a good thing and Krugman is a numpty.
    "Controlling spending" and balancing budgets is important to everyone these days. The debate is how much to cut, from which programs, and when. Add to that paying down deficits, changing taxes, with enough revenue to keep essential gov't services running, and keeping our debt obligations. Those policies are in politicians' hands, state and federal both. That's their job even during downturns, prolonged recessions, slow growth and long slogs. Are we on the same page so far?

    The "stimuli" included QE by central banks and Treasury moves, buying/holding financial assets in order to bailout rescue TBTF and SIFI banks and investment firms. What your Treasury will do matters, and what the ECB will do matters. Agreed?



    http://www.washingtonpost.com/opinio...syW_story.html

    The ECB in particular has added assets over the past year, expanding its portfolio by more than 1.1 trillion euros since July 2011. This explosion of assets makes the ECB’s balance sheet (totaling about 3.1 trillion euros, or $3.8 trillion) considerably larger than the Fed’s (about $2.8 trillion).

    The UK not only has the London Whale, but now the LIBOR scandal to deal with. You only mentioned the "good" employment rate, but your source showed a mixed bag of numbers, some not very good. Like long-term unemployed, applications for unemployment (Jobseeker's Allowance sounds nicer ), and London's 8.9% unemployed. UK is also "technically" in another recession. Maybe the Olympics "boost" will continue...but it's possible those added part-time jobs will simply disappear after the tourists go home.

    Wouldn't it make more sense to look at the whole picture of national economy, and not just employment/unemployment numbers? That would include politics, laws, central banks, treasury departments, currency exchanges, banking/financial institutions, even cultural expectations and standard-of-living issues. In a globally connected world....that's slowed dramatically in once strong and dominant nations, but growing and expanding in once "third world" nations....the trillion dollar question is how to find the balance. It seems to me that Conventional Wisdom, using old models and theories, are outdated. I'd welcome something modern and different, other than Keynes-Hayek-Mises-whomever, liberal-conservative, public-private, right-wrong comparisons. We need a new hybrid, IMO.


  14. #14
    Quote Originally Posted by RandBlade View Post
    Since GGT keeps asking me how UK austerity is going and keeps getting surprised that I say well, and since the USA is spending a fortune on Keynesian stimulus as otherwise "unemployment would be over 8%" how's it going?

    Keynesian-stimulus miracle of the USA: 8.2% unemployment
    Nasty severe Tory austerity of the UK: 8.1% unemployment - Source
    US is not in the keynesian path. During the New Deal, Roosevelt asked the rich people some sacrifice to give money to the poor. The programs were what historians call the "3 Rs": Relief, Recovery, and Reform. Relief for the unemployed and poor. Recovery of the economy to normal levels. Reform of the financial system to prevent a repeat depression.

    Nowadays what you see in US is severe job cuts in private sector, and some other cuts in public sector. The so called stimulus is about providing banks with liquidity through Quantitative Easing (printing money) to buy bank securities and toxic assets so banks can lend money to provide liquidity to economy. The problem of that is that banks lend P dollars and they collect P+I dollars, so in the end banks are sucking I dollars from the economy. Financial reform was a failure, as it only implemented shy measures to stop certain types of bank abuse, but it did not solve the root of the problem, it did not ban the derivatives that caused the crisis, it did not separate deposit banking from investment banking (as there is a conflict of interests there).

    The problem in US is that if Americans do not have money, there is no recovery, as consumers/customers are the drive of the economy. Currently, aid is aimed at banks and some companies, not people. So you may call it keynesian, but it is not.

    Also, as for unemployment figures, you may compare official data with independent studies. In 2010, official figures showed unemployment in US under 10%, while other studies showed more that 22%.

    Scary New Wage Data
    http://tax.com/taxcom/taxblog.nsf/Pe...Z?OpenDocument

    It happens because in US, if you are not working for a job full time, because you are taking a course to educate yourself, or if you already gave up looking for a job, you are not officially considered unemployed in US.

    Also this was the situation in 2010:

    The top 20% are prospering and spending money; the bottom 80% are not, but thanks to vast wealth disparity, the top slice of households can keep consumer spending aloft. This provides an illusion of "recovery" that masks the insecurity and decline of the bottom 80%.
    Source: http://www.businessinsider.com/the-k...yramid-2010-11

    So comparing UK and US is comparing apples and grapes in some ways. However there is one thing that summarizes the situation:

    UBS: The Risk Of Hyperinflation Is Largest In The US And The UK
    http://www.businessinsider.com/hyper...urrency-2012-7
    Last edited by ar81; 07-23-2012 at 03:41 PM.
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