Economics..so whats it all about?

southsiderosie · 04-02-2012 11:10PM

UsernameInUse wrote: »

Keynesian economics have brought us to our knees - I'd hazard a guess and say that nobody wants to listen to them anymore. Time for a new system - time to try Austro.

In what way? Keynesian economics calls for governments to save in good times, and 'prime the pump' in bad times - i.e. counter-cyclical government spending. But that isn't what happened: governments spend like crazy in the good times, and then are doubly-broke now that the party has ended. So the current crisis isn't necessarily a failure of Keynesianism, it is a failure of governments to maintain even a modicum of control over spending.

Honestly, I am so sick of the lazy use of the Keynesian label. Keynesianism =/= spending like a drunken sailor.

lividduck · 04-02-2012 11:14PM

southsiderosie wrote: »

Morgan Kelly is an economic historian by training, not a free marketeer, and the neo-liberal stream of economics (laissez-faire, low/no regulation, low taxes) that has dominated economic policy in the US, Ireland, and the UK for the last 20+ years.

You are the one who ill advisedidly used the blanket term "Economists", perhaps you should take wittgenstiens advice and (to parapharse) "on that of which you no nothing, speak nothing"

nlgbbbblth · 04-02-2012 11:19PM

When I started studying Economics in fifth year we were told that the 1984 Leaving Cert paper was "the most brutal ever".

southsiderosie · 04-02-2012 11:28PM

southsiderosie wrote: »

Oh, please. I'm not going to get into my background, but given the mess that trained economists have made of the whole crisis, I would venture to say that a degree in economics has little to no bearing on one's understanding of the relationship between the economy and political structures. It may be convenient to label people you disagree with, but it neither invalidates their point, nor furthers yours.

lividduck wrote: »

You are the one who ill advisedidly used the blanket term "Economists", perhaps you should take wittgenstiens advice and (to parapharse) "on that of which you no nothing, speak nothing"

Wow, look at the snark on you!

Perhaps I should have been clear about who I was referring to, but as a general rule, economic historians like Morgan Kelly are not government advisors or economic policymakers. Actually, I think the fact that he is, professionally, outside of the policy arena, and didn't have a stake in the Keynes vs. Neo-lib ideological debates, meant that he was better able to see the Irish economic situation for what it was: a fiction.

Would you disagree that professional economists - in particular, as I noted, neo-liberal economists - played a hand in the current economic crisis?

lividduck · 05-02-2012 01:31PM

southsiderosie wrote: »

Wow, look at the snark on you!

Perhaps I should have been clear about who I was referring to, but as a general rule, economic historians like Morgan Kelly are not government advisors or economic policymakers. Actually, I think the fact that he is, professionally, outside of the policy arena, and didn't have a stake in the Keynes vs. Neo-lib ideological debates, meant that he was better able to see the Irish economic situation for what it was: a fiction.

Would you disagree that professional economists - in particular, as I noted, neo-liberal economists - played a hand in the current economic crisis?

Of course some agreed with the lunatic Policies, but it was the politicans, the lobbyists (ICTU/IBEC/IFA/CIF etc), and the banks who were primarily the cause, David McWilliams,PJ Drudy, Jim Power, Sean Barrett and many others oppossed very publicly the policies being pursued, if I remember correctly our then taoiseach told them they should kill themselves.
PS Whats a snark?

Capt'n Midnight · 05-02-2012 04:16PM

dxhound2005 wrote: »

Someone told me the other day that if I buy €10,000 in Savings Certificates or other state savings products that increases the national debt by €10,000 because the state then owes the money to me.

LOL

no it means that the state doesn't have to go to the market and pay market rates for that €10,000

Instead they pay you a little less, and perhaps someone could clarify if the state also recoups some of that interest in DIRT so making it really cheap.

If the state were to offer domestic investors an interest rate after DIRT similar to what they are paying to the bonds market then they'd be offering us a gross rate of over 10%

Capt'n Midnight · 05-02-2012 04:18PM

If you laid all the worlds economists end to end they wouldn't reach a conclusion.

Capt'n Midnight · 05-02-2012 05:04PM

Economics is about hand waving and creating financial devices like derivatives and saying "this time it will be different" and thereby getting the rules put in place after the last crisis relaxed.

When there is a crisis make new rules, and repeat the whole cycle.

Regarding banks lending each other money and other ways of magic money
http://www.bis.org/statistics/otcder/dt1920a.pdf

Table 19: Amounts outstanding of over-the-counter (OTC) derivatives
By risk category and instrument
In billions of US dollars

Notional amounts outstanding
Jun 2011

707,569

just in case you missed that

$ 707,569 Billion

That's €100,000 per person on this planet

That's more than the DOUBLE the annual income of the poorest 99% of the worlds population
http://www.globalrichlist.com/how.html [info is out of date but not that much]

No matter what way you look at it lots of middlemen will get a cut on that.
Just 2% of that figure would represent the GDP of the USA. http://www.usgovernmentrevenue.com/

So a screwup in the value of outstanding derivatives could wipe out major economies.

The EU proposed transaction tax would drastically reduce such over extending.

Oh and that was Table 19, there are others

http://www.bis.org/statistics/index.htm

Oh yeah regarding the use of the word derivatives I can't say I've ever seen Economists using advanced mathematics. Certainly not in the way that scientists and engineers use to model the world,, where you must throw away the theory if it doesn't match observations.

When this was first demonstrated people thought it would be a joke, but it actually worked well enough to be of practical use. Which says a lot about how well economists understood the economy.
http://en.wikipedia.org/wiki/MONIAC_Computer

The MONIAC was approximately 2 m high, 1.2 m wide and almost 1 m deep, and consisted of a series of transparent plastic tanks and pipes which were fastened to a wooden board. Each tank represented some aspect of the UK national economy and the flow of money around the economy was illustrated by coloured water.

K-9 · 05-02-2012 05:20PM

UsernameInUse wrote: »

So you're telling us that there are no right or wrong answers in economics as to what constitutes sound economic policy?

You've completely lost the plot.

It's pretty simple, southsiderosie is saying that the present policies that you call Keynesian, aren't, same as Ron Paul supporters will say it wasn't neo-liberalism that got us into the mess. Both of you are right, but people will still go on hating Keynesian policies despite this being explained to them.

Economics..so whats it all about?

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