Do Politicians Know Anything About Economics?

[dynasaw]

Just to educate myself I re-read Joh Maynard Keynes;
Classical economics rest upon the erroneous idea that economic balance depends on supply and demand.

"in Keynes's view, the economy was chronically unstable and subject to fluctuations, and supply and demand could well balance out at an equilibrium that did not deliver full employment. The reasons were inadequate investment and over-saving, both rooted in the psychology of uncertainty.

The solution to this conundrum was seemingly simple: Replace the missing private investment with public investment, financed by deliberate deficits. The government would borrow money to spend on such things as public works; and that deficit spending, in turn, would create jobs and increase purchasing power. Striving to balance the government's budget during a slump would make things worse, not better. In order to make his argument, Keynes deployed a range of new tools -- standardized national income accounting (which led to the basic concept of gross national product), the concept of aggregate demand, and the multiplier (people receiving government money for public-works jobs will spend money, which will create new jobs). Keynes's analysis laid the basis for the field of macroeconomics, which treats the economy as a whole and focuses on government's use of fiscal policy -- spending, deficits, and tax. These tools could be used to manage aggregate demand and thus ensure full employment. As a corollary, the government would cut back its spending during times of recovery and expansion. "
http://www.pbs.org/wgbh/commandingheights/shared/minitext/ess_keynesiantheory.html

The other model is the circular flow of income where there is a reciprocity between output to generate jobs that will in turn generate spending and the creation of more jobs.

So when the right fringe want cuts, government "saving" you wonder about where the so called "common sense" has gone.

[Tansy_Gold]

1. No. n/t

[GreenPartyVoter]

2. I don't know of any economists in Congress.

:shrug:

[kenny blankenship]

6. That wouldn't help anything. Most of what most economists "know" is bullshit.

Bullshit - presented and held as God's Own Truth.

[coalition_unwilling]

9. Wow, that anti-intellectualism is really refreshing here on a so-called

progressive board.

So are you saying that the general macroeconomic equation Keynes and those who follow him developed is 'bullshit'?

[dawg]

11. No, he's right.

The economics profession has spent the last 30 years or so "unlearning" all the hard-won lessons of the Great Depression. Freshwater economists, such as those at the University of Chicago, have constructed elegant mathematical models that do not work in a real world where consumers and business-owners are not perfectly rational beings.

The economics profession is split down the middle just like the rest of the country, and conservative economists know what they need to say in order to have any influence at all on their side of the aisle. I have no respect for them whatsoever.

Keynes is considered "debunked" by many professional economists today. He doesn't fit their elegant models. No matter that his theories, and models based on his theories, appear to work, whereas his skeptics have been wrong at every turn.

[coalition_unwilling]

13. I took micro and macro from a very conservative professor. In no

way did he consider Keynes 'debunked'. While the prof may have bought the Laffer Curve and Friedman-esque monetarist theories, he presented Keynes' ideas without casting any type of aspersions on them.

So I really have to disagree that Keynes has been 'debunked' (except maybe in the same way Freud has been debunked).

[Oasis_]

17. Same here

Keynes' theory is accepted as wholly reliable among a wide range of scholars--even those with seemingly competing views.

The problem and arguments in opposition to it mainly center not around the government's ability to stimulate the economy with deficit spending, rather its inability or unwillingness to pay it back during periods of expansion and prosperity. In no way should anyone who's intellectually honest (which automatically disqualifies a large portion of the Right) view this as somehow a repudiation of Keynesian theory.

Quite the opposite, really.

Oasis

[kick-ass-bob]

15. You are talking about 'freshwater' economists only -

mostly from midwest universities, starting with Chicago. When you get to the coasts, you don't see the same patterns. Keynes is nowhere near debunked in the Ivy League and out west like Stanford.

[LiberalLoner]

3. Almost everyone in power disagrees with Keynes now and has gone back to an

earlier, "classical" Austrian school/Chicago school of free market economics. Economics that is WRONG.
And they don't even seem capable of learning. Like a child playing with matches who sets one fire after another and never seems to learn.

[madrchsod]

4. no.......

[Speck Tater]

5. Do ECONOMISTS know anything about economics? I doubt it!

Every forecast is wrong.
Every new development is "unexpected".
Every bit of economic news leaves economists shocked and bewildered.

[kick-ass-bob]

16. Only the ones who are following the wrong models. n/t

[alc]

7. they could/may know everything

They don't care. Politics takes priority to the exclusion of everything else.

[mmonk]

8. The only economics they understand are the corporate donations

to their campaigns. Except for the tea party. They have a case of libertarian delusion called Von Mises.

[Starry Messenger]

10. Why would they?

They know enough to benefit the ruling class, that's all they need now.

[Davis_X_Machina]

12. It's ok. Economists don't know anything about politics...

...or the constant harping "the stimulus should have been bigger" would not still be with us.

[undeterred]

14. They know enough to pick which strategy favors their re-election.

[Tierra_y_Libertad]

18. They believe that politics run the economy rather than the other way around.

Kinda like the proverbial flea on the elephant's forehead who thinks he's driving.

[chill_wind]

19. Great point. How many economists were appointed to the Serious Deficit Commission?

Galbraith
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x569194