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On February 10 2012 00:07 Trollk wrote:Show nested quote +On February 09 2012 08:35 Hider wrote:On February 09 2012 08:19 Trollk wrote:On February 09 2012 07:58 Hider wrote:On February 09 2012 07:55 vetinari wrote:
Greece will have to default and leave the euro. Its going to be chaos for them, but staying in the euro is economic suicide, because austerity during a recession is unbelievably retarded. If labour markets were very flexible they could continue staying in the euro. But since the labour markets aren't able to accept that wages need to be lower, and some people need to befired, the country would benefit from a devalulation of the currency. So while austerity is the solution to the problem of too much spending, the crises will be prolonged when unions has too much power, and government insitutions interfer with the market. Outdated and caught up by reality. This New-Classical point of view has been tried often, failed, tried again and failed again. First time where it was shown that it did not work at non-full employment was during the Great Depression. The President of the USA asked these economists what the solution was, and its Quoted was their advice. The unions were broken (what automaticly occurs in times of duress. People leave unions for personal certainty) and still there was depression. Demand for labor didn't suddenly peaked as these economists suggested because of the price drop. No, because there wasn't any aggregate demand for products and thus no need for hiring new workers to satisfy aggregate demand. The problem was then and it is still today (for the weak state of the current economy, not the europroblem specific) is that worldwide aggregate demand < worldwide supply. And as long as this is the case, there will not be a revival of the world economy. Lowering wages and decreasing public spending will only make our times even harder. What the people who argue for decreasing public spending often forget, is the simply the difference between a household and a government. If a household is in financial trouble, it should reduce spending till the point where revenues >= spenditures. Applying this logic to the governement fails because government spending affets general income. If 1 household decreases spending then the economy wouldn't suffer very much and would stay more or less the same. For a government, whos spending often combine to 30+% of the GDP this is NOT the case. Decreasing expenditures would decrease their incomes and the general state of the economy. Making everybody worse off then they were before. Your rewriting history. The Great Depression was a big government experiment. Maybe Hoover wasn't the favourite politican of Keynes, but this certainly wasn't a refusal of Says law. Problem with the politics of Hoover and Roosvelt was that they didn't let prices fall. This is how a crisis is solved. When prices are too high, they ought to go down. Its really that simple. There is not magic cure. You cant make the economy sound by increasing demand at procucts which are too high priced. Savings are needed. We had this discssuion at the republician thread. You can look it up if you have time. The problem of the keynesian way of thinking is that they for some reason think that the bubble economy is sound. That prices aren't too high and that some people don't need to get fired. You just need to increase spending becasue that increases aggreate numbers. But that only prolongs the crisis. Btw your example is actually wrong even according to keynesian logic. A household spending change has a multiplicator effect as well. What you might have wanted to imply was that government can idebt it self much more as it can always increase revenues (taxes) to get rid of the debt. Households can't do that. Im rewriting? Your... Ignoring the causes for the Great Depression (for which I haven't studied sufficiently to somehow decent opnion), one cannot dispute the fact that the massive government spending, caused by the war, ended the depression. WW2 saved the USA from their Depression. Thanks for the information on the discussion in the republician thread though. I will surely look it up. 
Your point was that austerity was the reason why the Great Depression lasted so long. That was definitely a rewriting a history as both Roosevelt and Hoover were big spenders (compared to the norm back then).
What got us out of the great depression is another discussion. But wasing ressources on war was definitely not the what did it.
If wars could actually was good for the economy why not do the following every time we have a ression:
1) Hire people to create a hole in the ground.
2) Hire people to fill it.
Repeat proces until economy is fixed...
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On February 10 2012 00:20 Hider wrote:Show nested quote +On February 10 2012 00:07 Trollk wrote:On February 09 2012 08:35 Hider wrote:On February 09 2012 08:19 Trollk wrote:On February 09 2012 07:58 Hider wrote:On February 09 2012 07:55 vetinari wrote:
Greece will have to default and leave the euro. Its going to be chaos for them, but staying in the euro is economic suicide, because austerity during a recession is unbelievably retarded. If labour markets were very flexible they could continue staying in the euro. But since the labour markets aren't able to accept that wages need to be lower, and some people need to befired, the country would benefit from a devalulation of the currency. So while austerity is the solution to the problem of too much spending, the crises will be prolonged when unions has too much power, and government insitutions interfer with the market. Outdated and caught up by reality. This New-Classical point of view has been tried often, failed, tried again and failed again. First time where it was shown that it did not work at non-full employment was during the Great Depression. The President of the USA asked these economists what the solution was, and its Quoted was their advice. The unions were broken (what automaticly occurs in times of duress. People leave unions for personal certainty) and still there was depression. Demand for labor didn't suddenly peaked as these economists suggested because of the price drop. No, because there wasn't any aggregate demand for products and thus no need for hiring new workers to satisfy aggregate demand. The problem was then and it is still today (for the weak state of the current economy, not the europroblem specific) is that worldwide aggregate demand < worldwide supply. And as long as this is the case, there will not be a revival of the world economy. Lowering wages and decreasing public spending will only make our times even harder. What the people who argue for decreasing public spending often forget, is the simply the difference between a household and a government. If a household is in financial trouble, it should reduce spending till the point where revenues >= spenditures. Applying this logic to the governement fails because government spending affets general income. If 1 household decreases spending then the economy wouldn't suffer very much and would stay more or less the same. For a government, whos spending often combine to 30+% of the GDP this is NOT the case. Decreasing expenditures would decrease their incomes and the general state of the economy. Making everybody worse off then they were before. Your rewriting history. The Great Depression was a big government experiment. Maybe Hoover wasn't the favourite politican of Keynes, but this certainly wasn't a refusal of Says law. Problem with the politics of Hoover and Roosvelt was that they didn't let prices fall. This is how a crisis is solved. When prices are too high, they ought to go down. Its really that simple. There is not magic cure. You cant make the economy sound by increasing demand at procucts which are too high priced. Savings are needed. We had this discssuion at the republician thread. You can look it up if you have time. The problem of the keynesian way of thinking is that they for some reason think that the bubble economy is sound. That prices aren't too high and that some people don't need to get fired. You just need to increase spending becasue that increases aggreate numbers. But that only prolongs the crisis. Btw your example is actually wrong even according to keynesian logic. A household spending change has a multiplicator effect as well. What you might have wanted to imply was that government can idebt it self much more as it can always increase revenues (taxes) to get rid of the debt. Households can't do that. Im rewriting? Your... Ignoring the causes for the Great Depression (for which I haven't studied sufficiently to somehow decent opnion), one cannot dispute the fact that the massive government spending, caused by the war, ended the depression. WW2 saved the USA from their Depression. Thanks for the information on the discussion in the republician thread though. I will surely look it up. Your point was that austerity was the reason why the Great Depression lasted so long. That was definitely a rewriting a history as both Roosevelt and Hoover were big spenders (compared to the norm back then). What got us out of the great depression is another discussion. But wasing ressources on war was definitely not the what did it. If wars could actually was good for the economy why not do the following every time we have a ression: 1) Hire people to create a hole in the ground. 2) Hire people to fill it. Repeat proces until economy is fixed...
No he is right.
The current crisis is all keynesian (everything is going as keynes said until now, which is not always the case, see the stagflation in the 70s). He is completly right when he says that austerity always aggravate economical crisis. It's a macroeconomic law : in the short term, you don't really care where you are spending your money, but only how much you are spending because you consider that the people who will have it will spend it.
Efficient investment is completly different from short term political spendings during a crisis.
What is happening in Greece right now is all because the government cut down all the pay and stopped all their investment. Less money in the economy in a crisis = more recession.
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On February 10 2012 00:28 WhiteDog wrote:Show nested quote +On February 10 2012 00:20 Hider wrote:On February 10 2012 00:07 Trollk wrote:On February 09 2012 08:35 Hider wrote:On February 09 2012 08:19 Trollk wrote:On February 09 2012 07:58 Hider wrote:On February 09 2012 07:55 vetinari wrote:
Greece will have to default and leave the euro. Its going to be chaos for them, but staying in the euro is economic suicide, because austerity during a recession is unbelievably retarded. If labour markets were very flexible they could continue staying in the euro. But since the labour markets aren't able to accept that wages need to be lower, and some people need to befired, the country would benefit from a devalulation of the currency. So while austerity is the solution to the problem of too much spending, the crises will be prolonged when unions has too much power, and government insitutions interfer with the market. Outdated and caught up by reality. This New-Classical point of view has been tried often, failed, tried again and failed again. First time where it was shown that it did not work at non-full employment was during the Great Depression. The President of the USA asked these economists what the solution was, and its Quoted was their advice. The unions were broken (what automaticly occurs in times of duress. People leave unions for personal certainty) and still there was depression. Demand for labor didn't suddenly peaked as these economists suggested because of the price drop. No, because there wasn't any aggregate demand for products and thus no need for hiring new workers to satisfy aggregate demand. The problem was then and it is still today (for the weak state of the current economy, not the europroblem specific) is that worldwide aggregate demand < worldwide supply. And as long as this is the case, there will not be a revival of the world economy. Lowering wages and decreasing public spending will only make our times even harder. What the people who argue for decreasing public spending often forget, is the simply the difference between a household and a government. If a household is in financial trouble, it should reduce spending till the point where revenues >= spenditures. Applying this logic to the governement fails because government spending affets general income. If 1 household decreases spending then the economy wouldn't suffer very much and would stay more or less the same. For a government, whos spending often combine to 30+% of the GDP this is NOT the case. Decreasing expenditures would decrease their incomes and the general state of the economy. Making everybody worse off then they were before. Your rewriting history. The Great Depression was a big government experiment. Maybe Hoover wasn't the favourite politican of Keynes, but this certainly wasn't a refusal of Says law. Problem with the politics of Hoover and Roosvelt was that they didn't let prices fall. This is how a crisis is solved. When prices are too high, they ought to go down. Its really that simple. There is not magic cure. You cant make the economy sound by increasing demand at procucts which are too high priced. Savings are needed. We had this discssuion at the republician thread. You can look it up if you have time. The problem of the keynesian way of thinking is that they for some reason think that the bubble economy is sound. That prices aren't too high and that some people don't need to get fired. You just need to increase spending becasue that increases aggreate numbers. But that only prolongs the crisis. Btw your example is actually wrong even according to keynesian logic. A household spending change has a multiplicator effect as well. What you might have wanted to imply was that government can idebt it self much more as it can always increase revenues (taxes) to get rid of the debt. Households can't do that. Im rewriting? Your... Ignoring the causes for the Great Depression (for which I haven't studied sufficiently to somehow decent opnion), one cannot dispute the fact that the massive government spending, caused by the war, ended the depression. WW2 saved the USA from their Depression. Thanks for the information on the discussion in the republician thread though. I will surely look it up. Your point was that austerity was the reason why the Great Depression lasted so long. That was definitely a rewriting a history as both Roosevelt and Hoover were big spenders (compared to the norm back then). What got us out of the great depression is another discussion. But wasing ressources on war was definitely not the what did it. If wars could actually was good for the economy why not do the following every time we have a ression: 1) Hire people to create a hole in the ground. 2) Hire people to fill it. Repeat proces until economy is fixed... No he is right. The current crisis is all keynesian (everything is going as keynes said until now, which is not always the case, see the stagflation in the 70s). He is completly right when he says that austerity always aggravate economical crisis. It's a macroeconomic law : in the short term, you don't really care where you are spending your money, but only how much you are spending. Efficient investment is completly different from short term political spendings. What is happening in Greece right now is all because the government cut down all the pay and stopped all their investment. Less money in the economy in a crisis = more recession.
What I got from your post was:
1) I am wrong (no explanation)
2) Then you proceed to talk about something completely else.
3) Your arguments wasn't even a response to my prev. comments of the real problem of greece.
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On February 10 2012 00:31 Hider wrote:Show nested quote +On February 10 2012 00:28 WhiteDog wrote:On February 10 2012 00:20 Hider wrote:On February 10 2012 00:07 Trollk wrote:On February 09 2012 08:35 Hider wrote:On February 09 2012 08:19 Trollk wrote:On February 09 2012 07:58 Hider wrote:On February 09 2012 07:55 vetinari wrote:
Greece will have to default and leave the euro. Its going to be chaos for them, but staying in the euro is economic suicide, because austerity during a recession is unbelievably retarded. If labour markets were very flexible they could continue staying in the euro. But since the labour markets aren't able to accept that wages need to be lower, and some people need to befired, the country would benefit from a devalulation of the currency. So while austerity is the solution to the problem of too much spending, the crises will be prolonged when unions has too much power, and government insitutions interfer with the market. Outdated and caught up by reality. This New-Classical point of view has been tried often, failed, tried again and failed again. First time where it was shown that it did not work at non-full employment was during the Great Depression. The President of the USA asked these economists what the solution was, and its Quoted was their advice. The unions were broken (what automaticly occurs in times of duress. People leave unions for personal certainty) and still there was depression. Demand for labor didn't suddenly peaked as these economists suggested because of the price drop. No, because there wasn't any aggregate demand for products and thus no need for hiring new workers to satisfy aggregate demand. The problem was then and it is still today (for the weak state of the current economy, not the europroblem specific) is that worldwide aggregate demand < worldwide supply. And as long as this is the case, there will not be a revival of the world economy. Lowering wages and decreasing public spending will only make our times even harder. What the people who argue for decreasing public spending often forget, is the simply the difference between a household and a government. If a household is in financial trouble, it should reduce spending till the point where revenues >= spenditures. Applying this logic to the governement fails because government spending affets general income. If 1 household decreases spending then the economy wouldn't suffer very much and would stay more or less the same. For a government, whos spending often combine to 30+% of the GDP this is NOT the case. Decreasing expenditures would decrease their incomes and the general state of the economy. Making everybody worse off then they were before. Your rewriting history. The Great Depression was a big government experiment. Maybe Hoover wasn't the favourite politican of Keynes, but this certainly wasn't a refusal of Says law. Problem with the politics of Hoover and Roosvelt was that they didn't let prices fall. This is how a crisis is solved. When prices are too high, they ought to go down. Its really that simple. There is not magic cure. You cant make the economy sound by increasing demand at procucts which are too high priced. Savings are needed. We had this discssuion at the republician thread. You can look it up if you have time. The problem of the keynesian way of thinking is that they for some reason think that the bubble economy is sound. That prices aren't too high and that some people don't need to get fired. You just need to increase spending becasue that increases aggreate numbers. But that only prolongs the crisis. Btw your example is actually wrong even according to keynesian logic. A household spending change has a multiplicator effect as well. What you might have wanted to imply was that government can idebt it self much more as it can always increase revenues (taxes) to get rid of the debt. Households can't do that. Im rewriting? Your... Ignoring the causes for the Great Depression (for which I haven't studied sufficiently to somehow decent opnion), one cannot dispute the fact that the massive government spending, caused by the war, ended the depression. WW2 saved the USA from their Depression. Thanks for the information on the discussion in the republician thread though. I will surely look it up. Your point was that austerity was the reason why the Great Depression lasted so long. That was definitely a rewriting a history as both Roosevelt and Hoover were big spenders (compared to the norm back then). What got us out of the great depression is another discussion. But wasing ressources on war was definitely not the what did it. If wars could actually was good for the economy why not do the following every time we have a ression: 1) Hire people to create a hole in the ground. 2) Hire people to fill it. Repeat proces until economy is fixed... No he is right. The current crisis is all keynesian (everything is going as keynes said until now, which is not always the case, see the stagflation in the 70s). He is completly right when he says that austerity always aggravate economical crisis. It's a macroeconomic law : in the short term, you don't really care where you are spending your money, but only how much you are spending. Efficient investment is completly different from short term political spendings. What is happening in Greece right now is all because the government cut down all the pay and stopped all their investment. Less money in the economy in a crisis = more recession. What I got from your post was: 1) I am wrong (no explanation) 2) Then you proceed to talk about something completely else. 3) Your arguments wasn't even a response to my prev. comments of the real problem of greece.
Sorry but I just merely put your conversation back in the present but everything else is pretty clear.
But since the labour markets aren't able to accept that wages need to be lower, and some people need to befired, the country would benefit from a devalulation of the currency.
So while austerity is the solution to the problem of too much spending, the crises will be prolonged when unions has too much power, and government insitutions interfer with the market.
This is where you are wrong, and all the discussion after that is just the reflexion of it. Basically, you are thinking the current "debt crisis" is due to "too much spending" and austerity is the solution to that. But the problem is that due to the lack of investment, the state spend too much, which created a huge debt.
Austerity maybe the solution to the debt, but not to the crisis : austerity will just aggravate the economical crisis.
You think long term, yes long term the greek will have to reduce the government spendings, but on the short term, if you reduce it now, you are just saying listen, you are in the shit, I will put you completly into it. That is what is happening right now.
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On February 10 2012 00:20 Hider wrote:Show nested quote +On February 10 2012 00:07 Trollk wrote:On February 09 2012 08:35 Hider wrote:On February 09 2012 08:19 Trollk wrote:On February 09 2012 07:58 Hider wrote:On February 09 2012 07:55 vetinari wrote:
Greece will have to default and leave the euro. Its going to be chaos for them, but staying in the euro is economic suicide, because austerity during a recession is unbelievably retarded. If labour markets were very flexible they could continue staying in the euro. But since the labour markets aren't able to accept that wages need to be lower, and some people need to befired, the country would benefit from a devalulation of the currency. So while austerity is the solution to the problem of too much spending, the crises will be prolonged when unions has too much power, and government insitutions interfer with the market. Outdated and caught up by reality. This New-Classical point of view has been tried often, failed, tried again and failed again. First time where it was shown that it did not work at non-full employment was during the Great Depression. The President of the USA asked these economists what the solution was, and its Quoted was their advice. The unions were broken (what automaticly occurs in times of duress. People leave unions for personal certainty) and still there was depression. Demand for labor didn't suddenly peaked as these economists suggested because of the price drop. No, because there wasn't any aggregate demand for products and thus no need for hiring new workers to satisfy aggregate demand. The problem was then and it is still today (for the weak state of the current economy, not the europroblem specific) is that worldwide aggregate demand < worldwide supply. And as long as this is the case, there will not be a revival of the world economy. Lowering wages and decreasing public spending will only make our times even harder. What the people who argue for decreasing public spending often forget, is the simply the difference between a household and a government. If a household is in financial trouble, it should reduce spending till the point where revenues >= spenditures. Applying this logic to the governement fails because government spending affets general income. If 1 household decreases spending then the economy wouldn't suffer very much and would stay more or less the same. For a government, whos spending often combine to 30+% of the GDP this is NOT the case. Decreasing expenditures would decrease their incomes and the general state of the economy. Making everybody worse off then they were before. Your rewriting history. The Great Depression was a big government experiment. Maybe Hoover wasn't the favourite politican of Keynes, but this certainly wasn't a refusal of Says law. Problem with the politics of Hoover and Roosvelt was that they didn't let prices fall. This is how a crisis is solved. When prices are too high, they ought to go down. Its really that simple. There is not magic cure. You cant make the economy sound by increasing demand at procucts which are too high priced. Savings are needed. We had this discssuion at the republician thread. You can look it up if you have time. The problem of the keynesian way of thinking is that they for some reason think that the bubble economy is sound. That prices aren't too high and that some people don't need to get fired. You just need to increase spending becasue that increases aggreate numbers. But that only prolongs the crisis. Btw your example is actually wrong even according to keynesian logic. A household spending change has a multiplicator effect as well. What you might have wanted to imply was that government can idebt it self much more as it can always increase revenues (taxes) to get rid of the debt. Households can't do that. Im rewriting? Your... Ignoring the causes for the Great Depression (for which I haven't studied sufficiently to somehow decent opnion), one cannot dispute the fact that the massive government spending, caused by the war, ended the depression. WW2 saved the USA from their Depression. Thanks for the information on the discussion in the republician thread though. I will surely look it up. Your point was that austerity was the reason why the Great Depression lasted so long. That was definitely a rewriting a history as both Roosevelt and Hoover were big spenders (compared to the norm back then). What got us out of the great depression is another discussion. But wasing ressources on war was definitely not the what did it. If wars could actually was good for the economy why not do the following every time we have a ression: 1) Hire people to create a hole in the ground. 2) Hire people to fill it. Repeat proces until economy is fixed...
Another point of view is that their spending wasn't high enough and therefor the GD lasted so long.
I do not say that wars are an efficient way of spending scarce resources. What I pointed out was that massive spending offseted the negative spiral. The spending created jobs and those jobs increased demand.
Your example indeed does not work. But that is because hiring people to do those chores, would not increase their future productivity.
My belief is that in times of economic recession/depression, the government has to increase its lending and invest that money in activities that increase future productivity. For instance, schools/infrastructure. This will increase the (human) capital the long run and thus make the government in a better shape to pay of the money the lended during the crisis. The spending would be an investement.
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On February 10 2012 00:40 WhiteDog wrote:Show nested quote +On February 10 2012 00:31 Hider wrote:On February 10 2012 00:28 WhiteDog wrote:On February 10 2012 00:20 Hider wrote:On February 10 2012 00:07 Trollk wrote:On February 09 2012 08:35 Hider wrote:On February 09 2012 08:19 Trollk wrote:On February 09 2012 07:58 Hider wrote:On February 09 2012 07:55 vetinari wrote:
Greece will have to default and leave the euro. Its going to be chaos for them, but staying in the euro is economic suicide, because austerity during a recession is unbelievably retarded. If labour markets were very flexible they could continue staying in the euro. But since the labour markets aren't able to accept that wages need to be lower, and some people need to befired, the country would benefit from a devalulation of the currency. So while austerity is the solution to the problem of too much spending, the crises will be prolonged when unions has too much power, and government insitutions interfer with the market. Outdated and caught up by reality. This New-Classical point of view has been tried often, failed, tried again and failed again. First time where it was shown that it did not work at non-full employment was during the Great Depression. The President of the USA asked these economists what the solution was, and its Quoted was their advice. The unions were broken (what automaticly occurs in times of duress. People leave unions for personal certainty) and still there was depression. Demand for labor didn't suddenly peaked as these economists suggested because of the price drop. No, because there wasn't any aggregate demand for products and thus no need for hiring new workers to satisfy aggregate demand. The problem was then and it is still today (for the weak state of the current economy, not the europroblem specific) is that worldwide aggregate demand < worldwide supply. And as long as this is the case, there will not be a revival of the world economy. Lowering wages and decreasing public spending will only make our times even harder. What the people who argue for decreasing public spending often forget, is the simply the difference between a household and a government. If a household is in financial trouble, it should reduce spending till the point where revenues >= spenditures. Applying this logic to the governement fails because government spending affets general income. If 1 household decreases spending then the economy wouldn't suffer very much and would stay more or less the same. For a government, whos spending often combine to 30+% of the GDP this is NOT the case. Decreasing expenditures would decrease their incomes and the general state of the economy. Making everybody worse off then they were before. Your rewriting history. The Great Depression was a big government experiment. Maybe Hoover wasn't the favourite politican of Keynes, but this certainly wasn't a refusal of Says law. Problem with the politics of Hoover and Roosvelt was that they didn't let prices fall. This is how a crisis is solved. When prices are too high, they ought to go down. Its really that simple. There is not magic cure. You cant make the economy sound by increasing demand at procucts which are too high priced. Savings are needed. We had this discssuion at the republician thread. You can look it up if you have time. The problem of the keynesian way of thinking is that they for some reason think that the bubble economy is sound. That prices aren't too high and that some people don't need to get fired. You just need to increase spending becasue that increases aggreate numbers. But that only prolongs the crisis. Btw your example is actually wrong even according to keynesian logic. A household spending change has a multiplicator effect as well. What you might have wanted to imply was that government can idebt it self much more as it can always increase revenues (taxes) to get rid of the debt. Households can't do that. Im rewriting? Your... Ignoring the causes for the Great Depression (for which I haven't studied sufficiently to somehow decent opnion), one cannot dispute the fact that the massive government spending, caused by the war, ended the depression. WW2 saved the USA from their Depression. Thanks for the information on the discussion in the republician thread though. I will surely look it up. Your point was that austerity was the reason why the Great Depression lasted so long. That was definitely a rewriting a history as both Roosevelt and Hoover were big spenders (compared to the norm back then). What got us out of the great depression is another discussion. But wasing ressources on war was definitely not the what did it. If wars could actually was good for the economy why not do the following every time we have a ression: 1) Hire people to create a hole in the ground. 2) Hire people to fill it. Repeat proces until economy is fixed... No he is right. The current crisis is all keynesian (everything is going as keynes said until now, which is not always the case, see the stagflation in the 70s). He is completly right when he says that austerity always aggravate economical crisis. It's a macroeconomic law : in the short term, you don't really care where you are spending your money, but only how much you are spending. Efficient investment is completly different from short term political spendings. What is happening in Greece right now is all because the government cut down all the pay and stopped all their investment. Less money in the economy in a crisis = more recession. What I got from your post was: 1) I am wrong (no explanation) 2) Then you proceed to talk about something completely else. 3) Your arguments wasn't even a response to my prev. comments of the real problem of greece. Sorry but I just merely put your conversation back in the present but everything else is pretty clear. Show nested quote +But since the labour markets aren't able to accept that wages need to be lower, and some people need to befired, the country would benefit from a devalulation of the currency.
So while austerity is the solution to the problem of too much spending, the crises will be prolonged when unions has too much power, and government insitutions interfer with the market. This is where you are wrong, and all the discussion after that is just the reflexion of it. Basically, you are thinking the current "debt crisis" is due to "too much spending" and austerity is the solution to that. But the problem is that due to the lack of investment, the state spend too much, which created a huge debt. Austerity maybe the solution to the debt, but not to the crisis : austerity will just aggravate the economical crisis. You think long term, yes long term the greek will have to reduce the government spendings, but on the short term, if you reduce it now, you are just saying listen, you are in the shit, I will put you completly into it. That is what is happening right now.
Investments? Private investmenints? Governemnt? Elaborate.
But its true that ressoruces consumed cannot be invested. Not sure how that is related to anything.
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On February 10 2012 00:44 Trollk wrote:Show nested quote +On February 10 2012 00:20 Hider wrote:On February 10 2012 00:07 Trollk wrote:On February 09 2012 08:35 Hider wrote:On February 09 2012 08:19 Trollk wrote:On February 09 2012 07:58 Hider wrote:On February 09 2012 07:55 vetinari wrote:
Greece will have to default and leave the euro. Its going to be chaos for them, but staying in the euro is economic suicide, because austerity during a recession is unbelievably retarded. If labour markets were very flexible they could continue staying in the euro. But since the labour markets aren't able to accept that wages need to be lower, and some people need to befired, the country would benefit from a devalulation of the currency. So while austerity is the solution to the problem of too much spending, the crises will be prolonged when unions has too much power, and government insitutions interfer with the market. Outdated and caught up by reality. This New-Classical point of view has been tried often, failed, tried again and failed again. First time where it was shown that it did not work at non-full employment was during the Great Depression. The President of the USA asked these economists what the solution was, and its Quoted was their advice. The unions were broken (what automaticly occurs in times of duress. People leave unions for personal certainty) and still there was depression. Demand for labor didn't suddenly peaked as these economists suggested because of the price drop. No, because there wasn't any aggregate demand for products and thus no need for hiring new workers to satisfy aggregate demand. The problem was then and it is still today (for the weak state of the current economy, not the europroblem specific) is that worldwide aggregate demand < worldwide supply. And as long as this is the case, there will not be a revival of the world economy. Lowering wages and decreasing public spending will only make our times even harder. What the people who argue for decreasing public spending often forget, is the simply the difference between a household and a government. If a household is in financial trouble, it should reduce spending till the point where revenues >= spenditures. Applying this logic to the governement fails because government spending affets general income. If 1 household decreases spending then the economy wouldn't suffer very much and would stay more or less the same. For a government, whos spending often combine to 30+% of the GDP this is NOT the case. Decreasing expenditures would decrease their incomes and the general state of the economy. Making everybody worse off then they were before. Your rewriting history. The Great Depression was a big government experiment. Maybe Hoover wasn't the favourite politican of Keynes, but this certainly wasn't a refusal of Says law. Problem with the politics of Hoover and Roosvelt was that they didn't let prices fall. This is how a crisis is solved. When prices are too high, they ought to go down. Its really that simple. There is not magic cure. You cant make the economy sound by increasing demand at procucts which are too high priced. Savings are needed. We had this discssuion at the republician thread. You can look it up if you have time. The problem of the keynesian way of thinking is that they for some reason think that the bubble economy is sound. That prices aren't too high and that some people don't need to get fired. You just need to increase spending becasue that increases aggreate numbers. But that only prolongs the crisis. Btw your example is actually wrong even according to keynesian logic. A household spending change has a multiplicator effect as well. What you might have wanted to imply was that government can idebt it self much more as it can always increase revenues (taxes) to get rid of the debt. Households can't do that. Im rewriting? Your... Ignoring the causes for the Great Depression (for which I haven't studied sufficiently to somehow decent opnion), one cannot dispute the fact that the massive government spending, caused by the war, ended the depression. WW2 saved the USA from their Depression. Thanks for the information on the discussion in the republician thread though. I will surely look it up. Your point was that austerity was the reason why the Great Depression lasted so long. That was definitely a rewriting a history as both Roosevelt and Hoover were big spenders (compared to the norm back then). What got us out of the great depression is another discussion. But wasing ressources on war was definitely not the what did it. If wars could actually was good for the economy why not do the following every time we have a ression: 1) Hire people to create a hole in the ground. 2) Hire people to fill it. Repeat proces until economy is fixed... Another point of view is that their spending wasn't high enough and therefor the GD lasted so long. I do not say that wars are an efficient way of spending scarce resources. What I pointed out was that massive spending offseted the negative spiral. The spending created jobs and those jobs increased demand. Your example indeed does not work. But that is because hiring people to do those chores, would not increase their future productivity. My belief is that in times of economic recession/depression, the government has to increase its lending and invest that money in activities that increase future productivity. For instance, schools/infrastructure. This will increase the (human) capital the long run and thus make the government in a better shape to pay of the money the lended during the crisis. The spending would be an investement.
Read my prev. posts and explain how one can have a sustainable economy if prices aren't allowed to reduce to their sustainable level.
Btw when government uses ressources there is always this "hole"-effect. Its not 0% productivity (like a war), buts its below what the private sector would have done.
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On February 10 2012 00:20 Hider wrote:Show nested quote +On February 10 2012 00:07 Trollk wrote:On February 09 2012 08:35 Hider wrote:On February 09 2012 08:19 Trollk wrote:On February 09 2012 07:58 Hider wrote:On February 09 2012 07:55 vetinari wrote:
Greece will have to default and leave the euro. Its going to be chaos for them, but staying in the euro is economic suicide, because austerity during a recession is unbelievably retarded. If labour markets were very flexible they could continue staying in the euro. But since the labour markets aren't able to accept that wages need to be lower, and some people need to befired, the country would benefit from a devalulation of the currency. So while austerity is the solution to the problem of too much spending, the crises will be prolonged when unions has too much power, and government insitutions interfer with the market. Outdated and caught up by reality. This New-Classical point of view has been tried often, failed, tried again and failed again. First time where it was shown that it did not work at non-full employment was during the Great Depression. The President of the USA asked these economists what the solution was, and its Quoted was their advice. The unions were broken (what automaticly occurs in times of duress. People leave unions for personal certainty) and still there was depression. Demand for labor didn't suddenly peaked as these economists suggested because of the price drop. No, because there wasn't any aggregate demand for products and thus no need for hiring new workers to satisfy aggregate demand. The problem was then and it is still today (for the weak state of the current economy, not the europroblem specific) is that worldwide aggregate demand < worldwide supply. And as long as this is the case, there will not be a revival of the world economy. Lowering wages and decreasing public spending will only make our times even harder. What the people who argue for decreasing public spending often forget, is the simply the difference between a household and a government. If a household is in financial trouble, it should reduce spending till the point where revenues >= spenditures. Applying this logic to the governement fails because government spending affets general income. If 1 household decreases spending then the economy wouldn't suffer very much and would stay more or less the same. For a government, whos spending often combine to 30+% of the GDP this is NOT the case. Decreasing expenditures would decrease their incomes and the general state of the economy. Making everybody worse off then they were before. Your rewriting history. The Great Depression was a big government experiment. Maybe Hoover wasn't the favourite politican of Keynes, but this certainly wasn't a refusal of Says law. Problem with the politics of Hoover and Roosvelt was that they didn't let prices fall. This is how a crisis is solved. When prices are too high, they ought to go down. Its really that simple. There is not magic cure. You cant make the economy sound by increasing demand at procucts which are too high priced. Savings are needed. We had this discssuion at the republician thread. You can look it up if you have time. The problem of the keynesian way of thinking is that they for some reason think that the bubble economy is sound. That prices aren't too high and that some people don't need to get fired. You just need to increase spending becasue that increases aggreate numbers. But that only prolongs the crisis. Btw your example is actually wrong even according to keynesian logic. A household spending change has a multiplicator effect as well. What you might have wanted to imply was that government can idebt it self much more as it can always increase revenues (taxes) to get rid of the debt. Households can't do that. Im rewriting? Your... Ignoring the causes for the Great Depression (for which I haven't studied sufficiently to somehow decent opnion), one cannot dispute the fact that the massive government spending, caused by the war, ended the depression. WW2 saved the USA from their Depression. Thanks for the information on the discussion in the republician thread though. I will surely look it up. Your point was that austerity was the reason why the Great Depression lasted so long. That was definitely a rewriting a history as both Roosevelt and Hoover were big spenders (compared to the norm back then). What got us out of the great depression is another discussion. But wasing ressources on war was definitely not the what did it. If wars could actually was good for the economy why not do the following every time we have a ression: 1) Hire people to create a hole in the ground. 2) Hire people to fill it. Repeat proces until economy is fixed...
because war destroys stuff that NEEDS to be rebuild...there are enormous growth prospects after a war ... and thats what our economyc system demands all the time. Growth opportunities. The reason we always need growth and get into trouble if we don't is our interest based fiat money.
and for example in the case of germany in the two WW's they had a monetary reform shortly after both wars (in War germany printed the money they needed and fix prices to a constant -> after war you get hyperinflation as a result -> reset of currency only solution.) So all debt (and all credit with it) are reset. and again ... endless growth opportunities.
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Article regardign the myths of the great depression:
http://mises.org/daily/1623
Please no more mentions of the great depressions as a time of austerity.
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On February 10 2012 00:50 Hider wrote:Show nested quote +On February 10 2012 00:44 Trollk wrote:On February 10 2012 00:20 Hider wrote:On February 10 2012 00:07 Trollk wrote:On February 09 2012 08:35 Hider wrote:On February 09 2012 08:19 Trollk wrote:On February 09 2012 07:58 Hider wrote:On February 09 2012 07:55 vetinari wrote:
Greece will have to default and leave the euro. Its going to be chaos for them, but staying in the euro is economic suicide, because austerity during a recession is unbelievably retarded. If labour markets were very flexible they could continue staying in the euro. But since the labour markets aren't able to accept that wages need to be lower, and some people need to befired, the country would benefit from a devalulation of the currency. So while austerity is the solution to the problem of too much spending, the crises will be prolonged when unions has too much power, and government insitutions interfer with the market. Outdated and caught up by reality. This New-Classical point of view has been tried often, failed, tried again and failed again. First time where it was shown that it did not work at non-full employment was during the Great Depression. The President of the USA asked these economists what the solution was, and its Quoted was their advice. The unions were broken (what automaticly occurs in times of duress. People leave unions for personal certainty) and still there was depression. Demand for labor didn't suddenly peaked as these economists suggested because of the price drop. No, because there wasn't any aggregate demand for products and thus no need for hiring new workers to satisfy aggregate demand. The problem was then and it is still today (for the weak state of the current economy, not the europroblem specific) is that worldwide aggregate demand < worldwide supply. And as long as this is the case, there will not be a revival of the world economy. Lowering wages and decreasing public spending will only make our times even harder. What the people who argue for decreasing public spending often forget, is the simply the difference between a household and a government. If a household is in financial trouble, it should reduce spending till the point where revenues >= spenditures. Applying this logic to the governement fails because government spending affets general income. If 1 household decreases spending then the economy wouldn't suffer very much and would stay more or less the same. For a government, whos spending often combine to 30+% of the GDP this is NOT the case. Decreasing expenditures would decrease their incomes and the general state of the economy. Making everybody worse off then they were before. Your rewriting history. The Great Depression was a big government experiment. Maybe Hoover wasn't the favourite politican of Keynes, but this certainly wasn't a refusal of Says law. Problem with the politics of Hoover and Roosvelt was that they didn't let prices fall. This is how a crisis is solved. When prices are too high, they ought to go down. Its really that simple. There is not magic cure. You cant make the economy sound by increasing demand at procucts which are too high priced. Savings are needed. We had this discssuion at the republician thread. You can look it up if you have time. The problem of the keynesian way of thinking is that they for some reason think that the bubble economy is sound. That prices aren't too high and that some people don't need to get fired. You just need to increase spending becasue that increases aggreate numbers. But that only prolongs the crisis. Btw your example is actually wrong even according to keynesian logic. A household spending change has a multiplicator effect as well. What you might have wanted to imply was that government can idebt it self much more as it can always increase revenues (taxes) to get rid of the debt. Households can't do that. Im rewriting? Your... Ignoring the causes for the Great Depression (for which I haven't studied sufficiently to somehow decent opnion), one cannot dispute the fact that the massive government spending, caused by the war, ended the depression. WW2 saved the USA from their Depression. Thanks for the information on the discussion in the republician thread though. I will surely look it up. Your point was that austerity was the reason why the Great Depression lasted so long. That was definitely a rewriting a history as both Roosevelt and Hoover were big spenders (compared to the norm back then). What got us out of the great depression is another discussion. But wasing ressources on war was definitely not the what did it. If wars could actually was good for the economy why not do the following every time we have a ression: 1) Hire people to create a hole in the ground. 2) Hire people to fill it. Repeat proces until economy is fixed... Another point of view is that their spending wasn't high enough and therefor the GD lasted so long. I do not say that wars are an efficient way of spending scarce resources. What I pointed out was that massive spending offseted the negative spiral. The spending created jobs and those jobs increased demand. Your example indeed does not work. But that is because hiring people to do those chores, would not increase their future productivity. My belief is that in times of economic recession/depression, the government has to increase its lending and invest that money in activities that increase future productivity. For instance, schools/infrastructure. This will increase the (human) capital the long run and thus make the government in a better shape to pay of the money the lended during the crisis. The spending would be an investement. Read my prev. posts and explain how one can have a sustainable economy if prices aren't allowed to reduce to their sustainable level. Btw when government uses ressources there is always this "hole"-effect. Its not 0% productivity (like a war), buts its below what the private sector would have done.
There is no empirical evidence that suggets that government investement or government production is constistently less efficient than private investement or private production. The cases were at first sight it showed where there were (for instance hospitals), it turned that was because of reduction in quality (they simply refused expensive patients).
This does not mean that government prod/investement is always as efficient as possible, but neither is it not.
For instance, South Korean government steelmills produced more efficient than the English private owned in '70s.
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On February 10 2012 00:48 Hider wrote:Show nested quote +On February 10 2012 00:40 WhiteDog wrote:On February 10 2012 00:31 Hider wrote:On February 10 2012 00:28 WhiteDog wrote:On February 10 2012 00:20 Hider wrote:On February 10 2012 00:07 Trollk wrote:On February 09 2012 08:35 Hider wrote:On February 09 2012 08:19 Trollk wrote:On February 09 2012 07:58 Hider wrote:On February 09 2012 07:55 vetinari wrote:
Greece will have to default and leave the euro. Its going to be chaos for them, but staying in the euro is economic suicide, because austerity during a recession is unbelievably retarded. If labour markets were very flexible they could continue staying in the euro. But since the labour markets aren't able to accept that wages need to be lower, and some people need to befired, the country would benefit from a devalulation of the currency. So while austerity is the solution to the problem of too much spending, the crises will be prolonged when unions has too much power, and government insitutions interfer with the market. Outdated and caught up by reality. This New-Classical point of view has been tried often, failed, tried again and failed again. First time where it was shown that it did not work at non-full employment was during the Great Depression. The President of the USA asked these economists what the solution was, and its Quoted was their advice. The unions were broken (what automaticly occurs in times of duress. People leave unions for personal certainty) and still there was depression. Demand for labor didn't suddenly peaked as these economists suggested because of the price drop. No, because there wasn't any aggregate demand for products and thus no need for hiring new workers to satisfy aggregate demand. The problem was then and it is still today (for the weak state of the current economy, not the europroblem specific) is that worldwide aggregate demand < worldwide supply. And as long as this is the case, there will not be a revival of the world economy. Lowering wages and decreasing public spending will only make our times even harder. What the people who argue for decreasing public spending often forget, is the simply the difference between a household and a government. If a household is in financial trouble, it should reduce spending till the point where revenues >= spenditures. Applying this logic to the governement fails because government spending affets general income. If 1 household decreases spending then the economy wouldn't suffer very much and would stay more or less the same. For a government, whos spending often combine to 30+% of the GDP this is NOT the case. Decreasing expenditures would decrease their incomes and the general state of the economy. Making everybody worse off then they were before. Your rewriting history. The Great Depression was a big government experiment. Maybe Hoover wasn't the favourite politican of Keynes, but this certainly wasn't a refusal of Says law. Problem with the politics of Hoover and Roosvelt was that they didn't let prices fall. This is how a crisis is solved. When prices are too high, they ought to go down. Its really that simple. There is not magic cure. You cant make the economy sound by increasing demand at procucts which are too high priced. Savings are needed. We had this discssuion at the republician thread. You can look it up if you have time. The problem of the keynesian way of thinking is that they for some reason think that the bubble economy is sound. That prices aren't too high and that some people don't need to get fired. You just need to increase spending becasue that increases aggreate numbers. But that only prolongs the crisis. Btw your example is actually wrong even according to keynesian logic. A household spending change has a multiplicator effect as well. What you might have wanted to imply was that government can idebt it self much more as it can always increase revenues (taxes) to get rid of the debt. Households can't do that. Im rewriting? Your... Ignoring the causes for the Great Depression (for which I haven't studied sufficiently to somehow decent opnion), one cannot dispute the fact that the massive government spending, caused by the war, ended the depression. WW2 saved the USA from their Depression. Thanks for the information on the discussion in the republician thread though. I will surely look it up. Your point was that austerity was the reason why the Great Depression lasted so long. That was definitely a rewriting a history as both Roosevelt and Hoover were big spenders (compared to the norm back then). What got us out of the great depression is another discussion. But wasing ressources on war was definitely not the what did it. If wars could actually was good for the economy why not do the following every time we have a ression: 1) Hire people to create a hole in the ground. 2) Hire people to fill it. Repeat proces until economy is fixed... No he is right. The current crisis is all keynesian (everything is going as keynes said until now, which is not always the case, see the stagflation in the 70s). He is completly right when he says that austerity always aggravate economical crisis. It's a macroeconomic law : in the short term, you don't really care where you are spending your money, but only how much you are spending. Efficient investment is completly different from short term political spendings. What is happening in Greece right now is all because the government cut down all the pay and stopped all their investment. Less money in the economy in a crisis = more recession. What I got from your post was: 1) I am wrong (no explanation) 2) Then you proceed to talk about something completely else. 3) Your arguments wasn't even a response to my prev. comments of the real problem of greece. Sorry but I just merely put your conversation back in the present but everything else is pretty clear. But since the labour markets aren't able to accept that wages need to be lower, and some people need to befired, the country would benefit from a devalulation of the currency.
So while austerity is the solution to the problem of too much spending, the crises will be prolonged when unions has too much power, and government insitutions interfer with the market. This is where you are wrong, and all the discussion after that is just the reflexion of it. Basically, you are thinking the current "debt crisis" is due to "too much spending" and austerity is the solution to that. But the problem is that due to the lack of investment, the state spend too much, which created a huge debt. Austerity maybe the solution to the debt, but not to the crisis : austerity will just aggravate the economical crisis. You think long term, yes long term the greek will have to reduce the government spendings, but on the short term, if you reduce it now, you are just saying listen, you are in the shit, I will put you completly into it. That is what is happening right now. Investments? Private investmenints? Governemnt? Elaborate. But its true that ressoruces consumed cannot be invested. Not sure how that is related to anything.
Private investment. Investment and consumption is the same in the short term (you are spending money, in the short term you don't care about the efficiency of the spendings).
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On February 10 2012 00:57 Hider wrote:Article regardign the myths of the great depression: http://mises.org/daily/1623Please no more mentions of the great depressions as a time of austerity.
No offense mate, but if I linked a work of Keynes to state my point that conflicts with yours, then you wouldn't accept it either.
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On February 10 2012 00:58 Trollk wrote:Show nested quote +On February 10 2012 00:50 Hider wrote:On February 10 2012 00:44 Trollk wrote:On February 10 2012 00:20 Hider wrote:On February 10 2012 00:07 Trollk wrote:On February 09 2012 08:35 Hider wrote:On February 09 2012 08:19 Trollk wrote:On February 09 2012 07:58 Hider wrote:On February 09 2012 07:55 vetinari wrote:
Greece will have to default and leave the euro. Its going to be chaos for them, but staying in the euro is economic suicide, because austerity during a recession is unbelievably retarded. If labour markets were very flexible they could continue staying in the euro. But since the labour markets aren't able to accept that wages need to be lower, and some people need to befired, the country would benefit from a devalulation of the currency. So while austerity is the solution to the problem of too much spending, the crises will be prolonged when unions has too much power, and government insitutions interfer with the market. Outdated and caught up by reality. This New-Classical point of view has been tried often, failed, tried again and failed again. First time where it was shown that it did not work at non-full employment was during the Great Depression. The President of the USA asked these economists what the solution was, and its Quoted was their advice. The unions were broken (what automaticly occurs in times of duress. People leave unions for personal certainty) and still there was depression. Demand for labor didn't suddenly peaked as these economists suggested because of the price drop. No, because there wasn't any aggregate demand for products and thus no need for hiring new workers to satisfy aggregate demand. The problem was then and it is still today (for the weak state of the current economy, not the europroblem specific) is that worldwide aggregate demand < worldwide supply. And as long as this is the case, there will not be a revival of the world economy. Lowering wages and decreasing public spending will only make our times even harder. What the people who argue for decreasing public spending often forget, is the simply the difference between a household and a government. If a household is in financial trouble, it should reduce spending till the point where revenues >= spenditures. Applying this logic to the governement fails because government spending affets general income. If 1 household decreases spending then the economy wouldn't suffer very much and would stay more or less the same. For a government, whos spending often combine to 30+% of the GDP this is NOT the case. Decreasing expenditures would decrease their incomes and the general state of the economy. Making everybody worse off then they were before. Your rewriting history. The Great Depression was a big government experiment. Maybe Hoover wasn't the favourite politican of Keynes, but this certainly wasn't a refusal of Says law. Problem with the politics of Hoover and Roosvelt was that they didn't let prices fall. This is how a crisis is solved. When prices are too high, they ought to go down. Its really that simple. There is not magic cure. You cant make the economy sound by increasing demand at procucts which are too high priced. Savings are needed. We had this discssuion at the republician thread. You can look it up if you have time. The problem of the keynesian way of thinking is that they for some reason think that the bubble economy is sound. That prices aren't too high and that some people don't need to get fired. You just need to increase spending becasue that increases aggreate numbers. But that only prolongs the crisis. Btw your example is actually wrong even according to keynesian logic. A household spending change has a multiplicator effect as well. What you might have wanted to imply was that government can idebt it self much more as it can always increase revenues (taxes) to get rid of the debt. Households can't do that. Im rewriting? Your... Ignoring the causes for the Great Depression (for which I haven't studied sufficiently to somehow decent opnion), one cannot dispute the fact that the massive government spending, caused by the war, ended the depression. WW2 saved the USA from their Depression. Thanks for the information on the discussion in the republician thread though. I will surely look it up. Your point was that austerity was the reason why the Great Depression lasted so long. That was definitely a rewriting a history as both Roosevelt and Hoover were big spenders (compared to the norm back then). What got us out of the great depression is another discussion. But wasing ressources on war was definitely not the what did it. If wars could actually was good for the economy why not do the following every time we have a ression: 1) Hire people to create a hole in the ground. 2) Hire people to fill it. Repeat proces until economy is fixed... Another point of view is that their spending wasn't high enough and therefor the GD lasted so long. I do not say that wars are an efficient way of spending scarce resources. What I pointed out was that massive spending offseted the negative spiral. The spending created jobs and those jobs increased demand. Your example indeed does not work. But that is because hiring people to do those chores, would not increase their future productivity. My belief is that in times of economic recession/depression, the government has to increase its lending and invest that money in activities that increase future productivity. For instance, schools/infrastructure. This will increase the (human) capital the long run and thus make the government in a better shape to pay of the money the lended during the crisis. The spending would be an investement. Read my prev. posts and explain how one can have a sustainable economy if prices aren't allowed to reduce to their sustainable level. Btw when government uses ressources there is always this "hole"-effect. Its not 0% productivity (like a war), buts its below what the private sector would have done. There is no empirical evidence that suggets that government investement or government production is constistently less efficient than private investement or private production. The cases were at first sight it showed where there were (for instance hospitals), it turned that was because of reduction in quality (they simply refused expensive patients). This does not mean that government prod/investement is always as efficient as possible, but neither is it not. For instance, South Korean government steelmills produced more efficient than the English private owned in '70s.
No there is no empirical evidence, because products are valued subjectively, so there can never be any empirical evidence on what is best. Only logic.
I guess you think governemnt might be better at satisfying its "customers" than companies?
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On February 10 2012 01:01 Trollk wrote:No offense mate, but if I linked a work of Keynes to state my point that conflicts with yours, then you wouldn't accept it either.
Ive read much keynesian (nonsense). But facts are facts. Just take that article for the facts.
Private investment. Investment and consumption is the same in the short term (you are spending money, in the short term you don't care about the efficiency of the spendings).
I think someone has made you very confused :O.
Where have you read about this.
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On February 10 2012 01:05 Hider wrote:Show nested quote +On February 10 2012 01:01 Trollk wrote:On February 10 2012 00:57 Hider wrote:Article regardign the myths of the great depression: http://mises.org/daily/1623Please no more mentions of the great depressions as a time of austerity. No offense mate, but if I linked a work of Keynes to state my point that conflicts with yours, then you wouldn't accept it either. Ive read much keynesian (nonsense). But facts are facts. Just take that article for the facts.
sorry i can't take things for facts when they come form a guy that wrote a book with the title "How Capitalism Saved America: The Untold History of Our Country, From the Pilgrims to the Present"
and why you have recovery after war ... i said it somewhere above ... but again 2 words : Growth opportunities.
dont missunderstand me here ... i am kinda sympathic with the austrain school of economics because they see the problems of our fiat money system.
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On February 10 2012 01:03 Hider wrote:Show nested quote +On February 10 2012 00:58 Trollk wrote:On February 10 2012 00:50 Hider wrote:On February 10 2012 00:44 Trollk wrote:On February 10 2012 00:20 Hider wrote:On February 10 2012 00:07 Trollk wrote:On February 09 2012 08:35 Hider wrote:On February 09 2012 08:19 Trollk wrote:On February 09 2012 07:58 Hider wrote:On February 09 2012 07:55 vetinari wrote:
Greece will have to default and leave the euro. Its going to be chaos for them, but staying in the euro is economic suicide, because austerity during a recession is unbelievably retarded. If labour markets were very flexible they could continue staying in the euro. But since the labour markets aren't able to accept that wages need to be lower, and some people need to befired, the country would benefit from a devalulation of the currency. So while austerity is the solution to the problem of too much spending, the crises will be prolonged when unions has too much power, and government insitutions interfer with the market. Outdated and caught up by reality. This New-Classical point of view has been tried often, failed, tried again and failed again. First time where it was shown that it did not work at non-full employment was during the Great Depression. The President of the USA asked these economists what the solution was, and its Quoted was their advice. The unions were broken (what automaticly occurs in times of duress. People leave unions for personal certainty) and still there was depression. Demand for labor didn't suddenly peaked as these economists suggested because of the price drop. No, because there wasn't any aggregate demand for products and thus no need for hiring new workers to satisfy aggregate demand. The problem was then and it is still today (for the weak state of the current economy, not the europroblem specific) is that worldwide aggregate demand < worldwide supply. And as long as this is the case, there will not be a revival of the world economy. Lowering wages and decreasing public spending will only make our times even harder. What the people who argue for decreasing public spending often forget, is the simply the difference between a household and a government. If a household is in financial trouble, it should reduce spending till the point where revenues >= spenditures. Applying this logic to the governement fails because government spending affets general income. If 1 household decreases spending then the economy wouldn't suffer very much and would stay more or less the same. For a government, whos spending often combine to 30+% of the GDP this is NOT the case. Decreasing expenditures would decrease their incomes and the general state of the economy. Making everybody worse off then they were before. Your rewriting history. The Great Depression was a big government experiment. Maybe Hoover wasn't the favourite politican of Keynes, but this certainly wasn't a refusal of Says law. Problem with the politics of Hoover and Roosvelt was that they didn't let prices fall. This is how a crisis is solved. When prices are too high, they ought to go down. Its really that simple. There is not magic cure. You cant make the economy sound by increasing demand at procucts which are too high priced. Savings are needed. We had this discssuion at the republician thread. You can look it up if you have time. The problem of the keynesian way of thinking is that they for some reason think that the bubble economy is sound. That prices aren't too high and that some people don't need to get fired. You just need to increase spending becasue that increases aggreate numbers. But that only prolongs the crisis. Btw your example is actually wrong even according to keynesian logic. A household spending change has a multiplicator effect as well. What you might have wanted to imply was that government can idebt it self much more as it can always increase revenues (taxes) to get rid of the debt. Households can't do that. Im rewriting? Your... Ignoring the causes for the Great Depression (for which I haven't studied sufficiently to somehow decent opnion), one cannot dispute the fact that the massive government spending, caused by the war, ended the depression. WW2 saved the USA from their Depression. Thanks for the information on the discussion in the republician thread though. I will surely look it up. Your point was that austerity was the reason why the Great Depression lasted so long. That was definitely a rewriting a history as both Roosevelt and Hoover were big spenders (compared to the norm back then). What got us out of the great depression is another discussion. But wasing ressources on war was definitely not the what did it. If wars could actually was good for the economy why not do the following every time we have a ression: 1) Hire people to create a hole in the ground. 2) Hire people to fill it. Repeat proces until economy is fixed... Another point of view is that their spending wasn't high enough and therefor the GD lasted so long. I do not say that wars are an efficient way of spending scarce resources. What I pointed out was that massive spending offseted the negative spiral. The spending created jobs and those jobs increased demand. Your example indeed does not work. But that is because hiring people to do those chores, would not increase their future productivity. My belief is that in times of economic recession/depression, the government has to increase its lending and invest that money in activities that increase future productivity. For instance, schools/infrastructure. This will increase the (human) capital the long run and thus make the government in a better shape to pay of the money the lended during the crisis. The spending would be an investement. Read my prev. posts and explain how one can have a sustainable economy if prices aren't allowed to reduce to their sustainable level. Btw when government uses ressources there is always this "hole"-effect. Its not 0% productivity (like a war), buts its below what the private sector would have done. There is no empirical evidence that suggets that government investement or government production is constistently less efficient than private investement or private production. The cases were at first sight it showed where there were (for instance hospitals), it turned that was because of reduction in quality (they simply refused expensive patients). This does not mean that government prod/investement is always as efficient as possible, but neither is it not. For instance, South Korean government steelmills produced more efficient than the English private owned in '70s. No there is no empirical evidence, because products are valued subjectively, so there can never be any empirical evidence on what is best. Only logic. I guess you think governemnt might be better at satisfying its "customers" than companies?
You can gain emprical evidence. Again the steelmills, you take both their products (steel of same quality), perfectly measurable, and you take the costs to produce it. There is a lot of data out there and again, noone of it has proven that there is an 'hole' that shows that goverments constitently produce/invest less efficient than private counterparts.
You guessed wrong. If you would have read my post more carefully, then you would notice that I point out that there isn't a difference. Neither government, neither private sector always make the 'better' decisions. What I do believe, is that competition is key to optimize decision-making & efficiency.
It is not a matter of gov vs private, what matters is that as long there is competition, effeciency can be achieved and hold. Again, emprical evidence from a study in garabage collectors in the state of Arizona shows this.
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On February 10 2012 01:11 Trollk wrote:Show nested quote +On February 10 2012 01:03 Hider wrote:On February 10 2012 00:58 Trollk wrote:On February 10 2012 00:50 Hider wrote:On February 10 2012 00:44 Trollk wrote:On February 10 2012 00:20 Hider wrote:On February 10 2012 00:07 Trollk wrote:On February 09 2012 08:35 Hider wrote:On February 09 2012 08:19 Trollk wrote:On February 09 2012 07:58 Hider wrote:
[quote]
If labour markets were very flexible they could continue staying in the euro. But since the labour markets aren't able to accept that wages need to be lower, and some people need to befired, the country would benefit from a devalulation of the currency.
So while austerity is the solution to the problem of too much spending, the crises will be prolonged when unions has too much power, and government insitutions interfer with the market. Outdated and caught up by reality. This New-Classical point of view has been tried often, failed, tried again and failed again. First time where it was shown that it did not work at non-full employment was during the Great Depression. The President of the USA asked these economists what the solution was, and its Quoted was their advice. The unions were broken (what automaticly occurs in times of duress. People leave unions for personal certainty) and still there was depression. Demand for labor didn't suddenly peaked as these economists suggested because of the price drop. No, because there wasn't any aggregate demand for products and thus no need for hiring new workers to satisfy aggregate demand. The problem was then and it is still today (for the weak state of the current economy, not the europroblem specific) is that worldwide aggregate demand < worldwide supply. And as long as this is the case, there will not be a revival of the world economy. Lowering wages and decreasing public spending will only make our times even harder. What the people who argue for decreasing public spending often forget, is the simply the difference between a household and a government. If a household is in financial trouble, it should reduce spending till the point where revenues >= spenditures. Applying this logic to the governement fails because government spending affets general income. If 1 household decreases spending then the economy wouldn't suffer very much and would stay more or less the same. For a government, whos spending often combine to 30+% of the GDP this is NOT the case. Decreasing expenditures would decrease their incomes and the general state of the economy. Making everybody worse off then they were before. Your rewriting history. The Great Depression was a big government experiment. Maybe Hoover wasn't the favourite politican of Keynes, but this certainly wasn't a refusal of Says law. Problem with the politics of Hoover and Roosvelt was that they didn't let prices fall. This is how a crisis is solved. When prices are too high, they ought to go down. Its really that simple. There is not magic cure. You cant make the economy sound by increasing demand at procucts which are too high priced. Savings are needed. We had this discssuion at the republician thread. You can look it up if you have time. The problem of the keynesian way of thinking is that they for some reason think that the bubble economy is sound. That prices aren't too high and that some people don't need to get fired. You just need to increase spending becasue that increases aggreate numbers. But that only prolongs the crisis. Btw your example is actually wrong even according to keynesian logic. A household spending change has a multiplicator effect as well. What you might have wanted to imply was that government can idebt it self much more as it can always increase revenues (taxes) to get rid of the debt. Households can't do that. Im rewriting? Your... Ignoring the causes for the Great Depression (for which I haven't studied sufficiently to somehow decent opnion), one cannot dispute the fact that the massive government spending, caused by the war, ended the depression. WW2 saved the USA from their Depression. Thanks for the information on the discussion in the republician thread though. I will surely look it up. Your point was that austerity was the reason why the Great Depression lasted so long. That was definitely a rewriting a history as both Roosevelt and Hoover were big spenders (compared to the norm back then). What got us out of the great depression is another discussion. But wasing ressources on war was definitely not the what did it. If wars could actually was good for the economy why not do the following every time we have a ression: 1) Hire people to create a hole in the ground. 2) Hire people to fill it. Repeat proces until economy is fixed... Another point of view is that their spending wasn't high enough and therefor the GD lasted so long. I do not say that wars are an efficient way of spending scarce resources. What I pointed out was that massive spending offseted the negative spiral. The spending created jobs and those jobs increased demand. Your example indeed does not work. But that is because hiring people to do those chores, would not increase their future productivity. My belief is that in times of economic recession/depression, the government has to increase its lending and invest that money in activities that increase future productivity. For instance, schools/infrastructure. This will increase the (human) capital the long run and thus make the government in a better shape to pay of the money the lended during the crisis. The spending would be an investement. Read my prev. posts and explain how one can have a sustainable economy if prices aren't allowed to reduce to their sustainable level. Btw when government uses ressources there is always this "hole"-effect. Its not 0% productivity (like a war), buts its below what the private sector would have done. There is no empirical evidence that suggets that government investement or government production is constistently less efficient than private investement or private production. The cases were at first sight it showed where there were (for instance hospitals), it turned that was because of reduction in quality (they simply refused expensive patients). This does not mean that government prod/investement is always as efficient as possible, but neither is it not. For instance, South Korean government steelmills produced more efficient than the English private owned in '70s. No there is no empirical evidence, because products are valued subjectively, so there can never be any empirical evidence on what is best. Only logic. I guess you think governemnt might be better at satisfying its "customers" than companies? You can gain emprical evidence. Again the steelmills, you take both their products (steel of same quality), perfectly measurable, and you take the costs to produce it. There is a lot of data out there and again, noone of it has proven that there is an 'hole' that shows that goverments constitently produce/invest less efficient than private counterparts. You guessed wrong. If you would have read my post more carefully, then you would notice that I point out that there isn't a difference. Neither government, neither private sector always make the 'better' decisions. What I do believe, is that competition is key to optimize decision-making & efficiency. It is not a matter of gov vs private, what matters is that as long there is competition, effeciency can be achieved and hold. Again, emprical evidence from a study in garabage collectors in the state of Arizona shows this.
How do you measure quality? What if some customers value customer service highly, and some don't. How do you proof what product is the best?
Btw I said you "might" think that they can (it doesn't imply always, but just that its possible for them).
But how is it possible? How do government estimate demand? Markets have prices and income, which are nessarcary for measurement. They have incentives as well to constantly improve. What do governemnt have (besides monopoly?).
There is a reason why communism failed. It doesn't work. It doesn't work in big scale, and it doesn't work when only a few companies are nationalised. Sure the consequences aren't as terible if you have 80% capitalism/20 % communism, but its still much better to have 100% capitalism (from a economical point of view).
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On February 10 2012 01:17 Hider wrote:Show nested quote +On February 10 2012 01:11 Trollk wrote:On February 10 2012 01:03 Hider wrote:On February 10 2012 00:58 Trollk wrote:On February 10 2012 00:50 Hider wrote:On February 10 2012 00:44 Trollk wrote:On February 10 2012 00:20 Hider wrote:On February 10 2012 00:07 Trollk wrote:On February 09 2012 08:35 Hider wrote:On February 09 2012 08:19 Trollk wrote:
[quote]
Outdated and caught up by reality.
This New-Classical point of view has been tried often, failed, tried again and failed again. First time where it was shown that it did not work at non-full employment was during the Great Depression. The President of the USA asked these economists what the solution was, and its Quoted was their advice. The unions were broken (what automaticly occurs in times of duress. People leave unions for personal certainty) and still there was depression. Demand for labor didn't suddenly peaked as these economists suggested because of the price drop. No, because there wasn't any aggregate demand for products and thus no need for hiring new workers to satisfy aggregate demand. The problem was then and it is still today (for the weak state of the current economy, not the europroblem specific) is that worldwide aggregate demand < worldwide supply. And as long as this is the case, there will not be a revival of the world economy. Lowering wages and decreasing public spending will only make our times even harder.
What the people who argue for decreasing public spending often forget, is the simply the difference between a household and a government. If a household is in financial trouble, it should reduce spending till the point where revenues >= spenditures. Applying this logic to the governement fails because government spending affets general income. If 1 household decreases spending then the economy wouldn't suffer very much and would stay more or less the same. For a government, whos spending often combine to 30+% of the GDP this is NOT the case.
Decreasing expenditures would decrease their incomes and the general state of the economy. Making everybody worse off then they were before. Your rewriting history. The Great Depression was a big government experiment. Maybe Hoover wasn't the favourite politican of Keynes, but this certainly wasn't a refusal of Says law. Problem with the politics of Hoover and Roosvelt was that they didn't let prices fall. This is how a crisis is solved. When prices are too high, they ought to go down. Its really that simple. There is not magic cure. You cant make the economy sound by increasing demand at procucts which are too high priced. Savings are needed. We had this discssuion at the republician thread. You can look it up if you have time. The problem of the keynesian way of thinking is that they for some reason think that the bubble economy is sound. That prices aren't too high and that some people don't need to get fired. You just need to increase spending becasue that increases aggreate numbers. But that only prolongs the crisis. Btw your example is actually wrong even according to keynesian logic. A household spending change has a multiplicator effect as well. What you might have wanted to imply was that government can idebt it self much more as it can always increase revenues (taxes) to get rid of the debt. Households can't do that. Im rewriting? Your... Ignoring the causes for the Great Depression (for which I haven't studied sufficiently to somehow decent opnion), one cannot dispute the fact that the massive government spending, caused by the war, ended the depression. WW2 saved the USA from their Depression. Thanks for the information on the discussion in the republician thread though. I will surely look it up. Your point was that austerity was the reason why the Great Depression lasted so long. That was definitely a rewriting a history as both Roosevelt and Hoover were big spenders (compared to the norm back then). What got us out of the great depression is another discussion. But wasing ressources on war was definitely not the what did it. If wars could actually was good for the economy why not do the following every time we have a ression: 1) Hire people to create a hole in the ground. 2) Hire people to fill it. Repeat proces until economy is fixed... Another point of view is that their spending wasn't high enough and therefor the GD lasted so long. I do not say that wars are an efficient way of spending scarce resources. What I pointed out was that massive spending offseted the negative spiral. The spending created jobs and those jobs increased demand. Your example indeed does not work. But that is because hiring people to do those chores, would not increase their future productivity. My belief is that in times of economic recession/depression, the government has to increase its lending and invest that money in activities that increase future productivity. For instance, schools/infrastructure. This will increase the (human) capital the long run and thus make the government in a better shape to pay of the money the lended during the crisis. The spending would be an investement. Read my prev. posts and explain how one can have a sustainable economy if prices aren't allowed to reduce to their sustainable level. Btw when government uses ressources there is always this "hole"-effect. Its not 0% productivity (like a war), buts its below what the private sector would have done. There is no empirical evidence that suggets that government investement or government production is constistently less efficient than private investement or private production. The cases were at first sight it showed where there were (for instance hospitals), it turned that was because of reduction in quality (they simply refused expensive patients). This does not mean that government prod/investement is always as efficient as possible, but neither is it not. For instance, South Korean government steelmills produced more efficient than the English private owned in '70s. No there is no empirical evidence, because products are valued subjectively, so there can never be any empirical evidence on what is best. Only logic. I guess you think governemnt might be better at satisfying its "customers" than companies? You can gain emprical evidence. Again the steelmills, you take both their products (steel of same quality), perfectly measurable, and you take the costs to produce it. There is a lot of data out there and again, noone of it has proven that there is an 'hole' that shows that goverments constitently produce/invest less efficient than private counterparts. You guessed wrong. If you would have read my post more carefully, then you would notice that I point out that there isn't a difference. Neither government, neither private sector always make the 'better' decisions. What I do believe, is that competition is key to optimize decision-making & efficiency. It is not a matter of gov vs private, what matters is that as long there is competition, effeciency can be achieved and hold. Again, emprical evidence from a study in garabage collectors in the state of Arizona shows this. How do you measure quality? What if some customers value customer service highly, and some don't. How do you proof what product is the best? Btw I said you "might" think that they can (it doesn't imply always, but just that its possible for them). But how is it possible? How do government estimate demand? Markets have prices and income, which are nessarcary for measurement. They have incentives as well to constantly improve. What do governemnt have (besides monopoly?). There is a reason why communism failed. It doesn't work. It doesn't work in big scale, and it doesn't work when only a few companies are nationalised. Sure the consequences aren't as terible if you have 80% capitalism/20 % communism, but its still much better to have 100% capitalism (from a economical point of view).
I do not like to keep refering to one example, but again, steel is a very homogenous product. You can argue that some value customer service, and issues like relationships/friendships affect choices, but that does not mean you cannot compare them if they are similar products. Homogenous products, in a market will a lot of suppliers, that is competitive, will result in the most efficient producing the product at the lowest price. The government owned steelmills did.
The 'government' is something different from a government owned company. What you are saying is that if there was a company and suddenly its main stockholder would become 'the government' it suddenly loses all contact with the earth, life, clients, market etc. Government owned companies do not necesarily imply inefficiency, again my previous statement. They would just be a company like another, only difference is the stockholder.
There was idd a reason why communism failed. That reason was a government cannot obtain all the required info to work efficiently. This does not mean that a gov owned company cannot obtain that information. It could happen, but then that government failure paralles market failure (for instance, information).
Lastly France also has a lot of government owned companies and they work very efficiently. You can look them up, visit them, and tell them that they cannot work efficiently because they are government owned.
Please understand that I live in a country that holds beautiful examples of gov owned companies that do fail. However, this does not mean that I give up government ownership in general.
Giving up government ownership because of some failures, is the same as to giving up on free market because some do not work (because of market power).
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On February 10 2012 01:35 Trollk wrote:Show nested quote +On February 10 2012 01:17 Hider wrote:On February 10 2012 01:11 Trollk wrote:On February 10 2012 01:03 Hider wrote:On February 10 2012 00:58 Trollk wrote:On February 10 2012 00:50 Hider wrote:On February 10 2012 00:44 Trollk wrote:On February 10 2012 00:20 Hider wrote:On February 10 2012 00:07 Trollk wrote:On February 09 2012 08:35 Hider wrote:
[quote]
Your rewriting history. The Great Depression was a big government experiment. Maybe Hoover wasn't the favourite politican of Keynes, but this certainly wasn't a refusal of Says law.
Problem with the politics of Hoover and Roosvelt was that they didn't let prices fall. This is how a crisis is solved. When prices are too high, they ought to go down. Its really that simple. There is not magic cure. You cant make the economy sound by increasing demand at procucts which are too high priced. Savings are needed.
We had this discssuion at the republician thread. You can look it up if you have time. The problem of the keynesian way of thinking is that they for some reason think that the bubble economy is sound. That prices aren't too high and that some people don't need to get fired. You just need to increase spending becasue that increases aggreate numbers. But that only prolongs the crisis.
Btw your example is actually wrong even according to keynesian logic. A household spending change has a multiplicator effect as well. What you might have wanted to imply was that government can idebt it self much more as it can always increase revenues (taxes) to get rid of the debt. Households can't do that. Im rewriting? Your... Ignoring the causes for the Great Depression (for which I haven't studied sufficiently to somehow decent opnion), one cannot dispute the fact that the massive government spending, caused by the war, ended the depression. WW2 saved the USA from their Depression. Thanks for the information on the discussion in the republician thread though. I will surely look it up. Your point was that austerity was the reason why the Great Depression lasted so long. That was definitely a rewriting a history as both Roosevelt and Hoover were big spenders (compared to the norm back then). What got us out of the great depression is another discussion. But wasing ressources on war was definitely not the what did it. If wars could actually was good for the economy why not do the following every time we have a ression: 1) Hire people to create a hole in the ground. 2) Hire people to fill it. Repeat proces until economy is fixed... Another point of view is that their spending wasn't high enough and therefor the GD lasted so long. I do not say that wars are an efficient way of spending scarce resources. What I pointed out was that massive spending offseted the negative spiral. The spending created jobs and those jobs increased demand. Your example indeed does not work. But that is because hiring people to do those chores, would not increase their future productivity. My belief is that in times of economic recession/depression, the government has to increase its lending and invest that money in activities that increase future productivity. For instance, schools/infrastructure. This will increase the (human) capital the long run and thus make the government in a better shape to pay of the money the lended during the crisis. The spending would be an investement. Read my prev. posts and explain how one can have a sustainable economy if prices aren't allowed to reduce to their sustainable level. Btw when government uses ressources there is always this "hole"-effect. Its not 0% productivity (like a war), buts its below what the private sector would have done. There is no empirical evidence that suggets that government investement or government production is constistently less efficient than private investement or private production. The cases were at first sight it showed where there were (for instance hospitals), it turned that was because of reduction in quality (they simply refused expensive patients). This does not mean that government prod/investement is always as efficient as possible, but neither is it not. For instance, South Korean government steelmills produced more efficient than the English private owned in '70s. No there is no empirical evidence, because products are valued subjectively, so there can never be any empirical evidence on what is best. Only logic. I guess you think governemnt might be better at satisfying its "customers" than companies? You can gain emprical evidence. Again the steelmills, you take both their products (steel of same quality), perfectly measurable, and you take the costs to produce it. There is a lot of data out there and again, noone of it has proven that there is an 'hole' that shows that goverments constitently produce/invest less efficient than private counterparts. You guessed wrong. If you would have read my post more carefully, then you would notice that I point out that there isn't a difference. Neither government, neither private sector always make the 'better' decisions. What I do believe, is that competition is key to optimize decision-making & efficiency. It is not a matter of gov vs private, what matters is that as long there is competition, effeciency can be achieved and hold. Again, emprical evidence from a study in garabage collectors in the state of Arizona shows this. How do you measure quality? What if some customers value customer service highly, and some don't. How do you proof what product is the best? Btw I said you "might" think that they can (it doesn't imply always, but just that its possible for them). But how is it possible? How do government estimate demand? Markets have prices and income, which are nessarcary for measurement. They have incentives as well to constantly improve. What do governemnt have (besides monopoly?). There is a reason why communism failed. It doesn't work. It doesn't work in big scale, and it doesn't work when only a few companies are nationalised. Sure the consequences aren't as terible if you have 80% capitalism/20 % communism, but its still much better to have 100% capitalism (from a economical point of view). I do not like to keep refering to one example, but again, steel is a very homogenous product. You can argue that some value customer service, and issues like relationships/friendships affect choices, but that does not mean you cannot compare them if they are similar products. Homogenous products, in a market will a lot of suppliers, that is competitive, will result in the most efficient producing the product at the lowest price. The government owned steelmills did. The 'government' is something different from a government owned company. What you are saying is that if there was a company and suddenly its main stockholder would become 'the government' it suddenly loses all contact with the earth, life, clients, market etc. Government owned companies do not necesarily imply inefficiency, again my previous statement. They would just be a company like another, only difference is the stockholder. There was idd a reason why communism failed. That reason was a government cannot obtain all the required info to work efficiently. This does not mean that a gov owned company cannot obtain that information. It could happen, but then that government failure paralles market failure (for instance, information). Lastly France also has a lot of government owned companies and they work very efficiently. You can look them up, visit them, and tell them that they cannot work efficiently because they are government owned. Please understand that I live in a country that holds beautiful examples of gov owned companies that do fail. However, this does not mean that I give up government ownership in general. Giving up government ownership because of some failures, is the same as to giving up on free market because some do not work (because of market power).
Well a customer is not just paying for the physical product. A lot of óther stuff is determining the value of the complete product.
Reg. the post of your post: WHY?
There are no arguments. Only claims.
I already argued that it is nessarcary for companies to know the prices of products for them to estimate demand, and they have incentives to innovate and make better products. Hence private companies are more efficient.
If a private company isn't creating value it goes bankrupt, so per se private ran companies has to create wealth.
So please argue why a government run "company" can be more efficient than a private run company.
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On February 10 2012 00:07 Trollk wrote:Show nested quote +On February 09 2012 08:35 Hider wrote:On February 09 2012 08:19 Trollk wrote:On February 09 2012 07:58 Hider wrote:On February 09 2012 07:55 vetinari wrote:
Greece will have to default and leave the euro. Its going to be chaos for them, but staying in the euro is economic suicide, because austerity during a recession is unbelievably retarded. If labour markets were very flexible they could continue staying in the euro. But since the labour markets aren't able to accept that wages need to be lower, and some people need to befired, the country would benefit from a devalulation of the currency. So while austerity is the solution to the problem of too much spending, the crises will be prolonged when unions has too much power, and government insitutions interfer with the market. Outdated and caught up by reality. This New-Classical point of view has been tried often, failed, tried again and failed again. First time where it was shown that it did not work at non-full employment was during the Great Depression. The President of the USA asked these economists what the solution was, and its Quoted was their advice. The unions were broken (what automaticly occurs in times of duress. People leave unions for personal certainty) and still there was depression. Demand for labor didn't suddenly peaked as these economists suggested because of the price drop. No, because there wasn't any aggregate demand for products and thus no need for hiring new workers to satisfy aggregate demand. The problem was then and it is still today (for the weak state of the current economy, not the europroblem specific) is that worldwide aggregate demand < worldwide supply. And as long as this is the case, there will not be a revival of the world economy. Lowering wages and decreasing public spending will only make our times even harder. What the people who argue for decreasing public spending often forget, is the simply the difference between a household and a government. If a household is in financial trouble, it should reduce spending till the point where revenues >= spenditures. Applying this logic to the governement fails because government spending affets general income. If 1 household decreases spending then the economy wouldn't suffer very much and would stay more or less the same. For a government, whos spending often combine to 30+% of the GDP this is NOT the case. Decreasing expenditures would decrease their incomes and the general state of the economy. Making everybody worse off then they were before. Your rewriting history. The Great Depression was a big government experiment. Maybe Hoover wasn't the favourite politican of Keynes, but this certainly wasn't a refusal of Says law. Problem with the politics of Hoover and Roosvelt was that they didn't let prices fall. This is how a crisis is solved. When prices are too high, they ought to go down. Its really that simple. There is not magic cure. You cant make the economy sound by increasing demand at procucts which are too high priced. Savings are needed. We had this discssuion at the republician thread. You can look it up if you have time. The problem of the keynesian way of thinking is that they for some reason think that the bubble economy is sound. That prices aren't too high and that some people don't need to get fired. You just need to increase spending becasue that increases aggreate numbers. But that only prolongs the crisis. Btw your example is actually wrong even according to keynesian logic. A household spending change has a multiplicator effect as well. What you might have wanted to imply was that government can idebt it self much more as it can always increase revenues (taxes) to get rid of the debt. Households can't do that. Im rewriting? Your... Ignoring the causes for the Great Depression (for which I haven't studied sufficiently to somehow decent opnion), one cannot dispute the fact that the massive government spending, caused by the war, ended the depression. WW2 saved the USA from their Depression. Thanks for the information on the discussion in the republician thread though. I will surely look it up.
This is incorrect. What "ended" the great depression was the drafting of 12.5 million people. When you remove a large portion of the working population, obviously unemployment goes down. Once the war ended, it took over 20 years for the unemployment rate to return to the normal 5%. What saved us was manurfacturing products. When the war ended factories that made bombs made washing machines instead. Also with women entering the work force it lowered labor costs. Talk about the perfect storm of economics. But we aren't like that anymore.
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EPT
