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Keynesianism is not defined by tax policy. The central theme for Keynesianism is the intellectual framework for justifying deficit spending. That's why Keynesianism requires the repudiation of sound money. If one is content with not going beyond adjusting tax rate, and not interested in printing money, there is no need for Keynesianism.
The wishful thinking that collectivist/totalitarian government interventions would work if only they are in the hands of wise leaders is getting really old. If the soviets only had wise leaders making all the right economic decisions . . . if the 1940's German leaders could only keep winning battles and looting the rest of the humanity, etc. etc. It's all nonsense. The socialist central planner can not carry out proper resource allocation because there is a fundamental calculation problem: he doesn't have the free market price signal! The very purpose of his actions is to yank the price points around; very quickly he'd be finding himself trading with his own shadows, just like a fund manager owning over 50% of a public traded company and unable to realize any of his paper gains (there isn't any other buyer aside from himself).
How can Keynesianism work in business or personal life? If any private business or individual printed money, he'd be arrested for counterfeiting. Private business and private individuals trading at their own risk has nothing to do with Keynesianism. The natural counter-cyclical consequence of private individuals/businesses buying low and selling high means that counter-cyclical influence does not have to be asserted by a government monopoly (which is what Keynesianism advocates. Keynesianism insists that private individuals and businesses are incapable of asserting counter-cyclical influence therefore government intervention with fiat money is necessary).
In real life, government officials can not hope to time the market correctly as they have to go through myriads of committees to have their decisions approved, lest their policies directly benefit their family and friends (they are not risking or using their own money, hence the grave risk of fraud and corruption). If we can actually find great market timers that can get timing right every time, a far more effective way to utilize talent to generate counter-cylical influence is actually shutting down the Keynesian department and turn these same guys loose as private traders! Their buying low and selling high trades would be able to work in a much more timely fashion when they are working for themselves than working for the government. Therefore, the continued existence of government bureaucracy implementing Keynsian policies is not meant to carry out counter-cyclical influences, but to bailout and benefit insiders who plant officials in those positions.
Macro 101 is akin to what colleges used to teach in the pre-enlightenment era: subjects like how Christ could walk on water, and how many angels could dance at the tip of a pin. It's essentially a brainwashing in Keynsianism, with complete disregard for reality. In Macro 101, the concept of Keynsian GDP is drilled into the students' head as a measure of economic well being. Since GDP is defined as having government spending as a contributor, dollar for dollar . . . we end up with a farcical situation where in the middle of WWII, all the bombs, aircrafts, anti-aircraft-artillery, shells, bomber crews wages and anti-aircraft crew wages all counted as GDP . . . so the world GDP went through the roof even as all the major cities in Europe were reduced to ashes. That's high per-capita GDP, i.e. high standards of living according to Keynesian econometrics. That's what Keynsian Macro 101 essentially teaches. Any wonder why half a century later, Keynesians like Paul Krugman still says WWII lifted world economy out the Great Depression? Perhaps it was the end of depression for the regimists as the nations marched off to war in a fit of misguided patriotism, but disaster for the world population at large.
posted by 76.118.39...
, Thu, 5 May 2011 19:17:20
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