On 11/5/2011 3:31 PM, Rich Cooper wrote:
> I discovered a book written in 1948 that explains why the Keynesian
> theories don't work - he describes what he calls the "broken window
> fallacy" here:
>
> http://www.fee.org/library/books/economics-in-one-lesson/
>
> I hope that helps stimulate more discussion of the role of self
> interest in AI and in ontology developments. (01)
Two points: (02)
1. The author, Henry Hazlitt, is a typical blue-sky academic with lots
of opinions, but no facts or experimental evidence to back them up. (03)
2. Keynes was also an academic. But he became wealthy by observing
the facts about currency fluctuations, formulating a theory based
on the facts, and testing his theory with his own money. Today,
currency trading is not a good field for making money because
everybody follows the same principles that Keynes established. (04)
I'm not going to defend all Keynesian policies because there has
been 80 years of further research and practice. But US presidents
from Franklin Roosevelt to Ronald Reagan have shown that the basic
ideas are sound. Roosevelt applied some of Keynes' ideas in the
1930s. He helped to mitigate the disaster created by 12 years
of Republican economics. But he didn't spend enough money until
1939, when he used the war in Europe as an excuse for big-time
spending. The massive war-time spending ended the Depression,
as Keynes had predicted. (05)
I hate to give credit to Hitler for anything, but I have to admit
that he got Germany out of an even worse financial problem by
classical Keynesian means: a huge amount of military spending
that created prosperity for Germany several years before Roosevelt
started the really big-time spending. (06)
Ronald Reagan also dug the US out of a recession by classical
Keynesian spending. The Republicans mistakenly say that he cut
government. But that is false. It is true that he cut domestic
federal spending by shifting the burden to the states. But his
military spending *tripled* the federal debt. The Republicans
also say that he cut taxes. For the rich, he did. But for the
middle class, the increase in state and local taxes wiped out
the tiny tax cut that Reagan gave them. (07)
Reagan's collectivism wasn't as blatant as Stalin's. Instead of
directly taking small farms and bundling them as large collectives,
he just subsidized the big corporate farms and drove small farmers
out of business. The big subsidies were reserved for huge collectives
that grow corn and soybeans. The small farmers who grew vegetables
for the local markets got nothing. (08)
Reagan's policy of welfare for big corporations was very similar
to Hitler's policy of promoting big corporations at the expense of
the small businesses and individuals. That isn't as blatant as
Stalin's collectivism. It's a more subtle form of collectivism
and anti-individualism. (09)
Republicans treat Reagan as a god for promoting "wealth building".
Look at the statistics: In 1979, the top 1% of all Americans earned
9% of the total amount of income. But in 2009, the top 1% earned
17% of the total. That is almost double the amount they got before
Reagan. The bottom 50% of all taxpayers earn only 13% of the total. (010)
Finance professionals really love the term "wealth building."
They got a 238% increase. (Statistics from New York Times,
30 October 2011, Sunday Review, page 10) (011)
Whenever you hear Republicans say "wealth building", that's
a synonym for "rape the middle class". I am very strongly in
favor of self interest. That's why I am no longer a Republican. (012)
John (013)
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