On 07/11/2011 12:04 PM, Rich Cooper wrote:
> Dear John,
>
> The issues you raise below are repeats of the ones
> we have already discussed. I think your view
> won't change on this, so I suggest we move on to
> something we can get our minds into, such as the
> definition of Keynesian economics.
>
> Keynes believed that by injecting liquidity into
> the economy (i.e., by increasing the money supply)
> government could stimulate the economy. He did
> not, as Hazlitt points out, take the full measure
> of the situation; the taxes extracted from the
> economy or the losses due to borrowing money to
> inject, both come from productive economic markets
> which must be reduced to get the charge of money
> that is injected.
Not clear that this is true.
If your taxes remove non-productive money (off-shore assets, foreign
travel, non-productive assets) and put it into productive efforts such
as dam building, road building, public infrastructure, rail
construction, etc. which are labour intensive and support a lot of
private sector activity, you allow the private sector to expand and
develop corporate and individual capabilities
The private sector also gets the benefits of cheap power, more efficient
roads, cheaper infrastructure costs, high-speed rail and lower freight
costs, etc. that last a long time and build more wealth.
It is not clear that this reduces economic markets at all. It just
shuffles it about and removes the premium for financial risk which makes
the projects move faster.
It also broadens the tax base and improves the general sense of
well-being in a country. (01)
If you print money rather than borrow it, you devalue your currency
which helps exporters
This, in turn, provides national relief by shifting the problem
elsewhere(hopefully to some country you don't care about - China was
only partly worried about the effect of its artificially low currency on
the rest of the world and was happy to have the high growth from exports). (02)
If you take the taxes and spend it paying rent and buying food and
services in another country (think military bases), you do not get the
long term benefits and lose most of the short-term effect. (03)
If you pay teachers, firemen, street cleaners, etc. they pay mortages,
rent, food, clothes which mostly comes from the private sector. Not much
long-term benefits unless the firemen put out a fire at your place or
educate someone who goes on to get a job rather than be on public
assistance. (04)
>
> By not including that loss in his calculations,
> Keynes committed the error of incorrectly drawing
> the lines of the economic system he studied.
> Hazlitt made that clear, and therefore improved
> knowledge of how the Keynesian strategies ignored
> a significant part of the system he studied. (05)
But it did regulate the ups and downs of the economy for both Democratic
and Republican administrations as John pointed out. (06)
> -Rich
>
> Sincerely,
> Rich Cooper
> EnglishLogicKernel.com
> Rich AT EnglishLogicKernel DOT com
> 9 4 9 \ 5 2 5 - 5 7 1 2
>
> -----Original Message-----
> From: ontolog-forum-bounces@xxxxxxxxxxxxxxxx
> [mailto:ontolog-forum-bounces@xxxxxxxxxxxxxxxx] On
> Behalf Of John F. Sowa
> Sent: Sunday, November 06, 2011 9:50 PM
> To: ontolog-forum@xxxxxxxxxxxxxxxx
> Subject: Re: [ontolog-forum] Self Interest
> Ontology
>
> 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.
> Two points:
>
> 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.
>
> 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.
>
> 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.
>
> 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.
>
> 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.
>
> 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.
>
> 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.
>
> 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.
>
> 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)
>
> 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.
>
> John
>
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