15 thoughts on “The tragic failure of Keynesian economics”

  1. Posted 30/07/2009 at 12:02 | Permalink

    The problem with this argument is that, when demand collapses across the economy, or you suck a large portion of the money stock out of circulation, there is less scope for value adding activity. If people are unwilling to spend instead of hoarding against an uncertain future, entrepreneurs have no business at any price. And workers thrown out of their jobs wouldn’t get new ones even if they offered to work only for food.

  2. Posted 30/07/2009 at 12:02 | Permalink

    The problem with this argument is that, when demand collapses across the economy, or you suck a large portion of the money stock out of circulation, there is less scope for value adding activity. If people are unwilling to spend instead of hoarding against an uncertain future, entrepreneurs have no business at any price. And workers thrown out of their jobs wouldn’t get new ones even if they offered to work only for food.

  3. Posted 30/07/2009 at 13:34 | Permalink

    Henry Hazlitt (in ‘The Failure of the “New Economics”‘)quoted a poem entitled ‘I want to be a Consumer’ written by Patrick Barrington and published in Punch on 25th April 1934. Only space for 1 1/2 verses:

    “And what do you mean to be?”
    The kind old Bishop said
    As he took the boy on his ample knee
    And patted his curly head.

    “I want to be a Consumer”
    The bright-haired lad replied
    As he gazed up into the Bishop’s face
    In innocence open-eyed.
    “I’ve never had aims of a selfish sort,
    For that, as I know, is wrong.
    I want to be a Consumer, Sir,
    And help the world along.”

    NB. This was written in 1934, two years before Keynes’s General Theory was published.

  4. Posted 30/07/2009 at 13:34 | Permalink

    Henry Hazlitt (in ‘The Failure of the “New Economics”‘)quoted a poem entitled ‘I want to be a Consumer’ written by Patrick Barrington and published in Punch on 25th April 1934. Only space for 1 1/2 verses:

    “And what do you mean to be?”
    The kind old Bishop said
    As he took the boy on his ample knee
    And patted his curly head.

    “I want to be a Consumer”
    The bright-haired lad replied
    As he gazed up into the Bishop’s face
    In innocence open-eyed.
    “I’ve never had aims of a selfish sort,
    For that, as I know, is wrong.
    I want to be a Consumer, Sir,
    And help the world along.”

    NB. This was written in 1934, two years before Keynes’s General Theory was published.

  5. Posted 30/07/2009 at 14:17 | Permalink

    Just to add that Hazlitt’s book can be downloaded in pdf format here (20MB file).

  6. Posted 30/07/2009 at 14:17 | Permalink

    Just to add that Hazlitt’s book can be downloaded in pdf format here (20MB file).

  7. Posted 30/07/2009 at 15:00 | Permalink

    The poem on ‘I want to be a Consumer’ was on pp. 133/4.

  8. Posted 30/07/2009 at 15:00 | Permalink

    The poem on ‘I want to be a Consumer’ was on pp. 133/4.

  9. Posted 30/07/2009 at 16:44 | Permalink

    Keynes means the government investing in the economy to create demand in recession? Right? By definition, investment is to create a profit. Like a Hoover Dam

    Or building the southern M4 in S.Wales – bypass the bottle neck of Bryn Glas tunnels, reduce congestion, business costs and pollution.

    Or the Severn Airport -buildings on the former Llanwern steel works close to M4, runway in the Severn Estuary. Bristol & Cardiff airports are small, vulnerable with poor road infrastructure. Severn Airport is terrorist secure, will relieve pressure on Heathrow, London & S.E, create 100,000 jobs in S.Wales and Bristol, and a PFI.

    That is Keynes but Labour wants to buy votes to stay in power.

  10. Posted 30/07/2009 at 16:44 | Permalink

    Keynes means the government investing in the economy to create demand in recession? Right? By definition, investment is to create a profit. Like a Hoover Dam

    Or building the southern M4 in S.Wales – bypass the bottle neck of Bryn Glas tunnels, reduce congestion, business costs and pollution.

    Or the Severn Airport -buildings on the former Llanwern steel works close to M4, runway in the Severn Estuary. Bristol & Cardiff airports are small, vulnerable with poor road infrastructure. Severn Airport is terrorist secure, will relieve pressure on Heathrow, London & S.E, create 100,000 jobs in S.Wales and Bristol, and a PFI.

    That is Keynes but Labour wants to buy votes to stay in power.

  11. Posted 30/07/2009 at 22:14 | Permalink

    Another excellent post from the IEA blog [which has yet again inspired a post I offer at RedStateEclectic].

    Assuming that this comment will be subject to moderation, let me explain:

    I do not intend to advertise the blog I am contributing to in a comment to your blog. Much rather, I would like to bring my post to Mr. Kates’ attention, as an acknowledgement of my respect and gratitude.

    http://redstateeclectic.typepad.com/redstate_commentary/2009/07/command-solutions-or-acquire-a-degree-in-mastering-society.html

  12. Posted 30/07/2009 at 22:14 | Permalink

    Another excellent post from the IEA blog [which has yet again inspired a post I offer at RedStateEclectic].

    Assuming that this comment will be subject to moderation, let me explain:

    I do not intend to advertise the blog I am contributing to in a comment to your blog. Much rather, I would like to bring my post to Mr. Kates’ attention, as an acknowledgement of my respect and gratitude.

    http://redstateeclectic.typepad.com/redstate_commentary/2009/07/command-solutions-or-acquire-a-degree-in-mastering-society.html

  13. Posted 01/10/2009 at 00:29 | Permalink

    Guided by the theories of famous British economist John Maynard Keynes and American monetarist Milton Friedman, politicians and monetary leaders throughout the developed world have embraced interventionist policies in an attempt to engineer “soft landings” to economic recessions. Policy makers may have secured a temporary reprieve from what would certainly have been more corporate defaults and job losses, but they simply delayed realization of losses on poor investment decisions by inducing liquidity driven speculation in financial securities.

    http://www.beyondthemargin.net/2009/09/keynesian-economics.html

  14. Posted 01/10/2009 at 00:29 | Permalink

    Guided by the theories of famous British economist John Maynard Keynes and American monetarist Milton Friedman, politicians and monetary leaders throughout the developed world have embraced interventionist policies in an attempt to engineer “soft landings” to economic recessions. Policy makers may have secured a temporary reprieve from what would certainly have been more corporate defaults and job losses, but they simply delayed realization of losses on poor investment decisions by inducing liquidity driven speculation in financial securities.

    http://www.beyondthemargin.net/2009/09/keynesian-economics.html

  15. Posted 01/04/2013 at 18:12 | Permalink

    The title makes little sense. Keynesianism has been a key defence for capitalism. I suppose you could classify it as a failure if you are a socialist!

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