quote:

Originally posted by Shakka I'd certainly say there's another discussion to be had about proper implementation. There was a good repost of a Friedman piece in Friday's WSJ. I too am among those who believe that the government that governs least governs best, and this study provides some interesting conclusions about monetary policy (and no question how and to what extent it was it utilized).

No denying the importance of monetary policy in modern economices (perhaps even the supremecy of monetary policy over fiscal policy), that there are clear benefits to "minimal" (an ambiguous term, admittedly) government involvement in economic policy or that a sharp contraction in monetary supply can lead to severe recession (which appears to be Friedman's explanation for the depression) but that still doesn't change the fact that Freidman's monetarist policy, when implemented, failed miserably. It reduced inflation (as predicted) but led to slugglish growth and high-unemployment until the Reserve stepped in to relax the stifling controls on money supply mandated by the monetarists and Regan began spending like a fiscal madman (a distinctly Keynesian response to an economic downturn).

This isn't an ideological debate about whether or not a "government that governs least governs best" (something that I - and most other people I suspect - would agree with, even if we differ on just how much government involvement in the economy is actually necessary) or about how appealing the monetarist approach sounds in theory, it's about whether the monetarist experiment in the US or the UK during the 1980s was successful (which is something that Friedman doesn't discuss in that essay). The clear fact - to me at least - is that it wasn't, which the economic statistics from the time would appear to bear out.

___________________
http://eschatonnow.blogspot.com/

quote:

Originally posted by Renegade No denying the importance of monetary policy in modern economices (perhaps even the supremecy of monetary policy over fiscal policy), that there are clear benefits to "minimal" (an ambiguous term, admittedly) government involvement in economic policy or that a sharp contraction in monetary supply can lead to severe recession (which appears to be Friedman's explanation for the depression) but that still doesn't change the fact that Freidman's monetarist policy, when implemented, failed miserably. It reduced inflation (as predicted) but led to slugglish growth and high-unemployment until the Reserve stepped in to relax the stifling controls on money supply mandated by the monetarists and Regan began spending like a fiscal madman (a distinctly Keynesian response to an economic downturn).

I would be fascinated to read your paper. So in your paper, with regards to your criticism of monetarism did you address the failure of demand driven fiscal policies to improve the economic situation prior to monetarism? Furthermore, you seem to critique monetarism for failing to facilitate growth despite its accomplishments in reducing inflation. To the best of my knowledge, monetarism is not a tool that has ever pretended to have utopian successes. It presents policy makers with the hard choice of either curbing inflation or encouraging economic growth. If you can tell me of any kind of economic policy that would reduce inflation and would expand in growth in gdp/employment I would feel comfortable in saying that you would win the nobel prize. Volker's monetary policy did not fail "miserably". It did not acheive all of its objectives however, it was a remarkable success considering what it was able to accomplish in such a short time frame. Furthermore monetarism has embedded itself in the policies of most central banks. Granted monetarism has taken a few twists and turns since its inception several decades ago, however, I'm surprised at how much bad publicity it recieves as a legitimiate economic theory when compared to several others ... particularly since it's been adopted by most governments I know of.

Edit: to expand upon one point you made, I wouldn't regard monetarism as being a minimalist government role. Granted implementation lag is going to be longer than fiscal policy, but consider that central banks can directly influence the federal funds rate, the reserve requirement, and purchase/sell treasuries. This is a LOT of influence that the central bank can wield.

___________________
Retro ...

Last edited by occrider on Nov-20-2006 at 11:14

quote:

Originally posted by occrider Furthermore, you seem to critique monetarism for failing to facilitate growth despite its accomplishments in reducing inflation.

I would further add to that point that from an economic standpoint, it is much more palatable to have a period of slower growth or even recession rather than falling behind and being unable to control inflation, as in the long-run (as history has taught us), inflation is much more destructive than low/slow or even negative growth.

quote:

Originally posted by occrider I would be fascinated to read your paper.

Well it was a talk rather than an essay so there isn't too much to read unfortunately, but I could post my notes presuming I still have them and presuming you think you'd be able to make sense of them.

quote:

So in your paper, with regards to your criticism of monetarism did you address the failure of demand driven fiscal policies to improve the economic situation prior to monetarism?

Not specifically, but I did address the economic situtation prior to the advent of monetarism in the late 70s, yes. No question that the Keynesian orthodoxy had no credible explanation for that period of crippling stagflation - let alone a solution to it - so I don't doubt the importance of the emergent schools of monetarism / neo-classicalism during this time, but the issue is whether or not the strict monetarist policies advocated by Friedman and others were successful in practice. To the extent that the theory failed to conform to expectations in practice, I'm not sure we can say that they were.

quote:

Furthermore, you seem to critique monetarism for failing to facilitate growth despite its accomplishments in reducing inflation.

I don't think it can be said that Friedman's monetarism was a successful economic policy in practice for reducing inflation any more than it can be said that Marx's communism was a successful economic policy in practice for eliminating inequality. In my opinion, economic policies should be judged on their influence on economies as a whole, not merely on a single criterion to the exclusion of all others.

quote:

To the best of my knowledge, monetarism is not a tool that has ever pretended to have utopian successes.

Perhaps not, but it did make a number of claims that failed to eventuate. For instance, it argued that the imposition of tight controls on the supply of money with the focus placed exclusively on the acheivement of GDP targets would have only small, temporary, self-correcting effects on things like interest rates and currency exchange rates. In practice, interest rates rose sharply (and took a long time to come down) as did the exchange rate and GDP growth was only really stimulated by the 1982 tax-cats and expansionary fiscal policy. It argued, on the basis of the "rational expectations" of the private sector, that strict controls on the money supply would have a gentle effect on production and spending so long as there was some warning in advance about the policy shift - the sharp economic contraction that occurred after the imposition of strict monetarist policy would appear to contradict this.

So while the monetarists wouldn't have predicted a "utopian success" through the imposition of their policies, I don't think they would have predicted the severity of the resultant low growth rates, highest interest rates or the plethora of other adverse economic effects either.

quote:

It presents policy makers with the hard choice of either curbing inflation or encouraging economic growth. If you can tell me of any kind of economic policy that would reduce inflation and would expand in growth in gdp/employment I would feel comfortable in saying that you would win the nobel prize.

Point taken. I need to point out, though, that I'm not criticising the very real need at the time (and even now) to keep inflation low (even at the cost of growth and employment) but rather that the monetarist theories implemented at the time did not have the predicted affect and that yet again Keynsian economic policy was needed to save the economy from itself.

quote:

Volker's monetary policy did not fail "miserably". It did not acheive all of its objectives however, it was a remarkable success considering what it was able to accomplish in such a short time frame.

Perhaps "failing miserably" was too strong an expression, but - again - to the extent that the empirical results of monetarist policy failed to conform to the predictions made by monetarist theory and had to be abandoned (or, at best, "revised") relatively quickly, I don't think it's too much of a stretch to call it a "failure".

quote:

Furthermore monetarism has embedded itself in the policies of most central banks. Granted monetarism has taken a few twists and turns since its inception several decades ago, however, I'm surprised at how much bad publicity it recieves as a legitimiate economic theory when compared to several others ... particularly since it's been adopted by most governments I know of.

Not the specific brand of monetarism advocated by Friedman, though. Again, no doubting his importance in causing a rethink about the nature of economic policy or of his continued legacy in the policies of governments and central banks around the world, but taken at face value the "tight-money" policies he championed aren't really used in their original form (to my knowledge anyway) anywhere in the western world. Perhaps a case could be made for the success of revised monetarism, but certainly not for the sort of monetarism he was arguing for - and that we saw implemented - in the 70s and early 80s.

quote:

Edit: to expand upon one point you made, I wouldn't regard monetarism as being a minimalist government role.

Yep, agreed. I was responding to what Shakka said about "the government that governs least governs best".

quote:

Granted implementation lag is going to be longer than fiscal policy, but consider that central banks can directly influence the federal funds rate, the reserve requirement, and purchase/sell treasuries. This is a LOT of influence that the central bank can wield.

Again, agreed. Like I said, there is "no denying the importance of monetary policy in modern economices [sic] (perhaps even the supremecy of monetary policy over fiscal policy)". My argument isn't against monetary policy in general, but rather a specific instance of monetary policy.

___________________
http://eschatonnow.blogspot.com/

While I never agreed with Friedman's free market fanaticism, and I feel that capitalism in general has been a failure riddled with irredeemable faults, one place where we had common ground was our opposition to the war on drugs. I recently came across a speech Friedman gave at the Fifth Annual Conference on Drug Policy Reform, 1991. Predictably a central part of his argument (besides the fact that the drug war has failed miserably in achieving its goals and should thus be terminated) is that the very existence of a war on drugs flies in the face of the free market and monetarily responsible government. In fact he accuses the drug war of being a "socialist" enterprise. Fascinating...

http://www.druglibrary.org/special/...n/socialist.htm

quote:

Originally posted by Renegade Again, agreed. Like I said, there is "no denying the importance of monetary policy in modern economices [sic] (perhaps even the supremecy of monetary policy over fiscal policy)". My argument isn't against monetary policy in general, but rather a specific instance of monetary policy.

Ah I think your last statement should come to the forefront before I proceed with any of my arguments . I am not a Friedman monetarist in the classical sense, and I am not well versed in all the historical implementation of "monetarism". Today, I'm primarily from the monetarist/neo-classical camp with some cautious leanings towards keynesian economics during stress scenarios.

quote:

Not specifically, but I did address the economic situtation prior to the advent of monetarism in the late 70s, yes. No question that the Keynesian orthodoxy had no credible explanation for that period of crippling stagflation - let alone a solution to it - so I don't doubt the importance of the emergent schools of monetarism / neo-classicalism during this time, but the issue is whether or not the strict monetarist policies advocated by Friedman and others were successful in practice. To the extent that the theory failed to conform to expectations in practice, I'm not sure we can say that they were.

Well certainly I would never argue in favor of "strict" monetarism as much as I would argue in favor of "strict" Keyensian economic thought. The theory was partially successful in acheiving some rather significant objectives. The lack of absolutes is why economics is still the "dismal" science as opposed to the science of monetarism.

quote:

I don't think it can be said that Friedman's monetarism was a successful economic policy in practice for reducing inflation any more than it can be said that Marx's communism was a successful economic policy in practice for eliminating inequality. In my opinion, economic policies should be judged on their influence on economies as a whole, not merely on a single criterion to the exclusion of all others.

Well this is actually what I consider to be the most interesting part of your post. I would consider Volker's policies to be driven largely by the main precepts of monetarism, and most would say that the Volker Fed played a large part in reducing inflation. Are you arguing that there was a corollary influence? I really don't find your Marxist analogy to be particularly applicable without substantive explanation. Granted the economy did not flourish under Volker, but I don't think that very many economists maintained such delusions considering the primary concern was to ward off inflation by enacting tremendous interest rate hikes. Would you have a more appropriate solution to decrease inflation and increase growth in a stagflating economy? I don't think that that is a failure of monetarism so much as it is a failure of there not being a 'perfect' solution to every problem.

quote:

Perhaps not, but it did make a number of claims that failed to eventuate. For instance, it argued that the imposition of tight controls on the supply of money with the focus placed exclusively on the acheivement of GDP targets would have only small, temporary, self-correcting effects on things like interest rates and currency exchange rates. In practice, interest rates rose sharply (and took a long time to come down) as did the exchange rate and GDP growth was only really stimulated by the 1982 tax-cats and expansionary fiscal policy. It argued, on the basis of the "rational expectations" of the private sector, that strict controls on the money supply would have a gentle effect on production and spending so long as there was some warning in advance about the policy shift - the sharp economic contraction that occurred after the imposition of strict monetarist policy would appear to contradict this. So while the monetarists wouldn't have predicted a "utopian success" through the imposition of their policies, I don't think they would have predicted the severity of the resultant low growth rates, highest interest rates or the plethora of other adverse economic effects either. Point taken. I need to point out, though, that I'm not criticising the very real need at the time (and even now) to keep inflation low (even at the cost of growth and employment) but rather that the monetarist theories implemented at the time did not have the predicted affect and that yet again Keynsian economic policy was needed to save the economy from itself.

It was a relatively new theory at the time, give it some leeway . I don't mean to denigrate your argument, and as a matter of fact I cannot argue you about 'classical' monetarism. You would appear to be more learned than me. However, my argument is that monetarism was quintessential towards eliminating the systemic economic risks, and once that was done, fiscal policies were implemented to stimulate economic growth ... not that it was a necessity. If Keynesian policy was needed to save the economy "yet again" why did it fail when originally implemented? Why does it have more of a minimal role today?

quote:

Perhaps "failing miserably" was too strong an expression, but - again - to the extent that the empirical results of monetarist policy failed to conform to the predictions made by monetarist theory and had to be abandoned (or, at best, "revised") relatively quickly, I don't think it's too much of a stretch to call it a "failure".

Well now I have to ask you in what way do you consider it a "failure" in a way that we can consider fiscal policies a "success" under similar economic circumstances? There are no empirical evidence for fiscal/keynesian economic failures?

quote:

Not the specific brand of monetarism advocated by Friedman, though. Again, no doubting his importance in causing a rethink about the nature of economic policy or of his continued legacy in the policies of governments and central banks around the world, but taken at face value the "tight-money" policies he championed aren't really used in their original form (to my knowledge anyway) anywhere in the western world. Perhaps a case could be made for the success of revised monetarism, but certainly not for the sort of monetarism he was arguing for - and that we saw implemented - in the 70s and early 80s.

Well it would seem like we're talking about peas and carrots here. If you want to probe me with classical Keynes and I respond with classical Friedman than we can spend all day talking. My frame of mind is neo-classicalism, neo-keynesian, and neo-monetarism ... all of which are a completly seperate debates altogether. If you want to get into a classical (whatever) vs. a classical (whatever) debate that's fine, however, I don't find the value of engaging in a classical (whatever) vs. neo-classical (whatever) debate to be honest.

___________________
Retro ...

Since a thread on him is already here, and because I'm guessing some of you may be interested in watching this too, I thought I'd post this here. It's a fairly old and rare interview with Friedman that a buddy provided the link for:



I find his comments towards the end quite interesting.

___________________
"The Greatest enemy of knowledge is not ignorance, it is the illusion of knowledge." -Stephen Hawking
"First they came for the communists, and I did not speak out— because I was not a communist;
Then they came for the socialists, and I did not speak out— because I was not a socialist;
Then they came for the trade unionists, and I did not speak out— because I was not a trade unionist;
Then they came for the Jews, and I did not speak out— because I was not a Jew;
Then they came for me— and there was no one left to speak out for me." -Martin Niemöller

quote:

Originally posted by shaolin_Z Since a thread on him is already here, and because I'm guessing some of you may be interested in watching this too, I thought I'd post this here. It's a fairly old and rare interview with Friedman that a buddy provided the link for: I find his comments towards the end quite interesting.

This was an excellent clip. I think I only disagreed with him once or twice. It's very pertinent to "liberals" and "conservatives" in the modern day sense.

___________________
Retro ...

Last edited by occrider on Nov-24-2006 at 07:55

quote:

Originally posted by occrider This was an excellent clip. I think I only disagreed with him once or twice. It's very pertinent to "liberals" and "conservatives" in the modern day sense.

Which parts specifically? What about his minimum wage example? (I found myself not fully agreeing with him there)

EDIT: Just so I don't give anyone the wrong impression, I didn't agree on the whole with him but thought there definetly were some kernels of wisdom in his responses.

___________________
"The Greatest enemy of knowledge is not ignorance, it is the illusion of knowledge." -Stephen Hawking
"First they came for the communists, and I did not speak out— because I was not a communist;
Then they came for the socialists, and I did not speak out— because I was not a socialist;
Then they came for the trade unionists, and I did not speak out— because I was not a trade unionist;
Then they came for the Jews, and I did not speak out— because I was not a Jew;
Then they came for me— and there was no one left to speak out for me." -Martin Niemöller

Last edited by shaolin_Z on Nov-24-2006 at 11:22

quote:

Originally posted by Marc Summers Capitalist pig.

What a brilliant occasion to express something like that. I'm not a big fan of Friedman, and to be honest, I'm not even terribly familiar with most of his work, but show some respect. This isn't the time for such distasteful comments.

___________________
"The Greatest enemy of knowledge is not ignorance, it is the illusion of knowledge." -Stephen Hawking
"First they came for the communists, and I did not speak out— because I was not a communist;
Then they came for the socialists, and I did not speak out— because I was not a socialist;
Then they came for the trade unionists, and I did not speak out— because I was not a trade unionist;
Then they came for the Jews, and I did not speak out— because I was not a Jew;
Then they came for me— and there was no one left to speak out for me." -Martin Niemöller

heh I hope you didnt post this about some comments in a PM between us I had about social security?
I got a lot of hate on TA last I posted those views so I'll refrain from bringing them up again out of the interests in keeping it civil and I'd like too avoid being called a 'retard' by other forum members too often.

Essentially I'm at a loss too disagree with much that he comments on in the interview so I guess that makes for boring conversation in some respects and I guess I wear the moniker of Capitalist Pig fairly easily even though I only have a small stake in the share market these days compared too the clown-fight of the late 90's. Real Estates tend too be a bit easier too live with in terms of upkeep and market trends in some regards...
While everyone else in their late teens early 20's I knew ended up in cushy jobs, parties, raves, drugs and other assorted fun. I ended up dragging my sorry, tired arse around the world scraping by in crap jobs and paltry wages while some things sorted themselves out and my investments paid off. It was and still is hard work and very much a case of sometimes all or nothing speculation, but he's right when he talks about charity states and people who have no regard for other peoples money or property.
They simply don't take care of themselves or anything around them too any level of responsibility. The people I knew from school that went into the cushy jobs, welfare and general party-mode never amounted too anything more than a complete shambles as eventually their own lack of responsibility caught up with them and they face uncertain futures.

It's really quite sad that his level of honesty doesnt get used in modern governments, least ways that we see on the media. Most advisors seem too keep their thoughts very close too their chest and not letting them out in the open based on the principle that it doesnt matter if its wrong, broken or screwed beyond belief, but one must not make the government look like its disfunctional under any circumstances.
Very easy too look back at his economic ideas of the 70's and 80's and call them failures with that ever seeing, critical eye of hindsight, fact is there, but the long terms ramifications of those decisions I think are worth bearing in mind when analysing any current western democratic government.

quote:

Originally posted by occrider Ah I think your last statement should come to the forefront before I proceed with any of my arguments . I am not a Friedman monetarist in the classical sense, and I am not well versed in all the historical implementation of "monetarism". Today, I'm primarily from the monetarist/neo-classical camp with some cautious leanings towards keynesian economics during stress scenarios.

Yep, that's fair enough. I'm certainly not dogmatically Keynesian either - nor am I averse to modern monetarist or neo-classical theory - I just find that my economic ideology, such that it is, is closer to that of the Keynesianism than anything else. This is not merely for ideological reasons, I might add: empirically, I find that economies with an active government presence (e.g. the Scandinavian countries) out-perform the economies without such governmental involvement, even in areas - such as economic efficiency and competitiveness - that neo-classicalism predicts them to fail in:

http://internationaltrade.suite101....itive_countries

quote:

Well this is actually what I consider to be the most interesting part of your post. I would consider Volker's policies to be driven largely by the main precepts of monetarism, and most would say that the Volker Fed played a large part in reducing inflation. Are you arguing that there was a corollary influence? I really don't find your Marxist analogy to be particularly applicable without substantive explanation.

Sorry, I didn't phrase that very well.

The point I was trying to make is that any given economic policy should not be judged by its success in acheiving a single, specific economic target (in this case, low inflation) but rather by its effect on the economy as a whole. Afterall, we could get any of the major economic indicators (inflation, GDP growth, unemployment etc.) to virtually any level we wanted so long as we were willing to make large enough sacrifices in other areas. For instance, we could get GDP growth up to 20% if we were willing to cut taxes in half and cease our worrying about inflation. We could get unemployment to 0% if we were willing to nationalise industry and sacrifice productive efficiency. In each of these cases, though, the sacrifices - or oppurtunity costs - are too large to consider them as anything even approaching good economic policy.

So, with regards to the implementation of strict monetary controls in the late 70s, they certainly reduced inflation successfully - no question about that - but at what cost? GDP growth was in the negatives for the best part of 3 years. Unemployment ballooned. Interest rates increased far beyond expectations. In the UK - where expansionary fiscal policy was not employed - the problems persisted for much of the decade. As per my analogy with Marxism and the elimination of inequality, an economic target was certainly reached here, but it came with a great opportunity cost. I guess the question here is, if the consequences of the introduction of Friedman's monetary theory could have been seen before time, would they still have been implemented?

It's a fairly weak appeal, I know, but that's what it comes down to. If, with the glorious benefit of hindsight, we can look back on an action and suggest that it should not be repeated if we could have our time over again, can we really call it anything other than a "failure"?

quote:

Granted the economy did not flourish under Volker, but I don't think that very many economists maintained such delusions considering the primary concern was to ward off inflation by enacting tremendous interest rate hikes. Would you have a more appropriate solution to decrease inflation and increase growth in a stagflating economy? I don't think that that is a failure of monetarism so much as it is a failure of there not being a 'perfect' solution to every problem.

I agree that there can be no perfect solution to any problem (which goes for all pursuits, with the possible exception of mathematics: this isn't merely an issue confined to economics), but that doesn't mean that there aren't gradiations in the quality of imperfect solutions.

This isn't something I've studied in any great depth, but my understanding is that inflation in the 1970s can be traced back, primarily, to a sharp rise in oil prices (no surprise that the stagflationary pressures first appeared shortly after the advent of OPEC) and inflexible and inefficient supply-side conditions. With the benefit of hindsight yet again, labour-reform, supply-side liberalisation and perhaps modest contractionary policy (either fiscal or monetary) would have succeded in reducing inflation, may have helped unemployment (depending on the nature of the labour and supply-side reforms) and would certainly not have impacted on GDP growth any more severely than monetarist policies did.

I've got no way of proving that such policies would have been "successful", but my point here is that there were surely alternatives available to policy-makers at the time and that many of these would have been more successful than the ones that were eventually implemented. On these grounds, yet again, I can't help but see the monetarist policies that were implemented as - in some sense, at least - failures.

quote:

It was a relatively new theory at the time, give it some leeway .

I appreciate that fact, I really do. I don't want to come across as a dick by self-righteously sitting here, 30 years in the future, criticising people who made decisions that, at the time, must have made a lot of sense, but nevertheless I am a big supporter of the primacy of objective truth and empirical fact in economic (and virtually all other) matters and in this context it's hard to say that the decisions made at the time were - objectively or empirically - the "right" ones. This isn't a personal judgement on Friedman or the other early monetarists, it's merely what I consider to be a sterile matter of fact.

quote:

I don't mean to denigrate your argument, and as a matter of fact I cannot argue you about 'classical' monetarism. You would appear to be more learned than me.

Haha well I doubt it, but thanks anyway.

I want to point out that my argument here isn't against monetary theory - which I am nowhere near equipped to argue against - but rather its outcomes. Early-monetarism may well have been the greatest economic theory ever advocated, but - in my eyes at least - it failed the empirical test which immediately erodes its legitimacy.

quote:

However, my argument is that monetarism was quintessential towards eliminating the systemic economic risks

Monetarism in general, or the specific monetary policies that were implemented in the 70s and 80s? I don't necessarily disagree with the former, but would certainly take issue with the latter.

quote:

and once that was done, fiscal policies were implemented to stimulate economic growth ... not that it was a necessity.

To be honest, I would argue that it was necessary.

The US and the UK employed nearly employed nearly identical monetary policies. The US employed massive fiscal expansionary measures shortly after, the UK didn't. The US economy recovered, the UK economy didn't for the best part of a decade. Granted we're comparing two different economies here, but the question still has to be asked: aside from fiscal policy, what else could explain the differences in fortune?

quote:

If Keynesian policy was needed to save the economy "yet again" why did it fail when originally implemented?

But I don't think it did "fail when originally implemented": in fact, I would argue that the rapid growth experienced in the world economy between 1945 and the mid 1970s can be directly attributed to Keynesian policy. The failures that the world economy experienced in the mid 1970s - due to oil prices and supply-side rigidity - could have been solved (at least theoretically, perhaps through the measures I mentioned earlier) through Keynesian policy as well.

On the other hand, I don't want to give the impression that the inability to address stagflation during that time was not a severe failure on behalf of the Keynesian economic orthodoxy of the time. I think they saw inflation and unemployment as enjoying a naturally inverse relationship and froze when that turned out not to be the case. There was a need to re-adjust economic thinking during that period and the advent of monetarism certainly succeded in that regard. Whether we can therefore say that the monetarist policies of the time were "successful" though is quite another matter.

quote:

Why does it have more of a minimal role today?

Does it though? Was the US rescued from recession earlier this decade through fastidious controls on the supply of money or through tax-cuts and corresponding budget-deficits of unparalleled magnitude? How frequently are economic issues solved through governmental intervention?

Keynesianism may not be explicitly endorsed by the powers that be all that often any more, but the principles remain in practice. The government is still an undeniably important variable in the overall economic equation.

quote:

Well now I have to ask you in what way do you consider it a "failure" in a way that we can consider fiscal policies a "success" under similar economic circumstances? There are no empirical evidence for fiscal/keynesian economic failures?

I'm not denying that Keynesianism, in general, has not had failures, but I would still argue that its success to failure ratio over the past century surpasses that of any of its rivals. The best performing economies have, historically, required large-scale government involvement: I believe that the current success of China and India, for instance, can be attributed to well-placed governmental involvement.

Now, admittedly, in the long-run, capitalistic economies need to tend towards market liberalism to sustain growth and that is certainly not something I would argue against as a nominal Keynesian. I believe in no more governmental involvement than is necessary to achieve a stable, growing economy. I do not, however, believe that an economy can acheive stable growth over a sustained period of time without principled and well-judged governmental intervention. Yet again, I believe that the historical facts will vindicate me on this point.

quote:

Well it would seem like we're talking about peas and carrots here. If you want to probe me with classical Keynes and I respond with classical Friedman than we can spend all day talking.

Haha, well it was never my intention to begin a debate about the merits of Keynesianism when I first posted in this thread, believe me. My point there wasn't that the theory of monetarism is essentially flawed (as a second year student, I still lack the theoretical grounding necessary to argue that point) but rather that monetarism - through the policies implemented in the 1970s and 1980s - was a largely unsuccessful enterprise. I don't think we need to introduce meta-debates about the viability of Keynesianism or neo-classicalism to reach a consensus about that.

quote:

My frame of mind is neo-classicalism, neo-keynesian, and neo-monetarism ... all of which are a completly seperate debates altogether. If you want to get into a classical (whatever) vs. a classical (whatever) debate that's fine, however, I don't find the value of engaging in a classical (whatever) vs. neo-classical (whatever) debate to be honest.

Too late.

___________________
http://eschatonnow.blogspot.com/

Last edited by Renegade on Nov-24-2006 at 16:44