Why all the hate for Keynesian Economics?

[Takaram]

They do know we call it a Gilded Age and not a Golden Age for a reason, right?

No, they don't.

Back to high school American History with them!

[Libey-libey]

look up keynes vs hyeck rap on youtube im a hyeckian i see keynes as inflationary and simply incorrect becouse in part its over relience on mathamatics and the fact it cannot explain the boom sand bust cycle only offer a "cure" that fails.

[Dyakovo]

look up keynes vs hyeck rap on youtube im a hyeckian i see keynes as inflationary and simply incorrect becouse in part its over relience on mathamatics and the fact it cannot explain the boom sand bust cycle only offer a "cure" that fails.

You seriously base what economic model works better on a YouTube video?

[Salandriagado]

because there is no real science of economics. only pseudo-scientific excuses for ideological fanatacism?

No, there's plenty of science of economics. It's just that you never hear about it on the internet, because it's overwhelmed with people who don't know what they're talking about - hence why you have so many people who spout Austrian "Economics" (and I use that latter word very, very loosely).

[Revolutopia]

look up keynes vs hyeck rap on youtube im a hyeckian i see keynes as inflationary and simply incorrect becouse in part its over relience on mathamatics and the fact it cannot explain the boom sand bust cycle only offer a "cure" that fails.

You seriously base what economic model works better on a YouTube video?

I think his discarding it because it uses math is even sadder/more funny.

[Cetacea]

The problem with Economics as Science is that it needs to be based on rational mathematical models of behaviour.

Unfortunately humans are irrational and make decisions based on emotion rather than reason, thats the flaw of Keynes perfect model - it can't predict human stoopid.

(there's also the whole issue of what money really does, but I wont go there)

[Silent Majority]

it cannot explain the boom sand bust cycle

I'm pretty sure no economic school of thought does this.

[Phocidaea]

Because in America there are a lot of right-wingers who oppose any economic strategy to the left of lassez-faire capitalism.

And a very small minority of left-wingers who oppose any economic strategy to the right of Marxism.

[Chestaan]

look up keynes vs hyeck rap on youtube im a hyeckian i see keynes as inflationary and simply incorrect becouse in part its over relience on mathamatics and the fact it cannot explain the boom sand bust cycle only offer a "cure" that fails.

You can't love Hayek that much, I mean you did spell his name wrong...

Secondly, use of maths is bad how? Maths is a tool that happens to be quite useful in economics.

And thirdly, Keynes didn't need to explain booms and busts as they are both inevitable under a capitalist system. Crisis will happen in an economy and there's very little that can be done to prevent them.

[Caninope]

I was reading this article about Libertarianism and it mentioned the majority of young people in America don't believe Keynesian principles work (i.e. increasing government spending will not increase overall spending). This really confused me, maybe it's because I'm not American, but I never saw Keynesian economics as A. associated with the left wing or B. at all disputable.

Can someone explain to me how anyone can actually disagree with it? I've always thought it was like disagreeing with it was like disagreeing with the link between smoking and lung cancer (although, that said, I heard that done a week ago)

Because there's a lot of disagreement in academic circles over Keynesians itself. Neokeynesianism/old Keynesianism (i.e. the Keynesianism of the 60s and 70s) has been largely abandoned both by the general public and academics, because of the inability to adequately explain the stagflation of the 1970's. It has survived as New Keynesianism.

However, the American people don't always believe that such things work. Keynesian injections into the economy hasn't solved the economy (or at least, hasn't appeared too for many people), things such as the stimulus problem and the Bush tax refunds/"Bush checks". This has made many people, both academic and layman wonder about the spending multiplier. Is the multiplier of aggregate demand really higher than the crowding out effect? That's entirely debatable, as many academics do today. Other Keynesian principles have been called into demand. Market monetarists, for example, argue that interest rates shouldn't be the primary tool of the central banks, and that central banks shouldn't target things like unemployment or inflation but instead, nominal income.

While Keynesian most certainly revolutionized economics, your view that Keynesianism isn't at all disputable is completely wrong. The fact that you've got monetarism (and it's newest incarnation, market monetarism), new classical macroeconomics, and New Keynesianism all floating around.

[Caninope]

But if the economy is doing badly enough people just won't spend at all, defeating the purpose of tax cuts

Tax cuts are actually a quite Keynesian response in some cases.

[Caninope]

I was reading this article about Libertarianism and it mentioned the majority of young people in America don't believe Keynesian principles work (i.e. increasing government spending will not increase overall spending). This really confused me, maybe it's because I'm not American, but I never saw Keynesian economics as A. associated with the left wing or B. at all disputable.

Well some people don't think that the assumptions of rigid nominal wages and prices are well founded. They have a model where markets clear and so the resource constraint binds. If the government purchases a good then necessarily somebody else who would have bought it now can't; so total spending doesn't increase. Also in that model an increase in nominal spending won't translate into an increase in real production anyway. Even if it does through some friction, it's not optimal.

Then even if you accept the sticky wage/price framework, it's still not clear whether the government can significantly increase nominal spending. Even if they can, it's not clear that you should ever use fiscal policy since monetary policy is much more potent. Fiscal stimulus is only considered by some people now because the Fed Funds rate is stuck at the zero lower bound and so they see monetary policy as being "out of ammunition", but that's also heavily disputed.

Then, on top of all this, by the time Congress is able to get around to doing anything, the worst of the recession has usually already passed.

[PapaJacky]

But if the economy is doing badly enough people just won't spend at all, defeating the purpose of tax cuts

Tax cuts are actually a quite Keynesian response in some cases.

Indeed. The whole idea of deficit spending is based on the idea of stimulating demand, which in turn stimulates supply. How much of anything demanded is directly proportional to how much money consumers have. One can either inflate the consumer's money supply via cutting taxes or providing stimulus funds, or, the Government can be the consumer itself.

[Death Metal]

Gilded age, little Govt. spending, economy boomed.

Of course, some want to revert to those days.

Well, economy boomed only if you have a very... unorthodox interpretation of the word "boom".

And/or the word "economy".


Anyway, to the OP, they hate it because they know it works. Pure and simple.

[L Ron Cupboard]

...it's over relience on mathamatics...

Do you have a problem with physics because of its over reliance on mathematics?

[Death Metal]

...it's over relience on mathamatics...

Do you have a problem with physics because of its over reliance on mathematics?

He's apparently an Austrian Economist given his love of Hayek. Which basically means he doesn't believe in empirical evidence in economical models just because it doesn't factor in human behavior (even though economical models work ENTIRELY on human behavior, so saying this is like saying you don't like a television because it requires electricity).

That's part of the fun of following an economic school who takes credit for an economic recovery of their home country, despite still being in self-imposed exile at the time and the country using Keynesian principles!

[Mr Bananagrabber]

That's part of the fun of following an economic school who takes credit for an economic recovery of their home country, despite still being in self-imposed exile at the time and the country using Keynesian principles!

Well... Keynesians kind of do the same thing claiming that government spending on WWII ended the Depression.

[Forsher]

That's part of the fun of following an economic school who takes credit for an economic recovery of their home country, despite still being in self-imposed exile at the time and the country using Keynesian principles!

Well... Keynesians kind of do the same thing claiming that government spending on WWII ended the Depression.

What would you say ended the Depression?

[Mr Bananagrabber]

Well... Keynesians kind of do the same thing claiming that government spending on WWII ended the Depression.

What would you say ended the Depression?

(Monetarist answer) The growth in the money supply.

[Forsher]

What would you say ended the Depression?

(Monetarist answer) The growth in the money supply.

(Bear in mind I have a very dodgy graps of quantitative easing, pretty sure that's spelt wrong.) Basically, quantitative easing?

[Mr Bananagrabber]

(Monetarist answer) The growth in the money supply.

(Bear in mind I have a very dodgy graps of quantitative easing, pretty sure that's spelt wrong.) Basically, quantitative easing?

You're actually one of the few people who spell it correctly. Most say and spell it "quant-a-tive". Kind of... but remember back then the Fed had a gold standard. So an expansion of the money supply now-a-days doesn't do a whole lot because the Fed has an inflation target; they expect it to be reversed if inflation gets too high. In 1933 the Fed abandoned the gold standard, unanchoring inflation expectations, which let an increase in the growth of the money supply have great effect despite zero interest rates. And then when WWII came along, the debt was monetized. If I recall, the price level increased by almost half. So that boost to nominal income from the expansion of money stopped any problems associated with nominal wage rigidity.

[Death Metal]

That's part of the fun of following an economic school who takes credit for an economic recovery of their home country, despite still being in self-imposed exile at the time and the country using Keynesian principles!

Well... Keynesians kind of do the same thing claiming that government spending on WWII ended the Depression.

Well they're half right at least. Government spending ended it, but most of the spending happened before there was even a war.

[Mr Bananagrabber]

Well... Keynesians kind of do the same thing claiming that government spending on WWII ended the Depression.

Well they're half right at least. Government spending ended it, but most of the spending happened before there was even a war.

Well it crowded out private sector consumption though... kinda hard to claim that's what you wanted.

[Eleutheria]

I think that Keynesian economics deals with a utopian reality whereby politicians are not worried about the loss of popularity caused by scaling back spending in the perceived "good times"-something which the public as a whole will never respect or understand-and why should they? It is natural for the working man to presume that when times are good for all the government as a whole should have more money and be able to spend it, instead of scaling back public spending and storing up for the bad times ahead.

It is my view that the Keynesian model will never work for a sustained period in modern democracies, which is why I am inclined to view the Austrian School of Economics as the best way of retaining democratic and civil freedoms whilst keeping the economy growing.

[Chestaan]

I think that Keynesian economics deals with a utopian reality whereby politicians are not worried about the loss of popularity caused by scaling back spending in the perceived "good times"-something which the public as a whole will never respect or understand-and why should they? It is natural for the working man to presume that when times are good for all the government as a whole should have more money and be able to spend it, instead of scaling back public spending and storing up for the bad times ahead.

It is my view that the Keynesian model will never work for a sustained period in modern democracies, which is why I am inclined to view the Austrian School of Economics as the best way of retaining democratic and civil freedoms whilst keeping the economy growing.

I really hope you understand the irony of advocating Austrian Economics while simultaneously dismissing Keynesian economics as utopian?

One of the key claims of the Austrian School is that the free market is perfectly efficient. Now, this would be true if perfect information existed and if perfect competition existed, in other words this assumption would be true in a perfect world. Austrian economics would only hold true in a utopia.