Mastodawn

José Manuel Acevo García Jan 10, 2025

Emeritus Prof Christopher May

The hypocrisy of fiscal economics:

When there is a crisis in the real economy, we are told austerity is needed to restore confidence & encourage growth - the neo-classical economic solution.

When there is a crisis in the financial serves sectors we are told what is needed is liquidity & stimulus to restore confidence & encourage growth - a (narrow form of) Keynsian response.

So its not so much Keynes has been rejected, but rather its only applicable when the rich are in trouble!

Alex P Roe - OLD ACCOUNT Jan 10, 2025

@ChrisMayLA6 That austerity is required so frequently appears to suggest that austerity doesn’t work! Well, it does seem to keep the rich rich and even make many even richer!

Emeritus Prof Christopher May Jan 10, 2025

so it is working, then; just not for us....

Ramesh #NotGoingBack Jan 10, 2025

⬆️ @ChrisMayLA6 @alexproe

>> so it is working, then; just not for us...

>> So it's not so much #Keynes has been rejected, but rather it's only applicable when the rich are in trouble!

#Keynsian theory formed the underpinnings of #Reagan's obscene #TrickleDown theory in which the rich would reinvest money saved in taxes to drive growth.

#US has the rich getting richer while infrastructure like bridges and airports crumble, and services like #heathCare are only for those who can afford to pay.

Emeritus Prof Christopher May Jan 10, 2025

@rameshgupta @alexproe

If Reagan's economists where Keynsians, then they were the bastardisation called neo-Keynsianism that was an out growth of neo-classical economics that sought to mimic some of the discourse of Keynsianism with none of the progressive content... just calling yourself a Keynsian (if they did) doesn't;t make you one....

The problems you identify are real, but they are not due to Keynsian economics - that is all about 'effective demand' not enriching the already wealthy!

Ramesh #NotGoingBack Jan 10, 2025

⬆️ @ChrisMayLA6

They spun the basic tenet of #Keynsian or #Keynesian Theory:

Per #IMF, "Keynesians believe that… fluctuations in ANY component of spending,… [e.g.] investment,… cause output to change. If government spending increases, for example, and all other spending components remain constant, then output will increase".

#Reagan's connivers substituted "rich" for "government" and claimed the RICH would drive growth by reinvesting money saved in taxes.

https://www.imf.org/external/pubs/ft/fandd/2014/09/basics.htm

What Is Keynesian Economics? - Back to Basics - Finance & Development, September 2014

Sarwat Jahan, Ahmed Saber Mahmud, and Chris Papageorgiou - The central tenet of this school of thought is that government intervention can stabilize the economy

Emeritus Prof Christopher May Jan 10, 2025

@rameshgupta @alexproe

Indeed; classic bait & switch

Ramesh #NotGoingBack Jan 10, 2025

⬆️ @ChrisMayLA6

>> Indeed; classic bait & switch

Indeed.

In a nutshell, their line of persuasion was:

1. Government is too big.

2. Cut down the government.

3. Why pay taxes to government?

4. Give tax cuts to the rich instead.

5. The rich will take care of the poor.

6. More succinctly, #PrivatizationOfGovernment

NOTHING has changed in this wicked #conservative story in 5 decades, except that rich got richer, poor got poorer, infrastructure crumbled, and services vanished!

Lin Viv Jan 11, 2025

@alexproe You make a very good point, can you send me a private message?I have a little question for you.

David S (inactive)Jan 10, 2025

@ChrisMayLA6 the new version of privatise profits, nationalise losses?

Emeritus Prof Christopher May Jan 10, 2025

pretty much....

yuhasz01 Jan 10, 2025

@ChrisMayLA6 In US only corporate welfare and subsidies are tolerated.....Supportive Socialism for us, none for you private citizen...

Bob Thomson Jan 10, 2025

@ChrisMayLA6 as someone said the other day on here, when the poor are said to need motivation, money is taken away from them. When it’s the rich who need motivation, money is given to them.

Emeritus Prof Christopher May Jan 10, 2025

Its one of the great conundrums of economics... and revelatory of the skewed notions of incentivisation.

You can (sort of) square the circle, if you want by taking the line that only work should pay, and so the wealthy execs need more money to incentivise them, while the poor need to have their benefits taken way to ensure they work to stay alive (the ultimate incentivisation); but that leaves the vexing question of relative rates of pay.

but as an approach its morally bankrupt

Dan Hatton Jan 10, 2025

@ChrisMayLA6 TBF, the same government that launched the post-2008-financial-crisis stimulus and liquidity packages also, a few years earlier, successfully used a Keynesian stimulus to prevent the dot-com recession reaching Britiain.

Dan Hatton Jan 10, 2025

@ChrisMayLA6 It is an ever-increasing source of astonishment to me that Gordon Brown doesn't defect to the SNP. Not only does he have nothing at all in common on policy with the current leadership of the Labour Party, he's been made to look like a liar by the unionist campaign of 2014 getting him to front "The Vow" then going section-35 on critical civil rights policies.

BashStKid Jan 10, 2025

@ChrisMayLA6 Naturally. Banks are smart enough to avoid the dogfood they prescribe to the little people.

Talya (she/her) 🏳️‍⚧️✡️Jan 10, 2025

@ChrisMayLA6
it's because even the economists themselves know that austerity is a lie. look at the EU's Draghi report - literally one of the architechts of early-2000s austerity admits plainly and clearly that austerity only made Europe poorer in the long term.