How long will it take to repair the damge to America done by the Bush regime

[Imran Siddiqui]

When you say 'producing' more you mean a shift in supply right? That's what Say was talking about. If you believe in Says law then you believe that a new equilibrium price will be set after supply increases. There is no movement along the supply curve because the supply curve moves.

The supply curve moves only when the means of production are altered. If you simply create more, it is simply movement along the supply curve. This was driven in by my professors. A shift in the curve usually comes from increases in technology, not by just producing more.

I haven't studied Say much, but it's common belief that he stated that equilibrium price would be maintained no matter how much supply increased, that is that any production of goods would be bought up by consumers.

The basics of Say's law is that demand does not exist without supply. Keynes' said that his argument is 'supply creates its own demand', but this is a misunderstanding of his point. I don't believe that Say would say that under a controlled economy that any production of goods would be bought by consumers. You cannot simply produce something that no one wants and expect it all to be sold. Say knew that.

As far as demand-side Keynesianism, I think it can be used to correct market failure. As far as supply-side economics or trickle down economics I think it doesn't work and causes market failure, and it certainly doesn't correct market failure.

There is the problem again, and what I'm talking about. You consider all demand-side to be Keynesianism and all supply-side to be Reaganism. What about Monetarism? You could consider that supply-side, but it isn't 'Supply-side economics'. That was the whole point. When you say that supply-side has been emphasized throughout economics, you have Reagan in mind, not von Hayek.

Oh, and Monetary policy is much more effective than Fiscal policy, especially in solving recessionary problems.

[DuncanK]

Originally posted by Ned
Imran, et al., it seems to me that putting more money in the hands of the people will cause the industrial engine to speed up if the slowdown has caused inventory buildup to meet the short-term demand. Otherwise, the new money will merely bid up prices for products as short term demand exceed short term supply.

True, but the trick is to keep prices high enough to maintain full employment. Now what full emplyment is is debatable. I think that during the 90s we didn't have full employment. I think the economy would have done much better if we would have had something like 2% unemployment. So the government and the fed should have done more to stimulate demand.

Originally posted by Ned
Reduction of corporate taxes or interest rates, on the other hand, reduces the cost of good and services, enabling corporations to hirer more people, to cut prices to move more product and to make more profit so their stock price rise. All three effects lead directly to a growing economy.

These things only work in an economy that is growing anyway. If the economy isn't growing these things won't work because businesses won't invest because of poor business confidence.

Originally posted by Ned
To this effect, I understand that Greenspan is thinking about cutting interest rates again. Congress should also consider cutting corporate taxes - for example, by making dividend deductable.

Your right that cutting interest rates wont help, but I think some direct government spending in the economy is what should be happening in Japan, Europe and the US. All three economies are looking at serious demographic changes and tax cuts that don't work are going to make things worse.

[DuncanK]

Originally posted by Imran Siddiqui

When you say 'producing' more you mean a shift in supply right? That's what Say was talking about. If you believe in Says law then you believe that a new equilibrium price will be set after supply increases. There is no movement along the supply curve because the supply curve moves.

The supply curve moves only when the means of production are altered. If you simply create more, it is simply movement along the supply curve. This was driven in by my professors. A shift in the curve usually comes from increases in technology, not by just producing more.

Shifts in supply also occur when business costs are reduced (among some other things), that's why the supply-siders want to cut taxes.

Originally posted by Imran Siddiqui

I haven't studied Say much, but it's common belief that he stated that equilibrium price would be maintained no matter how much supply increased, that is that any production of goods would be bought up by consumers.

The basics of Say's law is that demand does not exist without supply. Keynes' said that his argument is 'supply creates its own demand', but this is a misunderstanding of his point. I don't believe that Say would say that under a controlled economy that any production of goods would be bought by consumers. You cannot simply produce something that no one wants and expect it all to be sold. Say knew that.

I don't think Keynes was wrong in his interpretation.

Originally posted by Imran Siddiqui

As far as demand-side Keynesianism, I think it can be used to correct market failure. As far as supply-side economics or trickle down economics I think it doesn't work and causes market failure, and it certainly doesn't correct market failure.

There is the problem again, and what I'm talking about. You consider all demand-side to be Keynesianism and all supply-side to be Reaganism. What about Monetarism? You could consider that supply-side, but it isn't 'Supply-side economics'. That was the whole point. When you say that supply-side has been emphasized throughout economics, you have Reagan in mind, not von Hayek.

Oh, and Monetary policy is much more effective than Fiscal policy, especially in solving recessionary problems.

Monetary policy can't really handle major problems in the economy and can actually cause some big problems. We really don't have much choice but to use it though because fiscal policy is pretty much impossible with the budget process.

[chequita guevara]

Originally posted by Ned
What was the deal that the NV were offering Johnson?

It's irrelevent. The deal was almost through, and at the last minute the South pulled out of the talks because the Nixon team told them that if they held out they could get a better deal with a Nixon presidency. Kissinger leaked info from the talks to the Nixon team, who funneled their deal to the South through Chenault's wife (of Flying Tiger's fame). The resulting embarressment for the Johnson presidency cost Humphry the election.

Four more years of war, 24, 000 American and almost a million Vietnamese lives, plus the whole debacle and genocide in Cambodia were the result of that treason. If Nixon weren't already dead, he should have been executed (not that it would be possible because of Ford's pardon). Kissinger is still around. He needs to dance from the end of a rope.

[DuncanK]

Originally posted by Imran Siddiqui
What about Monetarism? You could consider that supply-side, but it isn't 'Supply-side economics'.

I think that monetary policy can either be supply-sided or demand-sided and it has been only supply-sided. Supply-sided policy is more concerned with inflation while demand-sided policy is more concerned with full employment. The Fed has always been more concerned with inflation. The exception is the Bank of Japan right now. They are setting out to create inflation in order to get the economy going right now, but it's something they should have done 10 years ago.

[Imran Siddiqui]

We really don't have much choice but to use it though because fiscal policy is pretty much impossible with the budget process.

That and fiscal policy is very risky. Usually by the time it is enacted the 'crisis' is over and it overcompensates, causing greater problems that it solves. The Monetarists showed this when they refuted Keynesianism (which is almost dead as an economic idelogy... neo-Keynesians are much more classical than Keynesian interestingly enough).

I support fiscal policy usually for ideological reasonings. Ie, I like the Bush tax cuts because I like less taxes and (hopefully) less government. I don't think it'll do all that much to stimulate the economy. We'll just have to ride out the cycle for that.

[DuncanK]

Originally posted by Imran Siddiqui

We really don't have much choice but to use it though because fiscal policy is pretty much impossible with the budget process.

That and fiscal policy is very risky. Usually by the time it is enacted the 'crisis' is over and it overcompensates, causing greater problems that it solves. The Monetarists showed this when they refuted Keynesianism (which is almost dead as an economic idelogy... neo-Keynesians are much more classical than Keynesian interestingly enough).

There's nothing wrong with a little inflation. You can just tighten the money supply a bit. The thing the conservatives (maybe that is better than supply-siders) screw up on is by wanting to keep demand so tight that they prevent growth. Debt and inflation aren't big problems when the economy is growing.

[Imran Siddiqui]

There's nothing wrong with a little inflation.

Of course not... but that is monetarism at work. You have to make a policy choice of which one you want. I think most recent heads of the Fed remember the end of the 70s and just hate inflation.

[DuncanK]

Originally posted by Imran Siddiqui
I like the Bush tax cuts because I like less taxes and (hopefully) less government.

The thing is that taxes are increased in the future and spending isn't effected or actually increases. People see this now. They were fooled a bit in the 80s, but they won't be fooled this time, and they won't spend the money. They will know that taxes will have to be increased again (in the near future) and spending is going to increase too.

[DuncanK]

Originally posted by Imran Siddiqui

There's nothing wrong with a little inflation.

Of course not... but that is monetarism at work. You have to make a policy choice of which one you want. I think most recent heads of the Fed remember the end of the 70s and just hate inflation.

They hate inflation because they are bankers. That will never change as long as bankers run the banks.

[Imran Siddiqui]

They were fooled a bit in the 80s, but they won't be fooled this time, and they won't spend the money. They will know that taxes will have to be increased again (in the near future) and spending is going to increase too.

Why would they not spend? If you have more money, you spend it. Why would you not spend and wait for taxes to go up?

They hate inflation because they are bankers. That will never change as long as bankers run the banks.

That didn't seem to be a great problem in the 1950s and 60s, with heads of the Fed that lived through the Depression.

[DuncanK]

Originally posted by Imran Siddiqui

They were fooled a bit in the 80s, but they won't be fooled this time, and they won't spend the money. They will know that taxes will have to be increased again (in the near future) and spending is going to increase too.

Why would they not spend? If you have more money, you spend it. Why would you not spend and wait for taxes to go up?

They will spend a little bit, but not like they would if they didn't believe that the taxes were going to be increased again. The cuts wont do anything unless they spend a lot of it.

Originally posted by Imran Siddiqui

They hate inflation because they are bankers. That will never change as long as bankers run the banks.

That didn't seem to be a great problem in the 1950s and 60s, with heads of the Fed that lived through the Depression.

I think we would have had better growth with looser money supply. The Fed chiefs were paranoid about inflation during that time and held back a lot of growth.

[DuncanK]

Well we have some wholesale infaltion and flat industrial production now. Doesn't look good for the eoconomy now.

[DuncanK]

housing starts come out on tuesday. that could be interesting.

[Bosh]

Really?

Which ones are not?

University of Chicago?
In any case economics departments don't tend to be that left wing, for example at Wesleyan University which really is dominated by the left and we've got a pretty big econ department for a school our size (about 15 profs IIRC) we've only got one real commie and a smattering of Soc Dem types, but most are pretty Neo-Keynesian (which is a bit of a misnomer) mainstream with a few old-fashioned Neo-Classical.