Why Don't Govs Save Taxes?

[Ben Kenobi]

That's what we did here, set up a reserve fund where oil export tax went.

Well now Stelmach looks like an idiot for his policies. I really don't understand why they didn't start building up a surplus, that's money they have to burn through before they have nothing.

[Ben Kenobi]

Arrian indicates he is a Keynesian. A lot more people are these days than a few years ago.

Why would anyone be a Keynesian over an Austrian? I mean really. Keynes is why we are in this mess.

[Naked Gents Rut]

Why would anyone be solely a Keynesian or a neoclassicist? How would you possibly explain both short-term and long-term economic behavior?

[Victor Galis]

Why would anyone be solely a Keynesian or a neoclassicist? How would you possibly explain both short-term and long-term economic behavior?

A fair point, though I suspect purely neoclassical economics is not useful over any time frame.

Any country with a huge pile of debt could easily trim the peaks and find a way to "invest" the surplus in debt reduction. That has the added benefit of cutting future interest payments on the debt.

Massive public investment makes most sense when there are unemployed workers you can put to work instead of displacing private investment, i.e. now.

[-Jrabbit]

I seriously read this as "Why doesn't god save Texas?" when I first glanced at the title.

Yeah. "Why don't gods save Texas?" is what I got...

[Naked Gents Rut]

I suspect purely neoclassical economics is not useful over any time frame.

I have no idea why you think neoclassical economics is not useful over any time frame greater than that needed for prices to adjust.

[Victor Galis]

I suspect purely neoclassical economics is not useful over any time frame.

I have no idea why you think neoclassical economics is not useful over any time frame greater than that needed for prices to adjust.

Because I believe shocks happen too frequently for prices to adjust. Because I don't believe people are close enough to rational for it to be a trivial assumption that they are. Because I don't believe most markets are thick enough to resemble ideal free markets. (Insert several more things here.) Also possibly because I don't live in a happy magical land of make-believe.

Some neoclassical economics has the utility of a fable that is designed to illustrate a bit of truth through a totally unrealistic story. The rest is just garbage.

[Naked Gents Rut]

I'd trust your opinion more if you didn't seem to think that neoclassicists assume rationality on the part of economic actors while Keynesians don't. You seem to have more of an issue with economics as a whole than with one school of it.

[Barnabas]

Trimming peaks happen, in spanish we call it creating a fondo anti cÃclico, anticyclical fund (I hope that is the right translation) Save time in good times to spend it in bad times


But, in order to create one of those funds, first, the country must be growing at high rates, and the government should have a budget surplus.
And I don't think that ever happened during W Bush two periods.

[Barnabas]

Isn't the interest rate close to 0 in the USA now?

The problem is they are in recession and most things to take countries out of recessions have already been done.

[Victor Galis]

I'd trust your opinion more if you didn't seem to think that neoclassicists assume rationality on the part of economic actors while Keynesians don't. You seem to have more of an issue with economics as a whole than with one school of it.

"Animal spirits" are rational? I believe people are irrational in predictable ways. Behavioural economics is kind of cool. You can do empirical stuff without making any assumption about rationality. You can also assume certain economic actors are rational.

I have problems with much of economics, because much of economics has been based too heavily on a few stupid assumptions, and because it's been too divorced from other disciplines such as psychology. The good news is modern economics is actually a lot better than the stuff we study in school.

[Seeker]

Err...I'm not THAT dense, I assume a savings pool would be a mixture of commodities, bonds from around the world, energy, different currencies, etc.

I'm not suggesting that the government suddenly try to sell a gold bar the size of my house

But, yes, PMs of all kinds should be part of a savings fund since they are less volatile historically.

"We should invest in education, health.."

Well why can't you do both?

I think there are diminishing returns to education based solely on money, and that proper regulation and socio-cultural forces are often much more important.

Also, the question is partially about how to pay for entitlements like health and education. We should immediately pay all existing revenue and borrow from future generations to pay for today?? WHY? Why not get the finances of the state on some sort of vaguely, slightly reasonable basis before you go off trying to make all children above average.

[Ben Kenobi]

Isn't the interest rate close to 0 in the USA now?

Which is why Keynesian theory no longer works. They are pushing against a rope.

The problem is they are in recession and most things to take countries out of recessions have already been done.

The saving grace is that the USD is a tall man among midgets. The US still has some policy options left. The rest of the world, (including Canada), is in real trouble.

[Naked Gents Rut]

Which is why Keynesian theory no longer works. They are pushing against a rope.

Just stop, Ben. Monetary policy isn't the only way to stimulate an economy.

[Ben Kenobi]

Just stop, Ben. Monetary policy isn't the only way to stimulate an economy.

What do you suggest ought to be done?