Why is good business politically foul?

Started by redwhiteblue, March 15, 2013, 05:17:35 AM

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kramarat

Quote from: Solar on March 16, 2013, 03:29:28 PM
It always puzzles me as to why some kid growing up in a Capitalist society would want to take a course in anti-capitalism.
If he is really serious about finance, he needs to learn both arenas, then he will discover that the economy isn't based on the Govt picking winners and losers.

It's not his fault. I don't think free market economics is taught in colleges anymore. They are taught that free market capitalism sucks, Obama is doing his best to fix the damage that has been done, and we just need to give socialism and Keynesian economics more time to take hold.

There will always be a certain degree of Keynesianism, and it's a good thing if practiced responsibly. Some projects are just too big to be undertaken by private interests.....Hoover Dam, interstate highway system, etc., but any system in which the government is in control, or trying to control, the economy, will ultimately fail. Unfortunately, people won't truly understand this until the multifaceted Obama bubble finally bursts. It's going to suck too. I giant bubble is being created, simply to maintain a crappy economy. I wish they would wake up and simply start dishing out the pain now, allowing things to self correct; but they won't.

Solar

Quote from: kramarat on March 17, 2013, 09:05:09 AM
It's not his fault. I don't think free market economics is taught in colleges anymore. They are taught that free market capitalism sucks, Obama is doing his best to fix the damage that has been done, and we just need to give socialism and Keynesian economics more time to take hold.

There will always be a certain degree of Keynesianism, and it's a good thing if practiced responsibly. Some projects are just too big to be undertaken by private interests.....Hoover Dam, interstate highway system, etc., but any system in which the government is in control, or trying to control, the economy, will ultimately fail. Unfortunately, people won't truly understand this until the multifaceted Obama bubble finally bursts. It's going to suck too. I giant bubble is being created, simply to maintain a crappy economy. I wish they would wake up and simply start dishing out the pain now, allowing things to self correct; but they won't.
I tend to disagree, neither of those two examples needed Govt, what they needed was Govt to approve these projects and let private industry bid and build.
Nasa on the other hand fell within the defense dept, we were in a race with Russians and defeating them in a space race was of the utmost importance.
But roads and infrastructure are paid for through taxes, we don't need govt creating competing industries over private to do these jobs.
As exampled by Caltrans in Ca. this is the most bloated waste of tax dollars in the state, every job they undertake is three times longer on average than that of the private sector.
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kramarat

Quote from: Solar on March 17, 2013, 09:18:48 AM
I tend to disagree, neither of those two examples needed Govt, what they needed was Govt to approve these projects and let private industry bid and build.
Nasa on the other hand fell within the defense dept, we were in a race with Russians and defeating them in a space race was of the utmost importance.
But roads and infrastructure are paid for through taxes, we don't need govt creating competing industries over private to do these jobs.
As exampled by Caltrans in Ca. this is the most bloated waste of tax dollars in the state, every job they undertake is three times longer on average than that of the private sector.

I could be wrong. I'm a free market capitalist because I've seen it work and I know it works, so I haven't bothered to study Keynsian economics, or anything else.

My examples came from reading this wiki blurb, which is all of the reading I've done on it. :smile:

TheoryKeynes argued that the solution to the Great Depression was to stimulate the economy ("inducement to invest") through some combination of two approaches:

1.A reduction in interest rates (monetary policy), and
2.Government investment in infrastructure (fiscal policy).By reducing the interest rate at which the central bank lends money to commercial banks, the government sends a signal to commercial banks that they should do the same for their customers.

Investment by government in infrastructure injects income into the economy by creating business opportunity, employment and demand and reversing the effects of the aforementioned imbalance.[7] Governments source the funding for this expenditure by borrowing funds from the economy through the issue of government bonds, and because government spending exceeds the amount of tax income that the government receives, this creates a fiscal deficit.

A central conclusion of Keynesian economics is that, in some situations, no strong automatic mechanism moves output and employment towards full employment levels. This conclusion conflicts with economic approaches that assume a strong general tendency towards equilibrium. In the 'neoclassical synthesis', which combines Keynesian macro concepts with a micro foundation, the conditions of general equilibrium allow for price adjustment to eventually achieve this goal. More broadly, Keynes saw his theory as a general theory, in which utilization of resources could be high or low, whereas previous economics focused on the particular case of full utilization.

The new classical macroeconomics movement, which began in the late 1960s and early 1970s, criticized Keynesian theories, while New Keynesian economics has sought to base Keynes's ideas on more rigorous theoretical foundations.

Some interpretations of Keynes have emphasized his stress on the international coordination of Keynesian policies, the need for international economic institutions, and the ways in which economic forces could lead to war or could promote peace.[8]


Solar

Quote from: kramarat on March 17, 2013, 10:02:27 AM
I could be wrong. I'm a free market capitalist because I've seen it work and I know it works, so I haven't bothered to study Keynsian economics, or anything else.

My examples came from reading this wiki blurb, which is all of the reading I've done on it. :smile:

TheoryKeynes argued that the solution to the Great Depression was to stimulate the economy ("inducement to invest") through some combination of two approaches:

1.A reduction in interest rates (monetary policy), and
2.Government investment in infrastructure (fiscal policy).By reducing the interest rate at which the central bank lends money to commercial banks, the government sends a signal to commercial banks that they should do the same for their customers.

Investment by government in infrastructure injects income into the economy by creating business opportunity, employment and demand and reversing the effects of the aforementioned imbalance.[7] Governments source the funding for this expenditure by borrowing funds from the economy through the issue of government bonds, and because government spending exceeds the amount of tax income that the government receives, this creates a fiscal deficit.

A central conclusion of Keynesian economics is that, in some situations, no strong automatic mechanism moves output and employment towards full employment levels. This conclusion conflicts with economic approaches that assume a strong general tendency towards equilibrium. In the 'neoclassical synthesis', which combines Keynesian macro concepts with a micro foundation, the conditions of general equilibrium allow for price adjustment to eventually achieve this goal. More broadly, Keynes saw his theory as a general theory, in which utilization of resources could be high or low, whereas previous economics focused on the particular case of full utilization.

The new classical macroeconomics movement, which began in the late 1960s and early 1970s, criticized Keynesian theories, while New Keynesian economics has sought to base Keynes's ideas on more rigorous theoretical foundations.

Some interpretations of Keynes have emphasized his stress on the international coordination of Keynesian policies, the need for international economic institutions, and the ways in which economic forces could lead to war or could promote peace.[8]

And once again, Keynesian economics is being applied to the current recession and turned it into a depression.
Many economists argue that it was Keynesian economics that extended the great depression.

The problem with Keynes theory is solely based in Govt interference in free mkt.
   
Keynesian economics is a theory of total spending in the economy (called aggregate demand) and its effects on output and inflation. Although the term has been used (and abused) to describe many things over the years, six principal tenets seem central to Keynesianism. The first three describe how the economy works.

1. A Keynesian believes that aggregate demand is influenced by a host of economic decisions—both public and private—and sometimes behaves erratically. The public decisions include, most prominently, those on monetary and fiscal (i.e., spending and tax) policies. Some decades ago, economists heatedly debated the relative strengths of monetary and fiscal policies, with some Keynesians arguing that monetary policy is powerless, and some monetarists arguing that fiscal policy is powerless. Both of these are essentially dead issues today. Nearly all Keynesians and monetarists now believe that both fiscal and monetary policies affect aggregate demand. A few economists, however, believe in debt neutrality—the doctrine that substitutions of government borrowing for taxes have no effects on total demand (more on this below).

2. According to Keynesian theory, changes in aggregate demand, whether anticipated or unanticipated, have their greatest short-run effect on real output and employment, not on prices. This idea is portrayed, for example, in phillips curves that show inflation rising only slowly when unemployment falls. Keynesians believe that what is true about the short run cannot necessarily be inferred from what must happen in the long run, and we live in the short run. They often quote Keynes's famous statement, "In the long run, we are all dead," to make the point.

Monetary policy can produce real effects on output and employment only if some prices are rigid—if nominal wages (wages in dollars, not in real purchasing power), for example, do not adjust instantly. Otherwise, an injection of new money would change all prices by the same percentage. So Keynesian models generally either assume or try to explain rigid prices or wages. Rationalizing rigid prices is a difficult theoretical problem because, according to standard microeconomic theory, real supplies and demands should not change if all nominal prices rise or fall proportionally.

But Keynesians believe that, because prices are somewhat rigid, fluctuations in any component of spending—consumption, investment, or government expenditures—cause output to fluctuate. If government spending increases, for example, and all other components of spending remain constant, then output will increase. Keynesian models of economic activity also include a so-called multiplier effect; that is, output increases by a multiple of the original change in spending that caused it. Thus, a ten-billion-dollar increase in government spending could cause total output to rise by fifteen billion dollars (a multiplier of 1.5) or by five billion (a multiplier of 0.5). Contrary to what many people believe, Keynesian analysis does not require that the multiplier exceed 1.0. For Keynesian economics to work, however, the multiplier must be greater than zero.

3. Keynesians believe that prices, and especially wages, respond slowly to changes in supply and demand, resulting in periodic shortages and surpluses, especially of labor.
http://economics.about.com/gi/dynamic/offsite.htm?site=http%3A%2F%2Fwww.econlib.org%2Flibrary%2FEnc%2FKeynesianEconomics.html
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kramarat

Quote from: Solar on March 17, 2013, 10:32:21 AM
And once again, Keynesian economics is being applied to the current recession and turned it into a depression.
Many economists argue that it was Keynesian economics that extended the great depression.

The problem with Keynes theory is solely based in Govt interference in free mkt.
   
Keynesian economics is a theory of total spending in the economy (called aggregate demand) and its effects on output and inflation. Although the term has been used (and abused) to describe many things over the years, six principal tenets seem central to Keynesianism. The first three describe how the economy works.

1. A Keynesian believes that aggregate demand is influenced by a host of economic decisions—both public and private—and sometimes behaves erratically. The public decisions include, most prominently, those on monetary and fiscal (i.e., spending and tax) policies. Some decades ago, economists heatedly debated the relative strengths of monetary and fiscal policies, with some Keynesians arguing that monetary policy is powerless, and some monetarists arguing that fiscal policy is powerless. Both of these are essentially dead issues today. Nearly all Keynesians and monetarists now believe that both fiscal and monetary policies affect aggregate demand. A few economists, however, believe in debt neutrality—the doctrine that substitutions of government borrowing for taxes have no effects on total demand (more on this below).

2. According to Keynesian theory, changes in aggregate demand, whether anticipated or unanticipated, have their greatest short-run effect on real output and employment, not on prices. This idea is portrayed, for example, in phillips curves that show inflation rising only slowly when unemployment falls. Keynesians believe that what is true about the short run cannot necessarily be inferred from what must happen in the long run, and we live in the short run. They often quote Keynes's famous statement, "In the long run, we are all dead," to make the point.

Monetary policy can produce real effects on output and employment only if some prices are rigid—if nominal wages (wages in dollars, not in real purchasing power), for example, do not adjust instantly. Otherwise, an injection of new money would change all prices by the same percentage. So Keynesian models generally either assume or try to explain rigid prices or wages. Rationalizing rigid prices is a difficult theoretical problem because, according to standard microeconomic theory, real supplies and demands should not change if all nominal prices rise or fall proportionally.

But Keynesians believe that, because prices are somewhat rigid, fluctuations in any component of spending—consumption, investment, or government expenditures—cause output to fluctuate. If government spending increases, for example, and all other components of spending remain constant, then output will increase. Keynesian models of economic activity also include a so-called multiplier effect; that is, output increases by a multiple of the original change in spending that caused it. Thus, a ten-billion-dollar increase in government spending could cause total output to rise by fifteen billion dollars (a multiplier of 1.5) or by five billion (a multiplier of 0.5). Contrary to what many people believe, Keynesian analysis does not require that the multiplier exceed 1.0. For Keynesian economics to work, however, the multiplier must be greater than zero.

3. Keynesians believe that prices, and especially wages, respond slowly to changes in supply and demand, resulting in periodic shortages and surpluses, especially of labor.
http://economics.about.com/gi/dynamic/offsite.htm?site=http%3A%2F%2Fwww.econlib.org%2Flibrary%2FEnc%2FKeynesianEconomics.html

I'm not going to get too deep into it, because it's what we're doing now, and it's not working. Government spending is digging us into a deeper hole, not increasing output. I'm also going to pull my hair out if hear anyone else point to the stock market as a sign of Obama's success. :mad:

People assume that capitalism is bad; what they don't realize, is that the bad aspects of capitalism stem from the incestuous relationship that has spawned between big business and government. They also have no idea that Obama is into it up to his ears.

Solar

Quote from: kramarat on March 17, 2013, 12:04:41 PM
I'm not going to get too deep into it, because it's what we're doing now, and it's not working. Government spending is digging us into a deeper hole, not increasing output. I'm also going to pull my hair out if hear anyone else point to the stock market as a sign of Obama's success. :mad:

People assume that capitalism is bad; what they don't realize, is that the bad aspects of capitalism stem from the incestuous relationship that has spawned between big business and government. They also have no idea that Obama is into it up to his ears.
Couldn't agree more.
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taxed

Quote from: kramarat on March 17, 2013, 12:04:41 PM
I'm not going to get too deep into it, because it's what we're doing now, and it's not working. Government spending is digging us into a deeper hole, not increasing output. I'm also going to pull my hair out if hear anyone else point to the stock market as a sign of Obama's success. :mad:
Correct.  Government spending is NEVER the answer (unless we're talking about defense).

Quote
People assume that capitalism is bad; what they don't realize, is that the bad aspects of capitalism stem from the incestuous relationship that has spawned between big business and government. They also have no idea that Obama is into it up to his ears.
I wouldn't call that "capitalism".  I'd call that "corruption".
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Solar

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kramarat

#53
He revealed who he was from the start. I was hoping for some honest debate, but once again, cry baby bullshit. :cry:

They take their talking points straight from the leftist playbook, i.e., "They cling to their guns and religion". One of Obama's early comments from his first campaign, in which he displayed his disdain for anything to do with God or the US constitution.

Why do "fiscally conservative" politicians and talking heads cling to an outdated and incorrect economic theory as if it is religion.

I ask this because...let's face it.  Paul Ryan's budget proposal is a farce and frankly embarrassing to anyone who takes business seriously.

Solar

Quote from: kramarat on March 17, 2013, 02:42:33 PM
He revealed who he was from the start. I was hoping for some honest debate, but once again, cry baby bullshit. :cry:

They take their talking points straight from the leftist playbook, i.e., "They cling to their guns and religion".
And the first thing they do is pray "Oh God, Please send an cop with a gun".
They quickly find Religion and realize their only defense against an armed intruder is a gun.

My how prophetic we are, they must think.  :rolleyes:
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Quote from: Solar on March 17, 2013, 03:14:12 PM
And the first thing they do is pray "Oh God, Please send an cop with a gun".
They quickly find Religion and realize their only defense against an armed intruder is a gun.

My how prophetic we are, they must think.  :rolleyes:

hahahahahaha  so true!
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simpsonofpg

We need to understand what a budget is.  It is not some cool sounding name but an actual plan of action where expenditures do not exceed income.  As any middle income family how that works.  My wife and I discuss it frequently.  We are living basically on SS and it is because we did not save money during our younger years but we do not complain but we do not spend more than we have and we are not asking you for any help.  Unlike our congress.
The Golden Rule is the only rule we need.