Lukey
Senator
The Keynesians on our left are quick to tell us that the economy has vastly improved since the recession ended, under the quasi neo-Keynesianism of Obamanomics, which seeks wealth redistribution through government tax and spending (fiscal) policies. They want desperately to show that their approach is working, to vindicate not only their own neo-Marxist proclivities, but also to salvage the reputation of their high priest, Paul Krugman.
Yet, we still don't see anything that looks like a "normal" recovery under Obamanomics, and so they tell us we are continuing to suffer "inadequate demand" which must be covered by even higher levels of government spending in order to get the demand "bathtub" filled up to the brim. This is how they manage to have it both ways, their policies of "stimulus" worked (the recession is over and "unemployment" is down) but there's still too much "austerity" (which is preventing a full recovery). It never dawns on them that by saying employment is near "full" and almost everyone who wants a job has one - how is it possible that "aggregate demand" hasn't recovered? I know, that's a flaw in their logic, but lets face it, they have all the economic maturity of children so I'm sure this makes perfect sense to them. They simply cannot envision a role for the private sector, other than as pavlovian producer to their government controlled "aggregate demand." I know, that sounds like the old Soviet era economic policy but at least they don't advocate that the state own the means of production (at least not yet).
So how to explain this illogical position the Keynesians are stuck with? The key is in the fact that sometimes the statistics will be lying to you, as the "unemployment rate" is doing in this case. The lefties here are quick to say "so where are all these folks who want a job but aren't counted in the workforce?" They aren't in the trendy progressive paradises like Boston, DC, Colorado, Seattle or Silicon Vally, they are in the rust belt - so the key to understanding the disconnect is in this chart:
So until we get the Labor Force Participation Rate moving back up towards 65 - 66%:
We will remain mired in a permanent recession, due to the record 92 million American adults who are not part of the work force. The left would have you believe they are all affluent baby boomers happily retired, but if that were the case, then "aggregate demand" would be currently at full capacity. I know, there's another logical fallacy in their thinking, but you have to remember they are semi-Marxists so in their mind we just have to take more from the rich and give it to the poor and "voila" - instant "aggregate demand" nirvana. But if we do that and we are already at "full employment" - where will all the additional workers come from to produce the products and services? Illegal immigration? I suppose, again, this all makes perfect sense if you aren't a capitalist.
If you ask me the correct approach is to create demand organically, through higher employment levels that gives workers a stronger bargaining position on wages:
But that would require opening up the markets and allowing capitalism to flourish:
Yet that seems to be the antithesis of neo-Keynesianism, which appears entirely committed to destroying capitalism from within, because as they keep telling us they are "saving capitalism from itself" - I guess we have to use the old Vietnam era strategy that in order to save the village from communism we had to destroy it - again, I'm sure it makes perfect sense to the child like economic sensibilities of the neo-Keynesians. But count me out because every day we see increasing evidence that what they are telling us is absolutely 100% wrong:
http://www.huffingtonpost.com/niall...e-uk_b_7257236.html?ncid=edlinkushpmg00000090
But as Ferguson points out, that never stops the neo-Keynesians from declaring victory anyway - like spoiled children, they think they are always right, no matter how many inconvenient facts get in their way.
Yet, we still don't see anything that looks like a "normal" recovery under Obamanomics, and so they tell us we are continuing to suffer "inadequate demand" which must be covered by even higher levels of government spending in order to get the demand "bathtub" filled up to the brim. This is how they manage to have it both ways, their policies of "stimulus" worked (the recession is over and "unemployment" is down) but there's still too much "austerity" (which is preventing a full recovery). It never dawns on them that by saying employment is near "full" and almost everyone who wants a job has one - how is it possible that "aggregate demand" hasn't recovered? I know, that's a flaw in their logic, but lets face it, they have all the economic maturity of children so I'm sure this makes perfect sense to them. They simply cannot envision a role for the private sector, other than as pavlovian producer to their government controlled "aggregate demand." I know, that sounds like the old Soviet era economic policy but at least they don't advocate that the state own the means of production (at least not yet).
So how to explain this illogical position the Keynesians are stuck with? The key is in the fact that sometimes the statistics will be lying to you, as the "unemployment rate" is doing in this case. The lefties here are quick to say "so where are all these folks who want a job but aren't counted in the workforce?" They aren't in the trendy progressive paradises like Boston, DC, Colorado, Seattle or Silicon Vally, they are in the rust belt - so the key to understanding the disconnect is in this chart:
So until we get the Labor Force Participation Rate moving back up towards 65 - 66%:
We will remain mired in a permanent recession, due to the record 92 million American adults who are not part of the work force. The left would have you believe they are all affluent baby boomers happily retired, but if that were the case, then "aggregate demand" would be currently at full capacity. I know, there's another logical fallacy in their thinking, but you have to remember they are semi-Marxists so in their mind we just have to take more from the rich and give it to the poor and "voila" - instant "aggregate demand" nirvana. But if we do that and we are already at "full employment" - where will all the additional workers come from to produce the products and services? Illegal immigration? I suppose, again, this all makes perfect sense if you aren't a capitalist.
If you ask me the correct approach is to create demand organically, through higher employment levels that gives workers a stronger bargaining position on wages:
But that would require opening up the markets and allowing capitalism to flourish:
Yet that seems to be the antithesis of neo-Keynesianism, which appears entirely committed to destroying capitalism from within, because as they keep telling us they are "saving capitalism from itself" - I guess we have to use the old Vietnam era strategy that in order to save the village from communism we had to destroy it - again, I'm sure it makes perfect sense to the child like economic sensibilities of the neo-Keynesians. But count me out because every day we see increasing evidence that what they are telling us is absolutely 100% wrong:
http://www.huffingtonpost.com/niall...e-uk_b_7257236.html?ncid=edlinkushpmg00000090
But as Ferguson points out, that never stops the neo-Keynesians from declaring victory anyway - like spoiled children, they think they are always right, no matter how many inconvenient facts get in their way.
