The problem with focusing on the demand side...

[Lukey]

And focusing on consumption is that it means you are going to miss some very simple but important indicators of the underlying strength of the economy you are examining. Here's why - "consumption" of building materials to fix up your house is not the same as consumption of fast food. Duh! I know, it should be a no-brainer, right? Obviously fixing up your house adds to national wealth while consuming a big mac does nothing but make you fat and unhealthy.

So it seems to me that it should be obvious that what you want in your economy is a healthy dose of "consumption" that adds to the stock of wealth, yet that seems to be the opposite of what the neo-Keynesians want, based on their redistributionism - taking from the folks who would tend to "consume" in ways that build wealth and giving to the folks who will consume in ways that create no wealth. You don't suppose they are really anti-capitalists looking to eliminate wealth, do you? Haha! If you want an honest answer about that you definitely do not want to ask one of them...

 

[BobbyT]

And focusing on consumption is that it means you are going to miss some very simple but important indicators of the underlying strength of the economy you are examining. Here's why - "consumption" of building materials to fix up your house is not the same as consumption of fast food. Duh! I know, it should be a no-brainer, right? Obviously fixing up your house adds to national wealth while consuming a big mac does nothing but make you fat and unhealthy.

So it seems to me that it should be obvious that what you want in your economy is a healthy dose of "consumption" that adds to the stock of wealth, yet that seems to be the opposite of what the neo-Keynesians want, based on their redistributionism - taking from the folks who would tend to "consume" in ways that build wealth and giving to the folks who will consume in ways that create no wealth. You don't suppose they are really anti-capitalists looking to eliminate wealth, do you? Haha! If you want an honest answer about that you definitely do not want to ask one of them...

Going with your argument, wages should be such that people can afford to fix up their house and not have to spend the whole of their income on necessities. People have to eat, they can put off fixing their house (if they can even afford to own one). Good demand-side point.

 

[Arkady]

And focusing on consumption is that it means you are going to miss some very simple but important indicators of the underlying strength of the economy you are examining. Here's why - "consumption" of building materials to fix up your house is not the same as consumption of fast food. Duh! I know, it should be a no-brainer, right? Obviously fixing up your house adds to national wealth while consuming a big mac does nothing but make you fat and unhealthy.

So it seems to me that it should be obvious that what you want in your economy is a healthy dose of "consumption" that adds to the stock of wealth, yet that seems to be the opposite of what the neo-Keynesians want, based on their redistributionism - taking from the folks who would tend to "consume" in ways that build wealth and giving to the folks who will consume in ways that create no wealth. You don't suppose they are really anti-capitalists looking to eliminate wealth, do you? Haha! If you want an honest answer about that you definitely do not want to ask one of them...

There are all different variations in how much a given amount of consumption enhances or hurts future economic potential. For example, if a Big Mac provides the calories that fuel a worker while he's doing the hard manual labor needed to assemble a factory, that does more to enhance long-term economic potential than the same monetary value of consumption if it takes the form of some trust fund brat drinking a few drops of a thousand-dollar bottle of wine.

So, if your point is that not all consumption is equal, I agree. But as for your idea that neo-Keynesians want to transfer money from those who tend to consume in ways that build wealth and give it to people who consume it in ways that don't, I see no evidence for that.

 

[Lukey]

There are all different variations in how much a given amount of consumption enhances or hurts future economic potential. For example, if a Big Mac provides the calories that fuel a worker while he's doing the hard manual labor needed to assemble a factory, that does more to enhance long-term economic potential than the same monetary value of consumption if it takes the form of some trust fund brat drinking a few drops of a thousand-dollar bottle of wine.

So, if your point is that not all consumption is equal, I agree. But as for your idea that neo-Keynesians want to transfer money from those who tend to consume in ways that build wealth and give it to people who consume it in ways that don't, I see no evidence for that.

We already know you subscribe to Marx's theory of labor so your opinion on this needs to be evaluated with that in mind. The fact that the "trust fund brat" may well have investments that added tens of millions to the national wealth while he or she was drinking a few drops of a thousand-dollar bottle of wine is not ever going to factor into your thought process because you view it as theft from the workers in the businesses from which the increased wealth is derived. So the drunken SS "disabled" person eating the Big Mac is probably more worthy in your eyes than the trust fund brat. FWIW...

 

[Arkady]

The fact that the "trust fund brat" may well have investments that added tens of millions to the national wealth while he or she was drinking a few drops of a thousand-dollar bottle of wine

Yet, the only way the trust fund brat is adding value to the economy is if he is better, on average, at allocating those investments than the average person would be, in terms of the productivity of those investments. In other words, the service that an investor conceivably does for the economy is to help allocate funds to more productive endeavors. If I choose investments that create 3X value where the average person would have created 2X value with the same money, then my role in allocating those funds is responsible for X value. But since the majority of actively-managed funds don't even beat their index, and the majority of private investors fall far short of the indices, there's little value being created for most of them. They're just basically rentiers -- being paid an unearned income for the use of money that our system has designated as belonging to them, and siphoning off plenty of that value to finance their extravagant personal consumption.

 

[Lukey]

Yet, the only way the trust fund brat is adding value to the economy is if he is better, on average, at allocating those investments than the average person would be, in terms of the productivity of those investments. In other words, the service that an investor conceivably does for the economy is to help allocate funds to more productive endeavors. If I choose investments that create 3X value where the average person would have created 2X value with the same money, then my role in allocating those funds is responsible for X value. But since the majority of actively-managed funds don't even beat their index, and the majority of private investors fall far short of the indices, there's little value being created for most of them. They're just basically rentiers -- being paid an unearned income for the use of money that our system has designated as belonging to them, and siphoning off plenty of that value to finance their extravagant personal consumption.

Yes, the old "anybody can do it" meme that drives the hubris of the neo-Keynesians. "We're smarter than the markets" is about the stupidest thing a person can say. Even in an index, that money would be doing many many times the good it would be doing in the hands of a fat stupid bureaucrat!

 

[Bugsy McGurk]

Yes, the old "anybody can do it" meme that drives the hubris of the neo-Keynesians. "We're smarter than the markets" is about the stupidest thing a person can say. Even in an index, that money would be doing many many times the good it would be doing in the hands of a fat stupid bureaucrat!

Meanwhile, big business is sitting on record piles of cash waiting for demand to improve so they can invest in more production of goods and services.

 

[fairsheet]

Lukeyism seems to suggest that the bad thing about "demand side" is that the market is inclined to buying what it wants to buy. "Supply side" on the other hand, presumes to tell them what to buy.

Ronald Reagan is rolling over in his grave.

 

[Lukey]

Meanwhile, big business is sitting on record piles of cash waiting for demand to improve so they can invest in more production of goods and services.

Or waiting for the government to stop "helping" them with selecting their investments...

 

[Lukey]

Lukeyism seems to suggest that the bad thing about "demand side" is that the market is inclined to buying what it wants to buy. "Supply side" on the other hand, presumes to tell them what to buy.

Ronald Reagan is rolling over in his grave.

Nope! What separates "supply side" from "demand side" is simply the acknowledgement that it's okay for someone to make a buck or two.

 

[as seen on tv]

there are proven (totalitarian) ways to manipulate the demand side:

1 - excise taxes, sales taxes, and VAT taxes on the cost of goods sold
2 - income taxes on consumers
3 - income taxes on producers, which must be baked into the retail sales price
4 - interfering with the supply of raw materials (crude oil, coal, metal ores, etc)

 

[Bugsy McGurk]

Or waiting for the government to stop "helping" them with selecting their investments...

What is meant by that exceptionally odd comment? And what does it have to do with what I just said?

Yikes.

 

[Lukey]

What is meant by that exceptionally odd comment? And what does it have to do with what I just said?

Yikes.

Get government out of the way and that money will find a place to be invested. The Fed holds interest rates at zero and no one knows what the real value of any investment ultimately is. At 0% everything looks profitable but there's no way to tell which ones actually will be when rates normalize. This isn't rocket science - it's finance 101, which is why it zooms over your head...

 

[Bugsy McGurk]

Get government out of the way and that money will find a place to be invested. The Fed holds interest rates at zero and no one knows what the real value of any investment ultimately is. At 0% everything looks profitable but there's no way to tell which ones actually will be when rates normalize. This isn't rocket science - it's finance 101, which is why it zooms over your head...

Not a thing in there, or your prior post, responding to what I said. Just irrelevant talking points/ blather about "getting the government out of the way." Good businesspeople let no one stand in their way - they have money to invest, and they invest it, when demand justifies it.

 

[Lukey]

Not a thing in there, or your prior post, responding to what I said. Just irrelevant talking points/ blather about "getting the government out of the way." Good businesspeople let no one stand in their way - they have money to invest, and they invest it, when demand justifies it.

No, you are (as usual) 100% wrong. They invest when they can expect a return on that investment. With rates at 0% they have no way of knowing so they wait.

 

[Bugsy McGurk]

No, you are (as usual) 100% wrong. They invest when they can expect a return on that investment. With rates at 0% they have no way of knowing so they wait.

Such inane drivel. Business people sell goods and services when they think they can do so at a profit. Period. That requires demand; not some assessment as to future interest rates. You seem to know literally nothing about business - your head is stuffed full of ideological garbage.

 

[Days]

Nope! What separates "supply side" from "demand side" is simply the acknowledgement that it's okay for someone to make a buck or two.

What that sounds like... I'm not sure... is that you think gross inequality is a good thing. In a 100% synthetic currency, which is what we have, the money in circulation represents distribution, not wealth. Do you understand that much? Its as if the banks distributed stock for all the world's goods and then said fight over who is going to hold the biggest share... but it totally will not affect how much wealth exists. That's why inequality is a sin.

I've been preaching for over ten years now that we need to return to real money, where making a buck or two would actually be growing the wealth. I think that's what you really want.

 

[Arkady]

Yes, the old "anybody can do it" meme that drives the hubris of the neo-Keynesians. "We're smarter than the markets" is about the stupidest thing a person can say. Even in an index, that money would be doing many many times the good it would be doing in the hands of a fat stupid bureaucrat!

Yet, if it isn't in the index, but is instead in the active control of some dumb-ass whose only claim to the money was being born into the right family, it's likely to be allocated worse than average, meaning his role will have negative value for the economy, before even considering the leeching he does to finance his luxurious personal lifestyle.

 

[fairsheet]

there are proven (totalitarian) ways to manipulate the demand side:

1 - excise taxes, sales taxes, and VAT taxes on the cost of goods sold
2 - income taxes on consumers
3 - income taxes on producers, which must be baked into the retail sales price
4 - interfering with the supply of raw materials (crude oil, coal, metal ores, etc)

As none of this is happening to any historic degree right now, Lukeyism makes no sense.

 

[fairsheet]

What that sounds like... I'm not sure... is that you think gross inequality is a good thing. In a 100% synthetic currency, which is what we have, the money in circulation represents distribution, not wealth. Do you understand that much? Its as if the banks distributed stock for all the world's goods and then said fight over who is going to hold the biggest share... but it totally will not affect how much wealth exists. That's why inequality is a sin.

I've been preaching for over ten years now that we need to return to real money, where making a buck or two would actually be growing the wealth. I think that's what you really want.

Of course I'm not down with your "real money" theme, but your generic theme makes good sense here.