yomomma wrote:Hemisphere wrote:As far as I'm aware Keynesian economic policies were implemented in order to recover from the recession the USA experienced after WW2, and I guess it worked reasonably well.
Well, one could argue that it wasn't full on Keynesian policies implemented. America has always been a hybrid of several economic approaches. The bigger question is -- are those policies sustainable in the long run or is it ultimately a pyramid scheme which will eventually implode as our population ages? I don't know. But the biggest problem I have with Keynesian is that it really, really, really relies on the U.S. being a mega economic super power and I'm not sure how we can guarantee that in this global economy.
It's not a 'pyramid scheme.' Keynesian economics (primarily) rely on TWO factors to regulate the economy:
1. Manipulation of Interest rates.
2. When interest rate manipulation can no longer function, (zero lower-boundary effect) debt-financed public works to be repaid during times of surplus through taxation. Nothing pyramid about that.
Also, Keynesian economic models work just as well in tiny Iceland as they do in the huge US.
Hemisphere wrote:The other major economic 'philosophy' that I'm aware of is the Milton Friedman-esque free-market capitalism - which notably crashed every single economy that it was implemented in in South America. Whether it makes logical sense seems secondary to whether it has ever succeeded in reality.
I don't know a lot about this, but it certainly sets off my skeptical spidey senses. I have to ask, really? Was it really, truly and completely free market capitalism system implemented in South Africa or was there something more or nefarious going on there?
I think this objection is a talking point of the left to discount free markets, but in reality, I'm not sure a true Libertarian society has ever been created because it isn't anarchy, but small government. I call bullshit. I really don't think that Libertarianism has really been tested, which could be problematic in and of itself.
It was South America. Not South Africa. And the point is true. Friedman (and the Gang of Eight) got free reign to impliment their economic ideologies and destroyed Chile's economy. Their complete failure is one of the reasons I got away from the economic fairy-tales of my youth.
In March 1975, the Chicago boys held an economic seminar that received national media attention. Here they proposed a radical austerity program — "shock treatment," they called it — to solve Chile's economic woes. They invited some of the world's top economists to speak at the conference, among them Chicago professors Milton Friedman and Arnold Harberger. Unsurprisingly, they gave the proposal their highest praise. The plan called for a drastic reduction in the money supply and government spending, the privatization of government services, massive deregulation of the market, and the liberalization of international trade
In 1973, the year General Pinochet brutally seized the government, Chile's unemployment rate was 4.3%. In 1983, after ten years of free-market modernization, unemployment reached 22%. Real wages declined by 40% under military rule. In 1970, 20% of Chile's population lived in poverty. By 1990, the year "President" Pinochet left office, the number of destitute had doubled to 40%. Quite a miracle. After nine years of economics Chicago style, Chile's industry keeled over and died. In 1982 and 1983, GDP dropped 19%
Between 1972 and 1987, the GNP per capita fell 6.4 percent. (13) In constant 1993 dollars, Chile's per capita GDP was over $3,600 in 1973. Even as late as 1993, however, this had recovered to only $3,170. (14) Only five Latin American countries did worse in per capita GDP during the Pinochet era (1974-1989).
The results were exactly what liberals predicted. Chile's economy became more unstable than any other in Latin America, alternately experiencing deep plunges and soaring growth. Once all this erratic behavior was averaged out, however, Chile's growth during this 16-year period was one of the slowest of any Latin American country. Worse, income inequality grew severe. The majority of workers actually earned less in 1989 than in 1973 (after adjusting for inflation), while the incomes of the rich skyrocketed. In the absence of market regulations, Chile also became one of the most polluted countries in Latin America.
That's a lot of Chutzpah. Destroy a countries economy. Turn it into a toxic cesspool. Make a Gilded Age. Plunge the economy into repeated boom-bust cycles as well as chronic unemployment and poverty. Then lie about your results (after getting fired) and declare victory. And, FWIW, most of the other countries in the South American region did remarkably well without the 'Chile economic miracle' help over that time so it wasn't a 'regional problem.'
Now, here's the kicker. After Chile went to hell in the late 1980s and Pinochet finally kicked Friedman and Laffer the rest of the Gang of Eight the fuck out of there, he brought in some Keynesian economists to fix Chile. They reversed all of the Gang of Eight's 'reforms' (to the extent they could). So, the banking system (deregulated and in bankruptcy) was nationalized as were many other industries (many of which were also in bankruptcy) all of which (except copper) were eventually re-privatized at a profit (kind of like GM). Further, the government started a large hiring program (500,000) and instituted many other "Keynesian" fixes (unions, minimum wage, social programs, etc.). These stabilized the country and set it on the path to recovery.
A second kicker is that Allende (the Marxist Pinochet over-threw) had instituted land reform by breaking up those huge feudal estates that were terribly non-productive and putting the land in the hands of small farmers and cooperatives (but leaving out Soviet central planning). Pinochet couldn't undo all of that and now, because of that, Chile is also an agricultural power-house in the region instead of just a copper-exporting powerhouse.
And, lo and behold, Chile recovered. It took a HELL OF A LONG TIME, but now not only are they still a copper-exporting powerhouse, but they are an agricultural powerhouse as well. Marxists and Keynesians to the rescue. Not Libertarians.
As for 'Libertarianism has never been implemented,' yes, I've heard that BS argument before.
The communists say the same thing for the same reasons -- they fail in the real world.
The thing is, Libertarianism and Communism are both ideological extremes in the economic continuum. The failure of one doesn't make the other 'correct.'
Both extremes, in fact, don't work because
HUMANS don't behave in the ways those academic theories need humans to act for those systems to work. I'm sure if we were robots, all programmed to be non-hierarchical and non-striving and fair and generous in the same general way, they'd work. But we're not. We compete. We have different levels of ability and desire. We play 'winners and losers' and 'power and privilege.' And both systems exaggerate the worst parts of the human condition by allowing them to run unfettered to their extremes.
Here's a rebuttal to the claim that free markets screwed over South Africa from the Cato Institute:
http://www.cato.org/publications/commen ... capitalism
I know the Skeptical Libertarian has called it out rather recently for being false as well, but I'd have to search for his response.
Personally, I wouldn't trust anything the Cato Institute wrote about economics. Africa is the pit of shit it is today in great part because of 'unregulated free market economics.' Free markets have consequences to those unprotected by strong central governments. You only need to look at the gilded age here in America to see these consequences. Never mind going to Africa.
But Cato doesn't like that. So they ignore it. Which is SOP for ALL of the 'think tanks' in Washington.
They're (as a group) POV to the donor audience, not broad-based for pragmatic, non-ideological solutions or analysis. In short, it's pretty much excuses and preaching to the choir.
As an aside, I'm really not a lock step Libertarian because I actually think the government provides some invaluable services and does them better than the private sector, it's just if I had to choose or be whipped, I would say that I'm Libertarian in principle just because austerity fits better with my world view, but ultimately, I think economies and governments work the best with a mixture of economic philosophies. What works in one area, may not be the best in another area. What works in one situation, may not work in another.
There's some sense. Because the Austerity philosophy has caused more depressions outside of Marxist-Socialism than any other economic theory used in the past 100 years. if you contract government spending in a down-turn, you just make it worse. And it sets up a vicious, repeating cycle.
Not only do you have Chile as an example of this kind of economic thinking destroying economies, you have other South American economies wrecked by that philosophy in the 1980s and 1990s. You also have current examples of Greece, Spain, etc., that have been all but destroyed as economic zones because of Austerity.
Sure, it's good for the PERSON and good for the FAMILY. And it 'feels good' from a personal responsibility standpoint. But it's bad for economies that are in trouble.
