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[RedKing]

You can't sustain growth forever on government debt.

Austerity is just a reality check, really.

This isn't forever though.  This is when the economy is severely depressed.  If you are complaining about structural deficits then complain when interest rates aren't at the zero bound, we have 3-5 percentage of the population cyclically unemployed and cutting deficits would be self defeating like in the UK.  I.E. the bush deficits were a good time.

Although, I think it'd be ideal if the government never went into deficit in the first place unless it absolutely had to. I think it'd help dampen the extremes of the economic cycle, if at least the government could be consistent with it's spending even if revenue declines or increases.

....how does that even work? If the government cannot go into deficit, then when revenue declines so does government spending.

Keynsian economics isn't "GOVT SPEND ALL THE TIME", it's counter-cyclical spending. The government acts a a "prime mover" during downturns to get the ball rolling again, then reins in spending during upswings (to recoup their losses and avoid crowding out private capital investment). The problem is that once the economy is moving again, politicians are loathe to cut anything that brings jobs to their district or subsidies to their industry buddies.

Cutting back spending and steadily raising taxes during upswings probably will slow down ecnomic growth, but as you yourself just stated, it would "dampen the extremes". That's the tradeoff you pay for not having to go through long, crippling recessions.

[Montague]

You can't sustain growth forever on government debt.

Austerity is just a reality check, really.

This isn't forever though.  This is when the economy is severely depressed.  If you are complaining about structural deficits then complain when interest rates aren't at the zero bound, we have 3-5 percentage of the population cyclically unemployed and cutting deficits would be self defeating like in the UK.  I.E. the bush deficits were a good time.

Although, I think it'd be ideal if the government never went into deficit in the first place unless it absolutely had to. I think it'd help dampen the extremes of the economic cycle, if at least the government could be consistent with it's spending even if revenue declines or increases.

....how does that even work? If the government cannot go into deficit, then when revenue declines so does government spending.

Keynesian economics isn't "GOVT SPEND ALL THE TIME", it's counter-cyclical spending. The government acts a a "prime mover" during downturns to get the ball rolling again, then reins in spending during upswings (to recoup their losses and avoid crowding out private capital investment). The problem is that once the economy is moving again, politicians are loathe to cut anything that brings jobs to their district or subsidies to their industry buddies.

Cutting back spending and steadily raising taxes during upswings probably will slow down ecnomic growth, but as you yourself just stated, it would "dampen the extremes". That's the tradeoff you pay for not having to go through long, crippling recessions.

Keynesian economics, I don't think has ever historically been shown to work as advertised, ever. Neither has the more serious implementations of laissez-faire economic policies, which tend to go through wildly extreme boom-bust cycles.

I think government spending should remain stable, even if revenue increases or decreases. The government can save during booms to survive the lean times like every other entity on the planet does. Otherwise it traps itself by overspending and overcommitment during booms and going into immense deficit during busts. Or worse yet it wastes money trying to halt a recession.

Avoiding extremes of the market cycle should coincide with avoiding austerity cycles with a government.

[RedKing]

You can't sustain growth forever on government debt.

Austerity is just a reality check, really.

This isn't forever though.  This is when the economy is severely depressed.  If you are complaining about structural deficits then complain when interest rates aren't at the zero bound, we have 3-5 percentage of the population cyclically unemployed and cutting deficits would be self defeating like in the UK.  I.E. the bush deficits were a good time.

Although, I think it'd be ideal if the government never went into deficit in the first place unless it absolutely had to. I think it'd help dampen the extremes of the economic cycle, if at least the government could be consistent with it's spending even if revenue declines or increases.

....how does that even work? If the government cannot go into deficit, then when revenue declines so does government spending.

Keynesian economics isn't "GOVT SPEND ALL THE TIME", it's counter-cyclical spending. The government acts a a "prime mover" during downturns to get the ball rolling again, then reins in spending during upswings (to recoup their losses and avoid crowding out private capital investment). The problem is that once the economy is moving again, politicians are loathe to cut anything that brings jobs to their district or subsidies to their industry buddies.

Cutting back spending and steadily raising taxes during upswings probably will slow down ecnomic growth, but as you yourself just stated, it would "dampen the extremes". That's the tradeoff you pay for not having to go through long, crippling recessions.

Keynesian economics, I don't think has ever historically been shown to work as advertised, ever.

Just post-WWII America and Europe for about 30 years. 

[Nadaka]

http://randonesia.tumblr.com/post/15251001685/i-want-to-be-the-big-cheese

My first act as President of the United States will to be shot. That’s right, SHOT. With a high-powered assault rifle. Immediately after taking the oath of office, I will be escorted about twenty yards away and be shot publicly in a non-lethal area of my body by a highly trained Navy SEAL sniper. It will hurt like fuck. Why would I do this? Because I will now be commander-in-chief of the armed forces. This means that during my term I will probably have to make some tough decisions affecting the survival of other men. And as commander-in-chief, I shouldn’t expect anyone in our military to do anything I’m not willing to do myself. That includes getting shot.

[Montague]

Just post-WWII America and Europe for about 30 years. 

Ehhhmmm... maybe. You could argue that the US and Europe were prosperous despite Keynesian economic policies. Europe has been a big fan of the theory and still is and they are not doing too hot right now, while less Keynesian-leaning places have been relatively untouched by the economic chaos of late.

I still say that they've been going down an unsustainable path and it's now catching up to them. All that heavy government spending isn't looking like such a great idea right now that they are going to have to implement austerity measures to prevent complete economic collapse. So, I still say it's not quite working as advertised.

[Heron TSG]

Oh, right.. I suppose a candidates religious beliefs are a good indicator of how well he run the country.

Not entirely, no. It's also the fact that presidents can and have used executives orders before. Santorum is a 'person' that has said he wants to arrest all people who have had a marriage that are gay. Moreover, his tax plan is wheels-on-ducks retarded. That means our tax plan would be left up to Congress. Yes, the most reviled wing of the Federal Government. Hell, probably the most reviled group of ~500 people in politics.

[mainiac]

Ehhhmmm... maybe. You could argue that the US and Europe were prosperous despite Keynesian economic policies. Europe has been a big fan of the theory and still is and they are not doing too hot right now, while less Keynesian-leaning places have been relatively untouched by the economic chaos of late.

No they most certainly have not.  The UK austerity package has been the exact opposite of Keynesian economics.  The policy towards Greece has produces exactly the disaster that the Keynesians have predicted.  And the German obsession with inflation is depressing growth throughout the euro-zone in exactly the way that a Keynesian prediction would produce.

The post-war period when the world really embraced Keynesian economics were the best 25 years of economic growth in this century if not ever.  The US, Europe and Japan all posted growth numbers that we haven't seen yet.

The war stimulus of WWII ended the great depression entirely.  This is exactly what one would predict.  Furthermore countries that engaged in fiscal and monetary corrections sooner saw results sooner, again an orthodox Keynesian result.

And austerity after an economic recovery to make up for stimulus during the recovery is not as bad as austerity during the recovery.  After the recovery you have the government crowding out private spending and inflationary pressure as desired spending is greater then total production.  By implementing austerity once you are recovered it's even possible to further boost growth in a best case scenario because the anti-inflationary pressures allow for pro-growth monetary policies that would otherwise not be possible due to inflationary fears.  These inflationary fears don't exist during a recession so you wouldn't experience these benefits by austerity during the recession itself.

You come across as someone who does not know what Keynesian economic is, the arguments for it or the historical evidence that lead to it becoming the orthodox economic school of thought worldwide until very recently.

[Montague]

The problem with Keynesian economic isn't the validity of it's predictions and it's academic observations of cause and effect, it's actually having the government intervene in the economy to implement them is the problem.

A democracy is basically going to do whatever it's pressured into doing and government programs and intervention in the economy during a recession is likely to persist into following the boom cycle. The programs become popular and the government is pressured to keep them going. It's a problem with political realities, rather then the science behind the economic theory.

That could possibly explain why the governments in Europe and the USA have been doing into such deep deficit, through good times and bad.

Also, I'm dubious of the value wars have on the economy. The US and it's western allies have been fighting a continuous war for more then 10 years now and it's economies have only deteriorated.

[mainiac]

Keynesian economics is no more responsible for fiscal profligacy then nutritional science is responsible for obesity.  It tells people what to do, it does not magically compel them to do so.

And Keynesian economics doesn't say that wars grow the economy.  The specific case of WWII did because it provided a stimulus to a number of deeply depressed economies, not because of any inherent virtues of war.  Hiring 30 million people to dig holes in the ground would have accomplished the same end.  Keynesian economics doesn't proscribe silver bullets that fit all situations.

[Luke_Prowler]

So hey, about them politicians 

Did someone already post this one? Or is it just that obvious?

[Sirus]

Someone needs to write out the 1st Amendment in 10ft tall, brick letters, and then collapse it on Santorum's head. Maybe then he'll get the message. 

[Luke_Prowler]

Maybe he was an inquisitor in another life

[Nilik]

I'm British and vote for Ron Paul.

I'm British and don't do that.

[Montague]

Keynesian economics is no more responsible for fiscal profligacy then nutritional science is responsible for obesity.  It tells people what to do, it does not magically compel them to do so.

And Keynesian economics doesn't say that wars grow the economy.  The specific case of WWII did because it provided a stimulus to a number of deeply depressed economies, not because of any inherent virtues of war.  Hiring 30 million people to dig holes in the ground would have accomplished the same end.  Keynesian economics doesn't proscribe silver bullets that fit all situations.

Yeah, fair enough. Can't really fault an economic policy if the people in charge are not even consistent about implementing it as policy. My point was that Keynesian economics is flawed because it assumes the government will correctly identify the situation and implement the best course of action, while Austrian School Economics requires the government to do essentially nothing, which seems easier to do successfully, but in reality a government can interfere as an unintended consequence of some other action or be pressured to deviate from that policy as well.

Although you could condemn an economic policy if it consistently fails when it's consistently followed as a coherent policy, I suppose that is actually the case here.

[Aqizzar]

Although you could condemn an economic policy if it consistently fails when it's consistently followed as a coherent policy, I suppose that is actually the case here.

There is nothing to say this one way or the other, precisely because we live in a world where national leaders do not sit down with a sixty year old textbook and ask, "What singular, academic theory should I personally use to direct every single dollar that this government spends for every day of my term in office?"  This is exactly the kind of argument I've been saying from the start that I don't want in my thread, because it goes nowhere.

You are not going to convince mainiac of anything, he is not going to convince you of anything.  Sitting here as OP, I can say that of the two of you, he is the one making the coherent argument, in that he acknowledges how little any of this talk has to do with how nations are actually run.  My thread about the current American elections is not an open microphone for you to launch your case against a nebulous (and might I add erroneous) dimensionless impression of an economic theory, and I'm getting a little tired of having to remind everyone of that.

You know what policy positions you can argue about?  The ones people running for office have actually described.  Not what you believe they have acted on, what they have actually described, and what (at least in the case of those who have held an office) have actually implemented themselves.  In concrete terms.