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Weekend reflections

April 3rd, 2009

It’s time once again for weekend reflections, which makes space for longer than usual comments on any topic. As always, civilised discussion and no coarse language.

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  1. Alice
    April 6th, 2009 at 19:39 | #1

    1930s

  2. Alice
    April 6th, 2009 at 19:42 | #2

    Chris,
    re
    (“news weekly” not in ambit?) – I am hoping to retrieve him from insanity….
    Alanna

  3. Alice
    April 6th, 2009 at 19:54 | #3

    Or perhaps Im trying to just retrieve PM from the professional role of propangandism.

    Its the same.. within that role a conflict of true beliefs over paid beliefs emerges and its very obvious…it always makes their arguments terribly light but terribly manipulative (as if they are thinking about how they can change tack quickly).

    There is a studied “diversion” technique in posts, similar to the “studied incompetence” most 1950s born males exhibit in the kitchen! (I know – sweeping generalisation…etc but its true for the majority).

  4. April 6th, 2009 at 20:09 | #4

    Alice, you are resorting to abuse, not argument. As, when, and if you care to address issues, represent facts and other people’s positions correctly and apply reason to those, I will engage in discussion. Short of that you have a claque, not the better of any argument.

  5. April 6th, 2009 at 20:13 | #5

    Chris Warren, far from attrempting to distance myself from anybody, I am willing to take what part of the truth I have to any quarter – the likes of News Weekly or of you yourself. It’s a publicans and sinners thing, if you like. Feel free to call them either of those, but don’t stand aside yourself.

  6. Alice
    April 6th, 2009 at 20:35 | #6

    54#
    I have the better of it PM – and Im actually very proud of that.

    What is the “news weekly” link anyway PM? Maybe you should explain yourself. It sounds like something completely tacky.

  7. Alice
    April 6th, 2009 at 20:43 | #7

    55#

    You dont deserve any argument PM – it is you who are abusive and manipulative and distort the facts with extreme right wing zealotry and you dont faze me one bit.

    As I said you can keep your crazy ideas (you are an embarrassemnt to every balanced decent minded individual when it comes to economic policy ideas) – you obviously dont care but you also dont carry much blog cred here so dont try and bully me.

  8. jquiggin
    April 6th, 2009 at 20:48 | #8

    Cool it, please guys.

  9. Kevin Cox
    April 7th, 2009 at 06:02 | #9

    #43 Alice

    The reason markets are a “good thing” is that they permit choice and innovation and with that they allow failure. Markets are agnostic and working well they are a good way of distributing resources.

    What I am proposing is that governments can use markets to distribute resources by giving money directly to the people and let them choose.

    The current financial crisis gives us a once in a generation opportunity of using this approach to eliminate inflation, get rid of the business cycle, help eliminate social problems like unemployment and a distorted distribution of wealth, while fixing environmental problems like destructive climate change. This is an opportunity we should not miss particularly as it is simple to implement.

    I urge you to listen again to http://stableproductivemoney.wordpress.com/2009/04/03/increasing-the-money-supply-without-loans/

    If it does not make sense or if there is some flaw in the argument or ideas on implementation then I would like to hear about it.

    Underlying it all is the concept of individual spending for the common good as well as for the benefit of the individual. That is, it is a solution to the Tragedy of the Commons in a way that neither free for all markets, not government direction can achieve on their own.

  10. Chris Warren
    April 7th, 2009 at 07:27 | #10

    Kevin, Alice

    Is the real problem with markets, more to do with practicalities than theory.

    In theory, pure, free markets, can allocate resources, but in practice, as workers never get wages equal to their productivity, they cannot produce suitable demand for market equilibrium.

    Wages are set by politics and, unlike capital, labour cannot move freely to access opportunities.

    Society tries to make up the difference by boosting demand through credit and population increase.

    This make matters worse. If theory and practice contradict each other – do you change theory, or change practice?

    So are you both right?

  11. April 7th, 2009 at 12:06 | #11

    I have to admit, Alice, that you do not distort the facts with extreme right wing zealotry – you do it in other ways. But when you repeatedly accuse me of that, when you misrepresent my stated views that way, when you misquote material to support your slurs and indulge in guilt by association – just who is trying to bully whom, here? It’s a bad case of projection and “cet animal est mechant, il se defend quand on l’attaque”.

    I do indeed want you to cool it as JQ suggests, but if you don’t I shall take care to let others see where I am really coming from and really saying, and I shall call you what you are for doing all these things. I see no reason to let your slurs go unchallenged. Do I want people to work until they drop, and so on? I do not, but you have repeatedly accused me of that. Show people where I did any of those things, by all means, if you can find anything like that, but do not mistake your own misquotations and distorted descriptions for what I have been trying to communicate. Your bias is no substitute for the truth.

  12. Alice
    April 7th, 2009 at 12:47 | #12

    Refer to 58 PM and dont bother addressing any further comments to me. You wont get a response.

  13. Ubiquity
    April 7th, 2009 at 23:49 | #13

    Alice @ 40

    You are correct about low unemployment rates in the 50s and 60s and early 70s. Prosperous times. In the mid – 1970s early 1980-s unemployment increased from around 2% to 6-7% and has remained at these higher levels. We have never been able to achieve the 1-2% unemployment rates again.

    In the 1950s and 1960s the underlying rate of unemployment was consistent with full employment and the balance between real wages and average labour productivity was maintained.

    “In the early 1970s something happened to the efficiency of the Australian labor market. Real wages increases accelerated above the average rate of increase in the previous two decades without an accompanying increase in the underlying rate of change. The increase in real wages created a real wage-labour productivity imbalance. As a result there was a “real wage overhang” – that is the real wage level of 1975 exceeded the level of labour productivity that would prevail at full employment”

    I have quoted Bob Gregory (above) from this article

    http://cepr.anu.edu.au/pdf/DP425.pdf

    My point is this, regardless of the history of the success of “fine tuning” of the economy in the 50s and 60s, those same economic principles failed to stop the overall increase in unemployment, because they were unable to anticipate the slower rate of technological change which in a market free from “fine tuning” would have produced a slower rate of growth of labour productivity consistent with full employment. What actually happened was real wage increases accelerated at a much greater rate then that required to maintain full employment.

    It is fine as Bob Gregory has done in hindsight, to identify the failure of the “fine tuning policies”. However it is another thing to try an anticipate the future response in a complex system were even small decisions can result in anything from great success, no result, or disasters never expected.

    My preference is still as much as possible, whilst retaining human dignity , to leave the market to sort out issues such as unemployment.

    Of course, anything is possible and the Social Democrats may end up finding the holy grail of economic models, but I haven’t seen it yet.

    I will agree with you on one final point, you say;

    “It will come. Governments cant afford to leave unemployment rising and trending up towards 9 and ten percent (and how much more?). It will trigger a a seismic shift in attitudes and in policy and it will be towards Keynesian stabilisation policies not towards Mises and Hayek”

    Lets hope Keynesian economics is more than a rationale for special-interest groups, such as trade unions, who don’t want to adapt to reality of supply and demand, and what the market viewed as real wealth.

    Sometimes you get the impression the Kenynes policy-driven economy mimics the unstable behaviour that Keynes thought to be charecteristic of a market economy.

  14. Alice
    April 8th, 2009 at 20:30 | #14

    Ubiquity
    you say
    “My preference is still as much as possible, whilst retaining human dignity , to leave the market to sort out issues such as unemployment.”

    Then under your criteria, the market is failing. When unemployment is trending tpo 9% -10% plus with no sign of abating yet there are huge affronts already occurring to human dignity.

    The market is not solving this problem Ubiquity. If it was unemployment wouldnt be rising quite so dramatically (and nor would inequality).

    The Keynesian rationale is being played out as real policy now for the whole economy not just special interest groups like unions, regardless of what Mises or Hayek fans would like. The economy has voted (and it votes for its own seldf interest).

  15. Alice
    April 8th, 2009 at 20:34 | #15

    The people have voted not only for their own self interest ubiquity, but for their own survival. I would suggest a lot of people saw themselves as worse off under workchoices, which is an extension of market theory (the so called flexibility of labour to be hired, fired and paid at the will of the employer with no protections).

    People lost real money Ubiquity. Its a one way ticket to turn people against the peddlers of such ideologies.

  16. Alice
    April 9th, 2009 at 09:41 | #16

    63# Ubiquity

    I agree on you point re the the weaknesses of Keynesian style intervention in the hands of the wrong people… (special interest groups – refer State Labor and the relatives and friends involved in property deals, committee appointments, poor/failed privatisation projects resulting in defacto taxing, etc)…
    Controls are needed (the type of controls that once clearly delineated the public sector from private interests and held public servants to greater account than now. When a situation exists like it does in State Labor where rules are overturned, committees created with nepotism, deals awarded to those with close links to the party and incompetence is rewarded etc…

    Keynesian style interventions are certainly not all smooth sailing either and they also need controls (that goes without saying). However monetary policy on its own is not reliable as a stimulator if people are not encouraged to borrow. With demand down and unemployment rising the missing factor is confidence…would you start a business now with debt, or expand your debt just looking about you (there are a few more shops standing empty around my way that are up for lease and have been for months)???

    I think people will tend to sit on their hands despite the huge liquidity injections, for quite a while yet.

  17. Ubiquity
    April 9th, 2009 at 23:44 | #17

    Alice

    Ask yourself why The Keynesian policies are being adapated by most of the global governments as the solution to the GFC.

    Its hard to go past the idea that Keynesian policies are the simplest solution to subdueing the masses in the wake of the GFC. By handing out money to anything that walks and talks, it takes attention away from the biggest state assisted corporate economic blunder in history.

    Keynes basically implied in his “General Theory of…” . Prolonged mass unemployment is a unsatisfactory condition and suggested as the solution to devalue the currency as the workers won’t be clever enough to realise it and won’t offer resistance against a drop in real wage rates. He was basically proposing cheating the workers instead of declaring honestly that wage rates must be adjusted to market conditions.
    Full employment by means of inflation.

    I am not sure who the Keynesian policies are trying to save, The government or the people. I smell a rat amongst all this “quantitative easing”. The people will end up poorer, but for the state and its mates its business as usual.

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