45 thoughts on “Monday Message Board

  1. Does anyone have a really good existing written counter-argument to the whole “but the present economy is great today because we have XYZ gadgets and more people survive heart attacks” argument that gets trotted out by conservatives? I usually point out that these are paltry expenses compared to stuff like housing, transportation, and health care in the US – and of course, it’s not a great comfort if the new economy also brought you greater poverty and job instability. But that’s patchwork stuff.

  2. @Brett
    See the Wikipedia article on Genuine progress indicator which references several other measures of wellbeing. I think this kind of approach is going to be more necessary in future. We probably have more cures for cancer than in 1987 but we no longer drive V8 Monaros. The net effect is ..? The danger in these alternative metrics is the subjective loading of different components.

  3. Maybe someone could also explain that with close to 30 years of “productivity” improvements, we are still in straightened times and the government budget needs to be constantly trimmed. Why during the Whitlam and Fraser years society could pay for universal health care, higher education etc, but now we can’t. Something doesn’t add up.

  4. More confirmation of Karl Marx’s analysis of capitalism is emerging.

    Given the failure of Krugman’s “injecting stimulus” has failed and the global capitalist system is now choked with $620 trillion in outstanding derivatives, capitalists can only resort to decreasing the share of wealth flowing through to the working class.

    While we have seen unemployment soar to over 25% in some states, new figures for the US and UK further underline the ongoing slide towards the Depression that capitalism typically terminates in.

    UK real wages have fallen for the last 6 years and capitalists now plead:

    The hoped-for return of real wage growth has been derailed

    Cited Kathryn Cooper, The Sunday Times Section 3, p1

    So how do Keynesians propose to avoid Depression now, with the world full of stimulus, full of unemployment and with falling wages?

  5. @Brett

    In the US, despite improvements in health technology, life expectancy is static or even falling for low income groups. Access to university education is also highly problematic.

  6. ” the world full of stimulus”

    Say what? Are you posting from a parallel universe? Try searching “austerity”

  7. A friend was complaining today that a coffee in Australia costs twice as much as it does in Italy. I don’t have the patience any more to explain just how sheltered Australia was from the GFC.

  8. @bjb

    I agree, but it all adds up when you add in these two related effects;

    (1) The wage share of national income is declining; and
    (2) Wealth is being concentrated in fewer and fewer hands.

    In the US, IIRC, the bottom 90% have had no real income increase and no recovery of any kind since the GFC. Their assets are actually worth a lot less on average.

  9. @John Quiggin

    Can I say the world is full of contradictions? We have austerity in the EU and it’s now coming to Australia. We previously had some stimulus Australia after the GFC and it worked. We saw plenty of stimulus in China post GFC and that seemed to work. We have had a kind of stimulus in the US, QE or Quantitative Easing, but this is not the same as standard Keynesian deficit stimulus nor is it as effective apparently. Even so, the US runs a deficit stimulus as well by under-taxing the rich. But is this the best way to stimulate the economy? One doubts it.

    And we may now have resource limitations which are limiting economic growth. I certainly assess that we do and in that I follow most resource, environmental and climate scientists rather than following economists. Can classical stimulus work when resource shortages are a drag on the economy? Then we can add in economic damage from climate change and other ongoing environmental damage.

    We also have the last stage of globalising the capitalist economy or at least the last stage which has enough extant resources to drive it. The de-industrialisation and financialisation of the USA constrasts to the industrialisation of China. I for one, seriously doubt there are enough extant resources for China to complete its capitalist revolution and raise all 1.25 billion people into the middle class.

    This is a complex brew and I suggest rather toxic to our chances.

  10. China’s last 5 year plan suggested a stronger turn to a circular economy and more unionization of workers – I’m unsure of how feasible this is. There is a lot of corruption and if you look at translations of Chinese news sites comments section regular people are fed up. But they are in a good position at least compared to when they started the Great Leap Forward – They have a lot of skilled and educated people, I think they have prioritized science and maths education, there are a lot of skilled industrial workers (compared to the deindustrialised countries), and general consumption is lower than over-consuming western countries possibly making a transition to sustainable consumption easier (less extensive bad habits to break), people are used to saving, and other countries owe china large sums. A new Cold War/set of proxie wars/CIA instigated massacres would make the outlook less positive though.

  11. And I heard Amanda Vanstone assert to Sinclair Davidson today that it was ‘Liberal’ governments that undertook privatization. Sinkers concurred although he described these governments of being of the ‘Centre Right’ type. For once he’s probably correct …

  12. Why would you search for austerity if you understand 25% unemployment and general falling wages.

    Those who point to austerity are shedding crocodile tears.

    Fix unemployment and falling wages and austerity will disappear.

    Presumably you only get austerity when stimulus, unemployment and wage cuts have failed to protect capitalist profits.

  13. @Ivor

    How would you fix unemployment and falling general wages? I know what I would attempt but I want to draw out your answer.

  14. @Ivor

    Current experience is not one of governments adopting policies of austerity because policies of stimulus have failed (whether that means failure to fix unemployment, failure to protect capitalist profits, or any other kind of failure); current experience is one of governments adopting policies of austerity with little or no attempt at the alternative of adopting policies of stimulus.

  15. @J-D


    I regard money printing and low interest rates as “adopting policies of stimulus”.

    I regard schools building program as a policy of stimulus.

    I regard bail-outs of banks as policies of stimulus.

    I regard deliberate reduction of wages as a policy of stimulus.

    I regard first home buyers schemes for new builds as stimulus.

    I regard population increase as a confused policy of stimulus.

    Austerity is the last gasp of a self-choking Keynesian capitalist.

    The sequel is Depression.

    I blame Keynesian economists.

  16. In response to @Ivor the current stimulus program being run by the US government has worked spectacularly well. The Fed has blown out its balance sheet by from some $500billion to $4trillion+, and almost all of that has been captured by the top 10%, most by the top 1%. A program designed for a capitalist’s heaven. Stock market, property, securities, all up. And the bottom 905 are totally out in the cold.

    Whenever a rational voice calls enough, some screams ‘What about the pension funds’ Ah, yes, we don’t want to deprive those poor pensioners.

    Keynesianism works a treat, but of course was anathema to the ‘neo-liberals’ until the right design came along, with the correct terminology, of course. QE, Keynesian stimulus for the very rich.

  17. @Ivor

    If you insist on using words differently from the way everybody else uses them, nobody can stop you, but the inevitable consequence is communication failure.

  18. In response to @Brett, the argument that capitalism lifts people out of poverty, and all its variants, is spurious. It would seem that a certain level of freedom within functioning state institutions allow people to technically advance, and hence improve their quality of life. The current rate of growth of scientific knowledge according to bibliometric analysts from the Max Planck Society in Munich and the Swiss Federal Institute of Technology is close to 9%, or a doubling in less than ten years.

    The real question is which economic systems optimise the utility of that advance. On the downside there is good evidence that authoritarian and totalitarian states destroy almost all the potential advance, as in Zimbabwe and North Korea. That is primarily a failure of political institutions. There is much less hard evidence on the upside, but I would content that the misallocation of resources under current neo-liberal regimes is less than optimal.

    Keynes predicted a shorter working week, about 15 hours, to maintain quality of life by the end of the twentieth century, and we all know how that went. I would call that as a failure of capitalism. I note that this blog has addressed the concept of utopias, but even as a cynical realist one would have to imagine there is a better way.

  19. @J-D

    If there is another reason for creating and injecting money into the economy, other than stimulus, then this is secondary.

    So stimulus is the word.

    Wage decreases also give a stimulus to capitalism.

    So stimulus is the word.

    Population increase also acts as a stimulus to capitalism.

    So stimulus is the word.

    Do you have any other forms of stimulus you’d like to “communicate”.

  20. @Ivor

    The ‘stimulus’ other people have been talking about is not ‘stimulus to capitalism’. If all you want to talk about is ‘stimulus to capitalism’, then you’re changing the subject, and that should be made clear.

    Reductions in wages, for example, even if you’re right that they give a ‘stimulus to capitalism’, are not the kind of ‘stimulus’ people are talking about when they contrast ‘stimulus’ policies with ‘austerity’ policies. In the context of a contrast between ‘stimulus’ policies and ‘austerity’ policies, wage reductions are, if anything, an austerity policy. If you’re not interested in that kind of discussion, that’s not an excuse for derailing it.

  21. J-D

    You are misbehaving.

    I was the first to talk about stimulus and so there is no change in subject. Just look at the top of this thread.

    If you want to make a distinction between stimulus (abstract) and stimulus in context (ie capitalism) then please do.

    But do not raise spurious accusations about derailment when this appears to be your project.

    Maybe it would be better if you got back on track.

  22. This seems to be a disturbing trend in our democracy:

    Mr Toole said the reforms would be modelled on the City of Melbourne, where landlords, business owners, corporations and other non-residents must vote in council elections. A business owner is entitled to two votes and the landlord of their building also has two votes.

  23. @Ivor

    Your first reference to ‘stimulus’ was a citation of Krugman, and therefore a reference to ‘stimulus’ in the sense that Krugman uses the word. If Krugman uses the expression ‘injecting stimulus’, he is not using the word ‘stimulus’ as you do. Did you fail to realise that? Do you genuinely not understand what Krugman means by ‘stimulus’ if he uses expression ‘injecting stimulus’?

  24. @J-D


    My point was not contingent on anything Krugman may have said. The quotes marks were not a citation.

    The theory of stimulus existed before and apart from Krugman.

    All the examples of stimulus I gave were not from Krugman.

    Capitalists have tried to save their bacon with many different forms of stimulus.

    Tax cuts is another.

    If you have some other concept of stimulus that does not involve:

    Increasing credit and debt
    Injecting money
    Increasing unemployment
    Increasing population
    Decreasing wages
    Shifting tax burden
    Subsidising consumption

    then just produce it.

  25. @Ivor

    You wrote ‘So how do Keynesians propose to avoid Depression now, with the world full of stimulus, full of unemployment and with falling wages?’

    That’s only a meaningful question if what you mean by ‘stimulus’ is the same thing Keynesians mean by ‘stimulus’ as a way of avoiding depression.

    Keynesians propose to avoid Depression by something that they call ‘stimulus’. The world is not currently full of the thing that Keynesians call ‘stimulus’. It is not the case that the world has made an all-out effort to avoid Depression by using what Keynesians call ‘stimulus’. The present circumstances are not ones in which the Keynesian prescription of ‘stimulus’ to avoid Depression has been tried and has failed; the present circumstances are ones in which there is still plenty of room to try the Keynesian prescription of ‘stimulus’ to avoid Depression. So if you berate Keynesians by saying ‘the world is full of stimulus’, implying that it hasn’t worked, it would be entirely reasonable and appropriate for Keynesians to respond by saying ‘that’s not what we mean by stimulus’.

  26. @J-D

    Your word games are not very interesting.

    you were asked:

    Do you have any other forms of stimulus you’d like to “communicate”.

    There was no response.

    You were then asked;

    If you want to make a distinction between stimulus (abstract) and stimulus in context (ie capitalism) then please do.

    There was no response.

    You were then asked;

    If you have some other concept of stimulus that does not involve:

    Increasing credit and debt
    Injecting money
    Increasing unemployment
    Increasing population
    Decreasing wages
    Shifting tax burden
    Subsidising consumption

    then just produce it.

    There was no response.

    Floating weird, vague, concepts as “something they call stimulus” doesn’t help you at all.

    So for the umpteenth time,

    just produce this so-called Keynesian stimulus which supposedly not been tried in present circumstances and for which, you claim, there is plenty of room.

    If you want to artificially want to restrict stimulus to your boutique hidden meaning, what label would you use for:

    Increasing credit and debt
    Injecting money
    Increasing unemployment
    Increasing population
    Decreasing wages
    Shifting tax burden
    Subsidising consumption

    It is typical of Keynesians to look at the mess they have created and then try to hide by saying

    that’s not what we mean by (our theory)

  27. @Ivor

    In a discipline like economics, certain words and phrases come to have an agreed meaning. This meaning is agreed upon by all or most practitioners of that discipline. This specialised or technical definition has to be precise whereas as the everyday meaning of the word can be broader, more vague or have multiple meanings.

    The word “stimulus” is a good case in point. As well as all the usual definitions of “stimulus” in the dictionary, it has a certain precise meaning in economics and a different precise meaning in subject areas like physiology and psychology (to give examples).

    If you use a word like “stimulus” in an economic discussion, you need to use it in the received sense. You are not doing so. You offer a grab-bag of items, some of which are an economic stimulus, some of which are contractionary and some of which could be either effect depending on other factors.

    Increasing credit and debt – This is vague. Whose “credit” and whose “debt”? If you had just said “increasing credit” this would have been clearer and it is probably a stimulus.

    Injecting money – Usually a stimulus.

    Increasing unemployment – This would be contractionary.

    Increasing population – This could stimulate the economy or stress it and contract it.

    Decreasing wages – This would be contractionary.

    Shifting tax burden – Depends how it’s done. It could stimulate or contract the economy.

    Subsidising consumption – Probably stimulatory but again would depend on the details.

    I agree with J-D on this one, Ivor. Basically, you are not making much sense.

  28. Ikon

    Increasing unemployment, in the long run, may be contractionary. However to respond to bad economic conditions businesses do this to increase overall productivity and increase their individual competitiveness. Business protects itself by such devices, in the short run. The stimulus is in the enhanced productivity/competitiveness.

    Ditto for decreasing wages. The stimulus is in the (supposed) lower costs.

    Presumably capitalists are wise enough to ensure that tax shifting gives them a benefit they did not have before, and to ensure they are not hit too much by tax changes that they do not like (super profits tax, carbon “tax”).

    So let the word-games die out. Keynesian-based policy makers are now foisting on us “the stimulus you get when you are not getting stimulus”.

    Maybe you should produce the much asked for; Keynesian elixir that J-D claims:

    “supposedly not been tried in present circumstances and for which, J-D claims, there is plenty of room.”

    What do you want? Increase Australian debt ratio to UK and USA levels?

    Exactly what do Keynesians want to stimulate if this does not mean boosted jobs and wages?

  29. @Ivor

    Ivor, your ideas are so mixed up it would take short essay to address them (and probably by a real Keynesian not by a layperson like me).

  30. It appears to me that Ivor is trying to blame “Keynesians” for the economic mess which resulted when western governments went post-Keynesian and followed the tenets of the Austrians and the Chicago School.
    But that’s just how it appears to me.

  31. Ikon

    The real world demonstrates that it is the Keynesians who are completely mixed up and this needs to be addressed.

    I doubt whether mixed up is correct. This is more like an avoidance strategy by Keynesians.

    Notice how, multiple times, when Keynesians pretended they had some earth-shattering pure stimulus, and were asked to describe it, they failed.

    They were also asked, if what I cited was not stimulus, what term would you use to describe, delebirate policy out of Keynesian stables to:

    Increase credit and debt
    Inject money
    Increase unemployment
    Increase population
    Decrease wages
    Shift tax burden
    Subsidise consumption?

    Maybe you would like to use the Marxist term “counteracting tendencies”? but then why wouldn’t a Marxist demand that you use their term exactly as they do, and tell you how mixed up you are. Although complex Marx seems more relevant than simplistic Keynes.

    So you and J-D should forget your word games, they are unedifying.

    If Keynesians want to be taken seriously they have to account for the misery that is spewing forth from every developed capitalist economy as from a volcano including the massive drive to enrich the rich and enpuperise the poor.

    Is it reasonable to protect Keynes by blaming Post-keynesians?

    Has the real world demonstrated that Keynesianism “an obsolete textbook which is not only scientifically erroneous but without interest or application to the modern world”?

  32. @J-D

    Restricting yourself to Keynesian dogma is not particularly useful.

    If cutting wages and jobs does not improve business why else would this occur in response to crisis?

  33. @Ivor

    I don’t know whether cutting wages and jobs ‘improves’ business; I guess it would depend on what you count as an ‘improvement’, since an improvement for one person can be the opposite for another; what I do know is that cutting wages and jobs is no part of a Keynesian policy of stimulus.

    If the governments of the world were going all-out to implement Keynesian policies of fiscal stimulus, they would be increasing their budget deficits with increased expenditure, particularly on infrastructure, possibly coupled with cuts to taxation. Is that what you’re observing? I’m not.

  34. @J-D

    I think most people will have no difficulty observing enormous budget deficits in economies impacted by GFC.


    In the United States they are having difficulty in maintaining and repairing much of their existing infrastructure. The message here is that previous infrastructure expenditures did not produce the growth sufficient to cover the costs of having that infrastructure. Surely you would want infrastructure to be cost effective and be able to cover its own depreciation?

    However the current GFC is a “financial” crisis where government spending on yet more infrastructure will still not

    encourage capitalists to borrow to invest. Capitalists are not borrowing because of other reasons, not lack of infrastructure – ie the amount of global debt and trends.

    There are insufficient opportunities to use today’s infrastructure in ways that attract borrowing from capitalist bankers.

    Infrastructure spending boosts some economic activity where it creates a competitive advantage. But this further depresses others and cannot be tolerated in a global crisis. Infrastructure must serve economic opportunity, economic opportunity

    does not serve infrastructure. No doubt Germany can stimulate its economy with new airports provided this attracts flights from Dubai, Paris and London. The UK cannot stimulate its economy by building shipyards in Liverpool.

    There are two core problems with infrastructure spending – a) does not impact on the cause of crisis, b) does not necessarily produce sufficient economic activity to cover its own costs.

    Nonetheless infrastructure spending creates jobs and pays wages which has a social welfare effect that can protect the vulnerable against the worse effects of capitalist crisis.

    Tax cuts never work in the long run. They increase inequality and weaken the welfare state. Tax cuts are right-wing Keynesian dogma. However tax shifting (from consumption to super profits or onto foreign transactions) may be useful.

    Restricting stimulus to right-wing Keynesian strictures is not possible in the modern world particularly in economies confronted with classic Marxist crisis tendencies – ie where there is insufficient returns on existing Capital. The only capitalist solution is to destroy the current infrastructure, hopefully in someone else’s land, and then lend them the money to rebuild. This has worked in the past but only for a single generation and then only for the later years of their lives.

    Restricting stimulus to right-wing Keysian strictures also will not work in economies that are developing into service based economies – particularly financial services – as this is where the crisis tendencies have come from.

    Of course in the real world, capitalists resort to all manner of other forms of stimulus I have listed above.

    The real solution to all this is to abolish the capitalist economic mode of production in the long run and tax capitalist profits (including the crossborder flows of capitalist profit) in the short run.

  35. @Ivor

    You may be right that Keynesian measures would not work ifthey were tried (or then again, you may be wrong). But that is still not the same as saying that Keynesian measures are being tried and have failed. In a number of countries government budgets went into deficit when the GFC hit and governments responded by trying to reduce those deficits sharply; that may have been a bad policy or a good policy, but it was definitely not a Keynesian policy.

  36. @J-D

    Restricting yourself to Keynesian dogma is not particularly useful.

    Injecting word games is not edifying.

    creating other diversions serves you no good.

  37. @Ivor

    I am not advocating Keynesianism. I am advocating accurate description of Keynesianism. I don’t object to the idea of criticism of Keynesianism. I object to inaccurate criticism of Keynesianism.

    See, it’s like this:

    Me: Are Keynesian measures being tried?
    You: Keynesian measure are bad.

    or like this:

    Me: Are Keynesian measures being tried?
    You: Capitalism is bad.

    The problem with your position in an exchange like that is not that it’s wrong but that it’s not an answer to the question.

    If you are failing to distinguish between relevance and irrelevance, don’t blame me for it.

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