I have taken the quote below from Terry McCrann via Andrew Bolt who titles his post Economy lifts, but where’s the business investment? Trying to make sense of an economy by using modern economic theory to find your way is an impossibility. I say this often, but who can understand any of this if they have not read pre-Keynesian economics? It’s impossible to read J.S. Mill unless you are schooled in the classics, but you can read Henry Clay’s 1916 Economics: an Introduction for the General Reader, or even my own Free Market Economics: an Introduction for the General Reader (2nd ed 2014). If you do not understand the classical theory of saving and investment you will never be able to think through economic events. This is the excerpt from Terry.

THE “good” economic growth figures for the September quarter capture a simple, brutal reality about today’s, and even more, tomorrow’s Australia: after the resources boom we are getting poorer…

There’s a seeming contradiction or paradox in the GDP figures. We continue to record relatively strong growth in the economy. That’s, of course, “relative” to other developed economies which are barely staying out of recession….

Yet right now it’s become a sort of empty growth. In simple terms we are producing more but earning less; we are shipping off more and more of Western Australia to Japan and of course especially China and getting less per tonne and so more or less the same actual dollars overall…

But our incomes aren’t growing.

This shows up in all, sorts of places — like wages, which are now growing at their lowest pace in 60 years and barely keeping up with (very low) inflation.

If it’s not value adding it will not add to growth. If it requires a government subsidy – green energy, NBN, pink batts – it will lower our standard of living. You cannot make an economy grow from the demand side. The proportion of non-Keynesians in the profession is under 10%, and the proportion who are actively anti-Keynesian may be less than 1%. What to do about this I do not know, but you would think by now that there would be some kind of effort to overturn Keynesian macro, but near as I can tell, there is hardly a whisper of dissent.