Monthly Archives: December 2016

There is a limited case for reading Keynes today

Posted on by
Reply

I am returning to the question of whether it is worth one’s while to read The General Theory since I may have been a little hasty in my previous advice. It is not to be read for entertainment, nor to understand how an economy works. But if you are interested in the history of economic theory, then that is a different story altogether. I have now replied again.

Thinking over what you had written, of course since you are an historian of economics you have to read The General Theory. You are not looking for enlightenment in the normal sense but to see how economics has “progressed”, and to understand in detail the steps along the way. Importantly, you will be reading it backwards in time, so that you are looking at it from now and trying to understand the origins of what we find in our texts. My original copy of The GT has become so fragile that I had to buy a second copy that I look at instead since the older one is disintegrating. And while I have probably read at one time or another every page of the book, I have not read them in order, from page 1 to the end. But I have read the index! And all of the footnotes. Never ignore the footnotes.

As for his definitions, Keynesian terminology is now so pervasive you will not stumble on a thing. Even his idiotic term “marginal efficiency of capital” is straightforward enough so that won’t be the obstacle it was at the start – his adoption of “marginal” concepts was a stroke of genius given when he was writing, although there is nothing “marginal” about mec and the mpc. The general problem will be that the presuppositions of the classical era will have evaporated so that it is less obvious what he’s going on about and why any of it matters. In it’s own way, because of my focus on Say’s Law, it was the first three chapters and then Book VI, which are the last three chapters, where I began and that led me to the rest. But since everything since 1936 has depended on acceptance of aggregate demand, which everyone now does accept, the book seems less idiotic to a modern reader than it did to Frank Knight and Henry Clay. And even then, since there was a consensus even among classical economists to increase spending to diminish the impact of The Great Depression, the radical nature of The GT remains in disguise. Seriously, can anyone really understand what this means and why it is so important?

“Say’s law, that the aggregate demand price of output as a whole is equal to its aggregate supply price for all volumes of output, is equivalent to the proposition that there is no obstacle to full employment.” (GT: 26)

This may be the least controversial statement in the entire General Theory over which literally no controversy of any serious kind occurred. Yet it is this statement that has made economics into the useless mess it is, wrecking our economies without hardly a soul understanding what’s involved and why it matters.

Keynes knew what he was up to. So once you understand that the entire book is aimed at demonstrating that Say’s Law as Keynes understood it is wrong, reading the book is then a walk in the park – at midnight in the midst of a hurricane.

Monumental error

Posted on by
Reply

A donation request I am going to ignore. It’s a joke, and I don’t really take pleasure in piling on Hillary since she is gone for all money. I only put it up because I think it is crucial to remember how monumentally rotten Obama was as president. I give him no marks for effort, since I think of him as nothing other than an Alinskite liar, with an incredible ill will towards the United States and the West in general. But it’s nice to read all the same.

Dear Friends:

I have the distinguished honor of being a member of the Committee to raise $50,000,000 for a monument to Hillary R. Clinton. We originally wanted to put her on Mt. Rushmore until we discovered there was not enough room for her two faces.

We then decided to erect a statue of Hillary in the Washington, D.C. Hall of Fame. We were in a quandary as to where the statue should be placed. It was not proper to place it beside the statue of George Washington, who never told a lie, or beside Barack Hussein Obama, who never told the truth, since Hillary could never tell the difference.

We finally decided to place it beside Christopher Columbus, the greatest Democrat of them all. He left not knowing where he was going, and when he got there he did not know where he was. He returned not knowing where he had been, and did it all on someone else’s money.

Thank you,
Hillary R. Clinton Monument Committee

P.S. The Committee has raised $2.16 so far.

My thanks to TMc for sending along.

If this is true, how can Malcolm continue to lead the Libs?

Posted on by
Reply

I’m on annual leave and away from it all with only the occasional look at the papers. But there was this at Andrew Bolt, Hinch blames Turnbull for ABCC backtrack. If it is true and nothing is done about the leadership of the party, then they are preparing for dishonourable defeat the next time we have an election.

Derryn Hinch was attacked as a CFMEU stooge for telling the Turnbull Government to add a two-year delay in making the anti-union provisions binding on companies in exchange for his vote. Now he says it was Malcolm Turnbull who suggested it to him.

Malcolm is the politically most inept person I have ever witnessed in politics, but for him this would be even more idiotic than his typically abysmal norm. The implication, as I read it from Hinch, is that he would have voted for the legislation in any case but added this two-year delay because he was asked to by Malcolm. So the two questions, in order, are:

1) Is it true?

2) If it is true, why is Malcolm still the leader?

Maybe everyone already knows the answer and I will find out when I return from the moon. But if not, then how can this be allowed to stand?

If I had a hammer

Posted on by
Reply

There is another discussion, picked up at Instapundit, on folk songs and in particular, on Pete Seeger. Where we find:

What passed for “folk music” in the 1940s and 1950s, by contrast, was the remnant of English ballad preserved in isolated Appalachian communities, as rediscovered by musicologists. Joan Baez made a specialty of such things. John and Alan Lomax gathered Appalachian music, African-American music, and other scraps and shards distant from the American mainstream as an expression of authentic “folk” culture. The entire “folk” movement was Stalinist through and through (including Woody Guthrie, who was a Communist Party hanger-on and probably a member. How do I know this? My late mother was Arlo’s nursery-school teacher in the Red Brooklyn of the 1940s).

Of course, it was all a put-on. Woody Guthrie was a middle-class lawyer’s son. Pete Seeger was the privileged child of classical musicians who decamped to Greenwich Village. The authenticity of the folk movement stank of greasepaint. But a generation of middle-class kids who, like Holden Caulfield, thought their parents “phony” gravitated to the folk movement. In 1957, Seeger was drunk and playing for pittances at Communist Party gatherings; that’s where I first met him, red nose and all. By the early 1960s he was a star again.

To Dylan’s credit, he knew it was a scam, and spent the first part of his career playing with our heads. He could do a credible imitation of the camp-meeting come-to-Jesus song (“When the Ship Comes In”) and meld pseudo-folk imagery with social-protest sensibility (“A Hard Rain is Gonna Fall”). But he knew it was all play with pop culture (“Lone Ranger and Tonto/Riding down the line/Fixin’ everybody’s troubles/Everybody’s ‘cept mine”). When he went electric at the Newport Festival to the hisses of the folk purists, he knew it was another kind of joke.

Pathetic stupidity. Here is the top comment which captures my mood although he is not hard enough on these cultural vandals.

You know, sometimes I think we overthink these things. John Steinbeck was never an Okie, but he wrote a good book about them, and followed that with a lot of other good books about people he wasn’t. And sure, he was an Upton Sinclair socialist (at least) but he grew up, and his Nobel Prize address is something everyone should read.

Woody Guthrie was a child of the middle class, but he also spent some years as a hobo, and he wrote some good songs that people still love.

Bobbie Zimmerman wrote a helluva lot of songs people loved, and if he was *ever* a lefty, he’s over it now. And he clearly isn’t taking this Nobel Prize thing seriously, unlike, say, Sartre, who practically made a second career out of declining.

What purpose is served by the agita?

As for Pete Seeger, this is what I wrote when he passed away. If you don’t like folk music, or the 1960s folk revival, or folk singers or their politics, well that’s great. If you can think what purpose is served by any of this rummaging through the political past of some of the greatest folk musicians who ever lived, well I would like to hear it. Whatever you might think about their politics, their music is among the treasures of our culture which we must do what we can to preserve and protect. Listening to these critics, I am reminded of Islamists as they topple ancient monuments in the Middle East to prove some political point of their own.

Should you read The General Theory?

Posted on by
Reply

I have been asked by an economist friend, who is quite well versed in macro, whether it is worth reading The General Theory and if not, what should be read instead to get a sense of what Keynes wrote. This was my answer:

My view is that there is no reason that I can think of to read The General Theory cold without some specific purpose and question in mind.

Today, it’s a book for scholars alone, even more so than in 1936 when it was published. But then, all the presuppositions of classical theory were alive so that many of the issues and statements made were clear enough to everyone so that they knew what he was on about. A great deal of time of mine has been understanding the presuppositions of classical theory – the beliefs that were so entrenched that no one even bothered to state them – so that I can read what Keynes was saying against the background of a classical understanding of how things worked. Since that is basically what I do believe is true, I can read Keynes almost the same way as Frank Knight, say, and can see things as they might have.

But what has given me an entirely different perspective is that I came to Keynes not just with the presuppositions of the 1930s in my mind, but also with the presuppositions of the 1840s. It’s with the conceptual approach of John Stuart Mill that I read the GT, and from that perspective, the book is so backwards, so incoherent and so illogical, that it defies belief to me every time I open it. But the presuppositions of almost all economists today are founded on the Keynes-Hicks-Hanson-Samuelson axis which make Keynes seem sensible and Mill incomprehensible. For me, as for Mill, it is so unmistakably true that demand is constituted by value adding supply that I am amazed that no one else can see it or why it matters. And even though a Keynesian stimulus has failed on each and every occasion it has been applied, the belief in aggregate demand independent of aggregate supply remains so entrenched that it is literally impossible for an economist to understand why the latest attempts at a stimulus did not work, and must come to the conclusion that things would have been even worse had the stimulus not been applied. It is not that they are dishonest or lack the most intensive economics education we can provide today. It is that their professional deformation, that began with their first principles course, has never gone away.

What to read instead? All I can say is that I wrote my Free Market Economics at the start of the post-GFC stimulus because there was then no other economics text anywhere to explain why a stimulus would make things worse. The best I can therefore suggest is the second edition which is the economics of Mill brought up to date as best I could do it.