The illegitimate spawn of a relic from the Great Depression

From Judy yesterday: A Keynesian solution even Keynes would have tossed. A program Keynes came up with during the Great Depression when unemployment was 25% is still being applied by moron economists 80+ years later who are ruining our economies while rewarding their friends. Crony capitalism is the illegitimate spawn of a depression level theory, that was useless even back then. She begins:

I thought active demand management or fine-tuning the economy had gone out with the ark — or, to be more precise, in the 1970s. Stagflation — high rates of unemployment and inflation — put paid to that party trick.

Of course, the idea of central authorities or governments controlling the pace and nature of economic growth was preposterous. Mind you, you could understand the reasons for this naive belief, particularly among those affected by the hardships associated with the 30s Depression.

Now the only people who come out ahead are millionaire recipients of the money paid out for the various projects governments come up with. Judy again:

And let’s not forget the waste in so much government spending. Can anyone forget the fiasco of the pink batts scheme: four deaths, and hundreds of millions of dollars to remediate the problems? Or what about the school halls program where the cost of building the new structures was at least 20 per cent greater than the efficient price?

Value for money from government! The idea is as nonsensical as it gets.

I also liked this from David in the comments, of which everything he says is true:

I’m not expert but it is one of the great ironies of world economics to me that the 1980’s were spent identifying inflation as the enemy of the economy and taking all measures possible to lower it and now the world experts want inflation back and can’t get it. What is more when it was at its highest most governments quietly changed the method of measuring inflation so now we have the position where officialdom says inflation is low but we in the streets who go to buy anything know how prices have risen considerably if not dramatically in many areas. But they are doing so without increase in real production the secret to any good economy.

I will finish off with a bit more from Judy:

Then there are the many ill-­educated media commentators and finance sector “economists” who dismiss concerns about ongoing budget deficits and rising government debt. The government must take action, according to this tribe. Clearly, they never understood anything beyond Macroeconomics 101.

And for myself, it would make hardly any difference had they gone on to graduate school since almost everything now taught in an economics course is valueless bilge.

This entry was posted in Classical Economics, Economics and economy. Bookmark the permalink.

14 Responses to The illegitimate spawn of a relic from the Great Depression

  1. Sean

    They have got ‘The tiger by the tail’

    The RBA is going to protect malinvestments all they can and let’s just pray that something external saves our bacon.

  2. miltonf

    Bill Hayden in 1975- ‘we no longer live in the Keynesian age’

  3. Karabar

    As recently as autumn 2013 the AUD was par with the USD.
    But these bloody “experts” insisted that we would be far better off if it were lower.
    Is this as illogical as it gets? Lower interest rates to keep that sucker down!
    If 75 cents is a good thing, then 67 cents must be better?
    If that is the case, how good would it be at 50 cents?
    Why not 25 cents.
    Imagine how lucky the lucky country would be if the AUD were ZERO cents! We could be as prosperous as Zimbabwe!
    Hemminway said that you go bankrupt slowly at first, and then, all of a sudden.,

  4. max

    I do not see many people here calling to abolish compulsory education and to stop public funding of higher education and to sell all public universities .

  5. I_am_not_a_robot

    … Crony capitalism is the illegitimate spawn of a depression level theory,
    Now the only people who come out ahead are millionaire recipients of the money paid out for the various projects governments come up with …

    Also the swelling bureaucratic caste that is generated.
    Risk is intrinsic to genuine vibrant capitalism.

  6. Roger

    Or what about the school halls program where the cost of building the new structures was at least 20 per cent greater than the efficient price?

    Standard practice when government contracts to the private sector.

    The only people who seem unaware of it are the public servants promoted above their level of incompetence who sign off on the contracts.

    What would they know?

  7. Peter Greagg

    Well said Steve and Judith!

  8. DD

    I would be pleased to see the introduction of compulsory education so long as the existing compulsory indoctrination of students was outlawed. It now starts at pre-school by commonwealth fiat tied to the subsidy. Another arterial bleed of Australia’s treasure to …, insert your favorite noun.

    IIRC Tony Abbott attempted to restructure the financing of tertiary education to staunch that uncontrolled bleeding. Shouted down, stamped on and kicked to death! An important national conversation that wasn’t.

    And here we are. Still digging the old holes deeper. Looking around for new holes, never enough holes!

  9. Ellen of Tasmania

    “Paper is poverty. It is only the ghost of money, and not money itself.”
    (Thomas Jefferson, 1788)

    “As economist Henry Hazlitt wrote, the practices of the Fed distort the real-world market indicators of cost, future prices, investments and production.”

    “Both James Madison and Thomas Jefferson warned that “the greatest threat to be feared” was the “public curse” of “public debt”, and that “banking establishments are more dangerous than standing armies.” The founding fathers understood the dangers of centralized manipulation of the money supply, the hidden taxation of inflation, and the control of buying power.”

    (Authored by South Carolina state Rep. Stewart Jones)

    https://www.zerohedge.com/economics/founders-warned-us-about-central-banking

  10. max

    Ellen of Tasmania
    #3179286, posted on October 9, 2019 at 11:42 am

    Ellen revolution cost money –paper money, hyperinflation, debt and central bank are all packaged deal

    The Bank of North America was a private bank first adopted on May 26, 1781, by the Confederation Congress, and opened in Philadelphia on January 7, 1782. It was based upon a plan presented by US Superintendent of Finance Robert Morris on May 17, 1781 that created the Nation’s first de facto central bank.

    It was succeeded in its role as central bank by the First Bank of the United States in 1791.

  11. max

    A History of the American People by Paul Johnson:
    Jefferson’s fundamental difficulty can be simply explained: he was a passionate idealist, to some extent indeed an intellectual puritan, but at the same time a sybarite, an art—lover, and a fastidious devotee of all life’s luxuries. From claret to concubinage, there was no delight he did not sample, or rather indulge in habitually. This set his views and practices in constant conflict. Slavery was a case in point: its dark shadow penetrates every corner of his long life.
    He also hated slavery, feared it, reviled it, privately at least, and sought in vain both to curtail it publicly and to cut it out of his own life.
    Nor did Jefferson ever get round to doing anything for his own slaves, such as emancipating them. The reason was pitifully simple: money. Jefferson was never in a financial condition to indulge his conscience. Indeed, in an unsuccessful attempt to increase the income from his estates, he actually bought more slaves. When one of his slaves ran away he offered a reward for his capture. When he was about to return from his embassy to Paris, and his black slave—cook wished to remain there as a freeman, Jefferson persuaded him to come back to Monticello as a slave—he could not afford to lose the cook’s `artistry.’

  12. Squirrel

    So interesting that a ban on repeat prescriptions of antibiotics is in prospect, but we doggedly persist with the fiscal and monetary equivalent – with the same diminishing results, and the grievous risks we face in the event of an economic “superbug” and nothing left to deal with it –

    https://www.abc.net.au/news/2019-10-09/push-to-cut-repeat-prescriptions-to-prevent-superbugs/11585508

  13. John A

    max #3179131, posted on October 9, 2019 at 9:10 am

    I do not see many people here calling to abolish compulsory education and to stop public funding of higher education and to sell all public universities .

    Have you been here long enough to see comments about the so-called education system, calls for “home education” or “unschooling”?

    My (Christian) philosophy of limited government is that it should ONLY be concerned with Law and Order, plus Civil and Military Defence (Romans 13). Everything else should be abolished (economic management, compulsory super, the ABC, the RBA) or privatised. The Health, Education and Welfare sectors are all a mix of government and private providers, so governments should just butt out.

    Standards setting can be handled by health insurers, welfare should be face to face, education is supposed to lead to effectiveness in jobs and the community, and results are readily observable. Education doesn’t have to be compelled, as there are not that many neglectful parents – education is still highly valued in the community. The only result of government interference has been a lowering of achievement and an almost total absence of standards. You just have to look at some of the exam questions of students in 6th to 8th grades of 150 years ago to see that.

    [Dismounts from hobby horse, packs up portable soap box and retires to lurkerdom again]

  14. No John A.

    You should write some content. Or have a go at writing policy.

    If the Liberal Party had decent folk like you, they would have seen the LDP or the Aus Cons exist at all.

    Teaching as a profession only exists now because of compulsion and what amounts to taxpayer subsidised daycare.

    Anyone who is literate can now homeschool their children. The classical economics justification of public schooling, free to the end user and universally available is now achieved by simply owning a mobile phone.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.