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Politics : View from the Center and Left
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To: Steve Lokness who wrote (178378)12/31/2011 5:11:40 PM
From: Mary Cluney  Read Replies (1) of 543071
 
<<< Isn't that exactly the definition of Keynesian spending; "policies that boost the economy in the short run"? >>>

My understanding of Keynesian economics is to stimulate the economy when large numbers of people are unemployed. Unemployment is bad for the economy. When people are unemployed, not only do they and their families suffer, but the economy suffers. Demand for goods and services are diminished causing more people to lose their jobs, lower government income from less people paying lower amount in taxes, and increasing buget deficits. The fed steps in to lower interest rates and increase the money supply to increase business activity. The government steps in and create jobs - even jobs that do nothing more than digging ditches and filling it up again. When conditions get better, when more people are employed, when business activity picks up, that is when stimulative spending stops and budgets are balanced.

Politicians tend to do the opposite. Keynesian economics is about taking emotions out of the budget process. It is all about the numbers. Some of the numbers get complicated. Mathematical models and regression analysis, and other forms of higher mathematics is needed to fully understand economics.

My understanding is that there are schools of economics that do not believe mathematics is needed to understand economics. That is the main argument against the Austrian schol of economists. Instead of trying to prove their point wrt to the economy using math, they rely on words.

No, I do not agree with you.
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