In Toolbox Theory deficit spending by the government results directly in GDP growth. This matches no historical or modern economic theory, would not be endorsed by any historical or contemporary economist, and is a fundamental misrepresentation of economics. The direct result of this is going to be a bunch of TNO players spouting the idea that government spending = GDP growth, which will be to the detriment of the playerbase, simply because it's irresponsible to let people think that.
This does not particularly concern the gameplay mechanics of TT, although I think it's perfectly conceivable to either add a multiplier effect determined by focus trees+events or a different method of calculating GDP growth, but that does not affect the further content of this post. I will counter the claim "but it is this way because it is simpler" with the response that including both interest rates and inflation means you are already creating a thorough macroeconomic model and should see it through completion, and not include something fundamentally inaccurate. Furthermore this is the whole reason I made this post - you now have a whole gang of TNO players who genuinely, avidly believe that unlimited deficit spending will resulting in unilateral economic growth, with the same fervour they usually have for the memes and ideas that whip up in this community, and in the interest of good governance and economics that shouldn't be encouraged.
I understand that most of the people reading this will have never studied any (macro)economics before, and that's fine. You may say to yourself "why should I trust you over the TNO devs", the answer being that the TNO devs did not invent the concept of inflation and interest rates and government spending, and that these have been long studied, and that everything in TT is based on these real life, real-studied concepts. As such you should refer to the real theory, which as I stated before, does not endorse government spending directly increasing GDP growth, even amongst the most heterodox of liberal economists.
Ok I got you with the flashy title and intro, now here's the economics. I will briefly explain what what GDP is, what deficit spending is, how government spending affects GDP, the multiplier effect, and then why it is agreed that government spending only SOMETIMES causes the economy to grow.
GDP
Most modern economists now measure GDP through 'aggregate demand' - the total demand for goods and services in a given econom
... keep reading on reddit β‘Do economists still use the labels "Austrian," "Neoclassical," or "Keynesian" anymore? I never hear economists use or refer to these terms, they sound old-fashioned, and seem pretty unscientific to me. How can you be a dispassionate, analytical scientist if you acknowledge that your work is guided by an ideology?
I have been reading a number of more post-keyensian works recently, like that of Steve Keen, and one thing I find is that a lot of it has elements of more classical marxism, however some of those elements are modified/changed. That's basically what neo-marxists do right? Revise and expand upon old marxist thought?
So what's the difference? Like, what sets the two apart?
I often see words like "Capitalism requires infinity growth", and "capitalism is about mindless consumption" or a combination of both "capitalists will mindlessly consume every natural resource for profit". Which is completely false.
Precisely because of thoughts like these, that socialists claim that capitalism requires infinite growth and infinite increase in production, consumption of resources and mindless consumption by customers.
Stop the misinformation pls.
The only capitalist economic theory that encourages mindless consumption of goods/resources and rejects saving ans investing as means to move the economy is Keynesian Economics (MMT) as explained by Keynes himself with the Paradox of Thrift.
AND most importantly, the destruction or consumption of goods/resources can never be a positive in a capitalist economy because the owner of a broken good will spend money (consuming his capital/resources) to fix it, resource that could've been used somewhere else other than fixing stuff, as shown by Bastiat in his idea of The Broken Window Fallacy.
Fallacy which comes from the false Keynesian idea that spending, even if it is to replace something broken, is better than saving. Thought that has its roots in the idea that it is consumption that moves the economy, same mistake as socialists that say stuff like those mentioned in the beginning.
Even MARX himself knew that capitalism wasn't about consumption/spending of resources/capital, but about saving, about accumulating capital.
If any of you are interested in understanding capitalism, you can look for Hayek and Bastiat as the opposite of Keynesian economics, as well some of Milton Friedman's interviews.
I spent some time searching good and short videos that serve as basic introduction to some ideas.
Keynesian vs Austrian economics in 1 min
Money Creation, Inflation and Debt - Short and quite good explanation of the Austrian view of inflation, as well as a bonus to explain our exorbitant debt that keeps increasing.
A debt based economy only makes sense if you believe that borrowing and spending money today can help the economy instead of having this money in the future. Which makes a quite good lead to the next video.
Austrian Business Cycle Theory - Basically the idea that government spending (increase in money supply) or
... keep reading on reddit β‘Origin Keynesian economic is a macroeconomic model that used to identify the equilibrium level, and examine disruptions, total production and income. Equilibrium is when total production and income i.
In the 1920s and 1930s, British economist John Maynard Keynes offered a new theory of the business cycle: economic recessions are caused by insufficient spending. Previously, classical economics had taught that "supply creates its own demand", meaning that it wasn't necessary for people to spend money to keep everyone employed, because there would always be demand for a product with economic utility, and therefore workers should always be employed because there would always be demand for their products.
Keynes observed that this was obviously not the case, and the Great Depression provided enough evidence for classical economics to be put out to pasture and for Keynesian economics to become the dominant economic model of the 20th century. Keynes taught that the government should spend money to make up for the lack of private spending. The government would employ people, pay them an income, and then they would be able to buy consumer goods, further increasing spending and employment.
Here's the thing: Keynes taught that it didn't matter what the government spent money on. The government could pay one group of workers to dig holes, and another group to fill them in. It was pure makework. But it was a correct theory under capitalism: capitalism depends on makework to keep people employed.
Step back and think about what this means. Under capitalism, society can produce an abundance of food, clothing, shelter, healthcare and other consumer goods, but large portions of society will go without these items unless they are subjected to makework.
Instead of drawing the obvious conclusion (capitalism withholds necessary economic goods and services from people), governments and economists decided to keep capitalism and try to fix it with Keynes' makework solution. And of course makework leads to too much energy consumption, which causes global warming and kills the planet.
The solution is obvious: ditch capitalism. Adopt socialism, give everyone what they need, and stop the makework.
I found this quote from Paul Samuelson from 1943. Samuelson, a follower of Keynes, wrote or influenced most of the conventional economics textbooks in the 20th Century:
>The final conclusion to be drawn from our experience at the end of the last war is inescapable β were the war to end suddenly within the next 6 months, were we again planlessly to wind up our war effort in the greatest haste, to demobilize our armed forces, to liquidate price controls, to shift from astronomical deficits to even the large deficits of the thirties β then there would be ushered in the greatest period of unemployment and industrial dislocation which any economy has ever faced.
As you know, quite the opposite happened. To me this doesn't bode well for the heavy-handed government central planning, price controls, and deficit spending that many Keynesians advocate.
Hi everyone! I'm looking for a book that would be made to introduce to Post-keynesian economics. Atm I'm a student in quite neoclassical university and I'd really like to dive into something else which would be more relevant.
The thing is I already tried two books by M. Lavoie about it ("Post-keynesian economics" and "Post-keynesian economics : New Foundations") and it seems those books always refer to some knowledge that is supposed to be known before to read them so I don't always understand much. Also the few resources I found about post-keynesian rarely explain their models but prefer looong written pages with not so much of examples.
So is there a book that is made to introduce and give the reader a good horizontal of PK economics somewhere?
not trolling, was big yang supporter, see my post history.
I've recently been reading about ancient civilizations and which civilizations have chosen to provide basic income + free things and those which only maintained stable currencies without engaging in mass wealth redistributions. It seems like those with stable currencies seem to be the only civilizations which stay in power for many centuries.
I'm definitely a believer in math and science when it comes to economic policy. From the studies that have been published, and from what we know from history, it sounds like handouts were never as good as simply letting free market price goods and labor.
In order to believe this premise, you have to believe that automation won't take all the jobs. In my above opinions, I'm assuming automation won't take all the jobs (or a significant portion). Feel free to disagree, but since there are 9 Million unfilled jobs in America, I don't know if Yang's claim of falling job openings really holds much weight. Also if anyone's curious, my political ideology has gone from: Bernie -> Yang -> Trump π― (libertarian leaning)
The whole point of bitcoin is to have an alternative currency that canβt be devalued by a central bank. So assuming bitcoin becomes widely adopted, how does this affect governmentβs ability to stimulate the economy? Would mass adoption mean that the government could not over spend to bail out the economy? Is that potentially problematic?**
Perhaps crypto people disagree with Keynesian economics anyways, but it seems to me government spending can smooth out economic hardships. If the governmentβs money relies on a fixed supply of bitcoin and a pandemic hits where the economy needs stimulus, what can it do? Is a bitcoin standard going to have this as a down side?
Curious what you all think!
Just found this. It's a cool video. Keynes debated Hayek twice. Keynes was declared the winner both times but by the powers that be that had an invested interest. (Government and the rich).
I recently watched a lecture by Jonathan Newman at the Mises Institute:
I wanted to understand the nuts and bolts of what the different schools disagreed on. This is a great lecture, I now understand that Austrian Economics approaches the entire science differently, mostly in that it ignores macroeconomic data and focuses on individual decision making and works its way upwards, not dividing the science into two different sects (micro and macro).
He also spells out quite well the subtle difference between Keynesian and Monetarist thought. Correct me if I'm wrong, the way I understand it is: Monetarists believe that monetary policy (controlling money supply) should be used to correct any imbalance in the market, while Keynesians believe it should be corrected with fiscal policy (government spending).
My question is this: if the two models are as I described them, would we say that the United States government employs both of these policies? Do we not have a centralized power (the Federal Reserve) that controls money supply, while also having a federal government which spends in incredible amount? Is this due to contrasting beliefs among our representatives?
I apologize if this might not be the best place to post this.
As a moderate libertarian interested in economics I wanna look into the Chicago School of Economics because I like how they use data unlike Austrian, but that's really all I know about them.
What are their beliefs on say, the Federal Reserve or Taxes for example ?
Are there any good books on the topic for beginners?
I have been reading a number of more post-keyensian works recently, like that of Steve Keen, and one thing I find is that a lot of it has elements of more classical marxism, however some of those elements are modified/changed. That's basically what neo-marxists do right? Revise and expand upon old marxist thought?
So what's the difference? Like, what sets the two apart?
I have been reading a number of more post-keyensian works recently, like that of Steve Keen, and one thing I find is that a lot of it has elements of more classical marxism, however some of those elements are modified/changed. That's basically what neo-marxists do right? Revise and expand upon old marxist thought?
So what's the difference? Like, what sets the two apart?
Origin Keynesian economic is a macroeconomic model that used to identify the equilibrium level, and examine disruptions, total production and income. Equilibrium is when total production and income i.
how does one apply this?
how does one apply this?
Are there any Keynesian economic policies you support?
