Monday, September 19, 2011

Shall We Spend?

Congress has apparently convinced Barack Obama that the U. S. does not have a lot of money (I really find this hard to understand, but I am just trying to repeat what I have heard) and, apparently, now the President of the U. S., in the person of Barack Obama, will spend less -- and this is going to save -- well, at least help -- us. Barack will help us by spending less. Well, I'm kind of cynical because it has not been established that spending less is really the point. Keynes thought you should spend more. I find John M. Keynes palatable and understandable. I do not find his thinking that mysterious. He brought into doubt the old idea that benefit only comes from one direction, i.e. savings. He contradicted the accepted orthodoxy of Says Law, which is to say the implicit value associated with "frugality," the frugality syndrome, you might say.
     Too much spending is immoral, after all, or it soit'nly seems that way. You might, for example start wasting money instead of spending it sensibly in a way that makes sense. And, to this day, conservatives always want to be sensible, not lunatic, with money. Keynes challenged that old logic. So, naturally if you are a conservative you aren't going to like this.
     So now everyone hates Keynes for saying this stuff.  Everyone who was boring and conservative and staid and unimaginative, that is to say. Or, to put it differently, persons that already had money were angry at him. But he didn't care because he was a sharp guy. He just wanted to tell the truth. Keynes made his point, noting that such old notions as those of Say's Law might actually not be all that relevant. OK, so that's what Keynes did and that was a singular achievement. In essence, Keynes said that economics might make another kind of sense. His works helps us to understand the way capitalism represents a special stage of history.
     Now Obama has gone Keynes one better. He is going to do both at the same time. Bowing to pressure from Boehner and that group, he will do both. The government will spend less-----that is in order to placate sensitive emotions in the "frugality group."  But I don't think they are telling the private sector to spend less. So the idea doesn't apply to the private sector. As for the private sector, or what we call the "private sector"-----well, it seems to me that these same persons want the private sector should spend more --- Isn't that what economics today is all about?-----spending more money? How do you do anything if you don't spend money? I suspect that, in this age, that's what economics is all about. And that's very Keynesian. But when it comes to government spending the conservative faction of society believes that the very opposite is true. I see no evidence that this makes any sense. And there is something scary about this, which is to say about entering into a brave new world where we stopped making sense. They are supposed to be staid and sensible, these old frugality-type guys. So, it's scary: a world that no longer make sense is a scary thought.
     First things first: there is an economic problem. It is possible to spend less, or spend more. Which should the majority of the economic actors choose to do? Should you (or the average economic actor) solve the problem by spending more, or by spending less? The frugality crowd says all problems are to be solved by spending less (and that is more moral as well) and the Keynesian crowd is clever, and they say, well, it doesn't actually work that way-----you could also spend more. The result, based on the big deficit showdown that happened about a month ago is to do both. Why is spending less on the part of government going to help the economy, and make everything better, BUT, spending more, on the part of the rest of us, will also make everything better? Two opposite things are both solving the economic problem (supposedly). Or am I somehow wrong, and it is not the case that Republicans want more (private) spending? I kind of assume they do. They are all capitalists. They are all in business. They want economic activity. "Spending" is like  economic activity. Maybe it is a Keynesian thing to say, but everyone seems to believe it today. The wisdom seems to say that you cannot have economic activity if you do not have spending. Maybe that is wrong, but that is what everybody (Keynesian or whatever) believes.
     That means more spending from investors, for example, but also from business owners; also from those business owners' consumers. At the same time, we want less spending when it is spending by government. As an aside, recall that, when it comes to government, homo Republicanus would want less, period-----less of everything-----everything government, and that, I assume would include spending.
     It seems to me that the fundamental contradiction is something like this: we assume that spending more is a good idea when that is convenient. This means when everybody with any money at all feels there will be benefit for business. Every businessperson wants other people to spend in order to buy whatever it is s/ he sells. But we also assume spending less is a good idea, when that is convenient. This to avoid embarrassing the old wrinklyface "frugality" type individual. It just depends on which Hershey bars they are chewing on. I depends on a particular moment and context. And, speaking of "H" words, the Heisenberg principle is a philosophically-tinged aspect of modern physics that responds to a rather weird fact that, in quantum physics, when dealing with the matter of light (should I italicize that, or is the word bright enough?) it can be or it is explainable simultaneously both by a concept invoking waves, and by a concept of particles. At one and the same time! Just like Boehner-Obamian economics today! Economics is like light: saving and spending are both true. I don't doubly it for a second, I'm easily convinced. OK. So, when you want to use the wave theory, use it; when you want to use the particle theory, use it. That is what they do in physics; they just use both theories. The same goes for the new post-Keynesian type of economics Boehner and Obama collaborated on. (But one thing: I doubt that it all breaks down neatly into government spending vs. private spending; in fact, it could even be the other way around, but we may never know, what with the Heisenberger thing in effect still.) What follows are a few more thoughts I had, at the time I was coming up with all this stuff. These thoughts follow a little different course. They aren't really related. Neither are particles and waves. They are totally different things, like the Stones and the Beatles, or, for  that matter, black and white. OK, now I'm in trouble!

           Apparently the worst thing is to offend others'           mental ideas              Look at the original impact of the ideas of Mr. (Lord) Keynes. He had every pedigree in the book. He was acknowledged as one of the top minds at his university, Cambridge. He was right up there. And also he still had to proceed very carefully and do everything right and accept all of their conventions (which, apparently, he did). Even with all of this, and even though his ideas made sense, they did not even gain acceptance, until depression came. He needed to phrase everything very carefully. Everyone is worried about offending somebody else's precious sensibility. You can see, even today, that many perople are very conservative and have intellectual lockjaw.

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