Thursday, Oct 24, 2013

Help to Buy and the death of Keynesianism

Pieria: Help to Buy and the death of Keynesianism

Help to Buy is not an appropriate Keynesian stimulus for a weak economy, but a profound policy error which puts at risk the quality of life of millions of households.

Posted by m @ 04:49 PM (1907 views)
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6 Comments

1. alan said...

Keynes works do not have references to Crony Capitalism.

He assumed politicians and bankers were playing fair - this is sadly out of date.

Have a look at the Kaiser Report. It shows the sort of financialisation tricks not possible in Keynes day. When Keynes was around, an industrial secret stayed that way...now we have the NSA, and their friends in GCHQ.

Even Angela agrees with me...she had her phone hacked!

Thursday, October 24, 2013 07:51PM Report Comment
 

2. taffee said...

the sad fact is that the reason for the ultra low rates and money printing is that things were so bad this was all they could do

the consequences of which are as yet unknown

Friday, October 25, 2013 09:54AM Report Comment
 

3. Lolprechter said...

No Keynesian stimulus is appropriate. Time to put the clueless academics like Jonathan Portes back in their little boxes.

Friday, October 25, 2013 11:08AM Report Comment
 

4. nickb said...

True stimulus has not been tried and never is. Government spending money into existence on e.g. new infrastructure. Instead, when stimulus is tried the government issues bonds to sell to investors, who would otherwise have made other investments in the private sector. 1-1 crowding out.

Friday, October 25, 2013 05:22PM Report Comment
 

5. pete green said...

I think Keynes understood Crony Capitalism all to well in what was present in his day. Unfortunately he believed rentierism would disappear, the 'functionless investor' would be eradicated. Keynes was dead wrong, and his advice has gone unheeded. Diametrically opposed to his advice our modern form of 'crony capitalism has glorified the rentier and functionless investor, giving them the economic topology to rest the commanding heights of economic policy & world politics.

In the end notes to Keynes's 1936 'General Theory', Keynes said that he looked forward to the "Euthanasia of the Rentier", to be replaced by “communal saving by the agency of the state; maintained at a level which will allow the growth of capital up to the point where it ceases to be scarce”.


"Now, though this state of affairs would be quite compatible with some measure of individualism, yet it would mean the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital. Interest today rewards no genuine sacrifice, any more than does the rent of land. The owner of capital can obtain interest because capital is scarce, just as the owner of land can obtain rent because land is scarce. But whilst there may be intrinsic reasons for the scarcity of land, there are no intrinsic reasons for the scarcity of capital. An intrinsic reason for such scarcity, in the sense of a genuine sacrifice which could only be called forth by the offer of a reward in the shape of interest, would not exist, in the long run, except in the event of the individual propensity to consume proving to be of such a character that net saving in conditions of full employment comes to an end before capital has become sufficiently abundant. But even so, it will still be possible for communal saving through the agency of the State to be maintained at a level which will allow the growth of capital up to the point where it ceases to be scarce.

I see, therefore, the rentier aspect of capitalism as a transitional phase which will disappear when it has done its work. And with the disappearance of its rentier aspect much else in it besides will suffer a sea-change. It will be, moreover, a great advantage of the order of events which I am advocating, that the euthanasia of the rentier, of the functionless investor, will be nothing sudden, merely a gradual but prolonged continuance of what we have seen recently in Great Britain, and will need no revolution.

Thus we might aim in practice (there being nothing in this which is unattainable) at an increase in the volume of capital until it ceases to be scarce, so that the functionless investor will no longer receive a bonus; and at a scheme of direct taxation which allows the intelligence and determination and executive skill of the financier, the entrepreneur et hoc genus omne (who are certainly so fond of their craft that their labour could be obtained much cheaper than at present), to be harnessed to the service of the community on reasonable terms of reward."

Saturday, October 26, 2013 03:32PM Report Comment
 

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