Keynesian, champion of people? Or plague of civilization?
If any of you knew me very well you'd know I'm a die hard capitalist, for those of you who don't know me we'll the blog is self explanatory. I recently had a very heated discussion with economical left people this of course are your Keynesians, Socialists, Communists, all around Big Government believers. AS a follower of the Austrian School of thought in economics I believe that less control by the state the better! After all I don't want to be told what I can or cannot buy, I have little choice on issues such as tax and no control as to where that tax money goes.
The worst out of all these groups has to be the Keynesians, they preach that their system of economics is the best implemented so far, based on historical evidence such as the socialization and the government's role in the allocation of funding (I.E Welfare, Social Security) I of course believe this lead to a dependency on our government to be this brilliant knight that comes in on a white stallion with bags of money to save us all. Which this only creates corruption, mediocrity, and stagflation. The principle of Keynesian economics is to control unemployment, to which they seek full employment; this of course leads to government regulation of industry and price floors/ceilings.
Now we do get high rates of employment I think we've had the highest employment rate in the last decade or so, the problem is this causes inflation. We therefore have too much money in circulation so the price of goods go up, this of course wouldn't be a problem if the supply of money slightly changed every year or so to increase with the inflation. That would be more of a Monetarists point of view to control our currency flow and letting the economy "fix" itself as the invisible hand would take over.
So Keynesian is sounding great right? Everyone has a job, the government is their to make a safety net for you when your down on your luck right? Now I point back at inflation, there is a theory set by Economist Milton Friedman, this of course is called the "Neutrality of money" the system works best when currency in circulation negates the effects of inflation. However, this doesn't work under Keynesian economics, because we are regulated so is our currency to what the employed get paid. this is of course your minimum wage.
The minimum wage however stays the same Congress hasn't changed it in quite sometime, the problem is set prices and price floors/ceilings rarely change with inflation. So if that food your wanting to buy increases in price let's say by 20% due to a supply shortage, you are not going to make any more money based on your wage laws. You'll still make that $5.15 an hour as prices climb, this leads to the recession going deeper and deeper... Now the government steps in with it's bags of money and hands it out in the form of socialized incomes (welfare primarily) "Cool now I can afford the food" Good for you except you'll suckle off the government until it runs dry so to speak.
So of course the only way for the government to get these funds is by a progressive tax, which is based on your income. The top portion of society pays a HUGE amount in taxes but all the programs go to help the bottom of the socio-economic spectrum. The higher part sees no benefits in its heavy taxes. This of course is wrong, the government should not play favorites with people in a country that we are all deemed equal. We could easily fix these systems the problem is we've had them so long that a good portion of our society is "addicted" to these social programs, therefore would be infuriated if we cut the proverbial "Umbilical Cord"
So why not a flat tax? Why not lower taxes for everyone and a deregulation of government influence in our economy? I'll tell you why it's because we've dug ourselves in a hole, we've become so needy of the government's influence we cannot think of what we'd do without them. Now without the minimum wage we'd get more employment, and wages would more than likely change with inflation. Prices would drop as the de-regulation would take away many taxes on goods and services increasing business profits which increase productivity...
What the Keynesians fear is of course another 1929 there is a way to prevent that without socializing everything and that is called "security" we should have currency to pump into the market as needed and retract as needed. The reason the stock market failed is because a failure of supply and corruption. Because of political corruption and peoples hands into the pockets of business the market wasn't free but held captive by illegal contracts between politicians and the corporate owners.
Laissez-Faire works great as long as we prevent the government’s corruption...
The worst out of all these groups has to be the Keynesians, they preach that their system of economics is the best implemented so far, based on historical evidence such as the socialization and the government's role in the allocation of funding (I.E Welfare, Social Security) I of course believe this lead to a dependency on our government to be this brilliant knight that comes in on a white stallion with bags of money to save us all. Which this only creates corruption, mediocrity, and stagflation. The principle of Keynesian economics is to control unemployment, to which they seek full employment; this of course leads to government regulation of industry and price floors/ceilings.
Now we do get high rates of employment I think we've had the highest employment rate in the last decade or so, the problem is this causes inflation. We therefore have too much money in circulation so the price of goods go up, this of course wouldn't be a problem if the supply of money slightly changed every year or so to increase with the inflation. That would be more of a Monetarists point of view to control our currency flow and letting the economy "fix" itself as the invisible hand would take over.
So Keynesian is sounding great right? Everyone has a job, the government is their to make a safety net for you when your down on your luck right? Now I point back at inflation, there is a theory set by Economist Milton Friedman, this of course is called the "Neutrality of money" the system works best when currency in circulation negates the effects of inflation. However, this doesn't work under Keynesian economics, because we are regulated so is our currency to what the employed get paid. this is of course your minimum wage.
The minimum wage however stays the same Congress hasn't changed it in quite sometime, the problem is set prices and price floors/ceilings rarely change with inflation. So if that food your wanting to buy increases in price let's say by 20% due to a supply shortage, you are not going to make any more money based on your wage laws. You'll still make that $5.15 an hour as prices climb, this leads to the recession going deeper and deeper... Now the government steps in with it's bags of money and hands it out in the form of socialized incomes (welfare primarily) "Cool now I can afford the food" Good for you except you'll suckle off the government until it runs dry so to speak.
So of course the only way for the government to get these funds is by a progressive tax, which is based on your income. The top portion of society pays a HUGE amount in taxes but all the programs go to help the bottom of the socio-economic spectrum. The higher part sees no benefits in its heavy taxes. This of course is wrong, the government should not play favorites with people in a country that we are all deemed equal. We could easily fix these systems the problem is we've had them so long that a good portion of our society is "addicted" to these social programs, therefore would be infuriated if we cut the proverbial "Umbilical Cord"
So why not a flat tax? Why not lower taxes for everyone and a deregulation of government influence in our economy? I'll tell you why it's because we've dug ourselves in a hole, we've become so needy of the government's influence we cannot think of what we'd do without them. Now without the minimum wage we'd get more employment, and wages would more than likely change with inflation. Prices would drop as the de-regulation would take away many taxes on goods and services increasing business profits which increase productivity...
What the Keynesians fear is of course another 1929 there is a way to prevent that without socializing everything and that is called "security" we should have currency to pump into the market as needed and retract as needed. The reason the stock market failed is because a failure of supply and corruption. Because of political corruption and peoples hands into the pockets of business the market wasn't free but held captive by illegal contracts between politicians and the corporate owners.
Laissez-Faire works great as long as we prevent the government’s corruption...
posted by James Nease at 8:07 PM
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