I dunno Willy, I dunno

First, there should be recognition of the breathtaking success of the most aggressively Keynesian economic stance taken since the war and how the state has been forced to come to the aid of a feckless private sector in order to relieve the prospect of mass unemployment and business collapse.

I\’m not hugely convinced that there has been all that much of a Keynesian economic stance.

There\’s been a huge amount of what could be called monetarist interventions. Slashing interest rates (Hey, when the V changes in MV=PQ then boosting M to avoid declines in either P or Q sounds pretty monetarist to me), quantitative easing because we\’re up against the lower interest bound of zero. Calling these \”Keynesian\” isn\’t really correct.

The bailing out of the banks similarly isn\’t particularly Keynesian.

There\’s been a few bits and pieces of proper Keynesianism around, this is true, but the vast majority of activity hasn\’t been particularly so.

The private sector does not organise itself optimally in markets; it needs constant monitoring, regulating and stimulating.

Let us assume that this is true.

Yes, Britain entered the recession with borrowing that was too high. Brown had fallen for his own over-optimistic rhetoric.

Ah, but you see, the incentives that politicians face make them *even worse* than the market at that regulating and stimulating.

The architecture in which it operates, employs and innovates has to be consciously designed or it will be dysfunctional.

But who is to do the designing and what incentives do they face? Arguably, worse ones and thus the outcome will be worse.

The state is the system designer, collective investor and risk manager and taxation is its due deserts and enables it to discharge its function.

See above: Brown fucked up. Why is he either right now or why is, if one politician fucking up can cause these problems, politics the right way to solve these problems?

In the same way Keynesianism works at a high level, so it works at micro level.

Good grief, not even Keynes would have made that claim.

Yet the scientific and technological opportunities are growing exponentially. Labour has helped the scientific community so that we are only just behind our competitor nations in innovation.

1) Nations do not compete with each other economically. 2) You seem not to know what innovation is. Innovation is the use of the new technologies: invention is the creation of them*. Of the two, it is vastly more important that new technologies spread through the economy, thus increasing productivity, than it is who invented them.

For example, have we got more wealth from the use of mobile phones than Nokia has by making them? Quite, I rest my case.

What we should now be discussing as a country is how to build on this and develop it into a system fostering productive – rather than Arthur Daley-style – entrepreneurs.

Weasel words: until you define \”productive\” and \”Arthur Daley-style\” you are just saying \”those I approve of\” and \”those I don\’t approve of\”.

I am an Arthur Daley-style entrepreneur. I simply buy and sell stuff making my money by knowing where it is cheap and where it is valued more highly. The end result is that your halogen light bulbs are cheaper and that Airbus gets to experiment on making planes 10% lighter. Want to say that that is not \”productive\”?

The rest of it is just the usual Willy Hutton: do as I tell you you ignorant peasants.

* According to William Baumol, the scholar of such things.

4 comments on “I dunno Willy, I dunno

  1. This is how the bullshit works. First you say that the world economy was about to be destroyed, when in fact we were just facing a recession that the market would have been able to handle like any other (the main threat in fact was from what governments might do to make things worse). Then you say government saved the world when the market begins to pick up, even though more than likely it would have done so anyway (and done so faster without governments getting in the way).

  2. “First you say that the world economy was about to be destroyed, when in fact we were just facing a recession that the market would have been able to handle like any other”

    I don’t remember the banks closing in 1980 or 1992. Nor credit cards and cash machines closing down. If by “like any other” you mean the widespread banking failures in the 1930s in the USA then yeah, I suppose so.

  3. (1) All sorts of shit happened in those recessions, some of it worse than what happened recently, some of it not. (2) If you looked at the recent recession from an objective, long-term point of view you could see it was only a small downturn in an otherwise steady climb upwards (as I said, the real risk was that the cure would be worse than the disease). (3) The claim that some bank failures would mean the end of the world’s economy never had anything other than fevered speculation to back it up. (4) And why think the market can’t sort out some bank failures? Sure, there’s vast amounts of red tape in the banking sector which threatened to screw things up, but the market itself could cope. Look at how quickly financial markets can come together after wars or other (real) destruction, as long as they are not too bogged down in bureaucracy.

  4. How would Will Hutton fancy this Keynesian progamme -Trident replacement. This will inject £25 billion into the economy and create thousands of jobs – what’s not to like?

    The left will point out that the money spent on Trident is money not spent elsewhere (schools and hospitals, as they are never slow to claim). Also the jobs spent renewing Trident could be used doing any number of other things. Quite correct. The money and jobs are, I agree, the costs of the project, boosting the UK’s defence the benefit. I think this, the left’s pet hate, exposes the broken windows fallacy underlying Keynesian schemes.

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