Tuesday, March 24, 2015

Robert Skidelsky — Messed-Up Macro

Economics is a science? Really?

Model, model, who's got the (right) model?

Project Syndicate
Messed-Up Macro
Robert Skidelsky, Professor Emeritus of Political Economy at Warwick University and a fellow of the British Academy in history and economics, is a member of the British House of Lords
ht Brad DeLong


NeilW said...

Skidelsky needs to read more Kalecki and less Keynes.

The failure of Keynesian policy last time was to rely too much upon pandering to 'business confidence'.

Government is not just in the business of creating demand. It has to be in the business of creating supply as well.

Hence the Job Guarantee and a properly funded education and basic research infrastructure.

Plus being pro-market, rather than pro-business.

Unknown said...

This was a really messed up article. I thought Skidelski was more in paradigm then this as a Post-Keynesian. I mean come on, with mainstream lines like this one:

"Should governments deliberately expand their deficits to offset the fall in household and investment demand? Or should they try to cut public spending in order to free up money for private spending?"

This is not a legitimate question for debate as there can be no such thing as deficit spending crowding out private sector spending. How can you not understand basic accounting. Deficits clearly and unambiguously add dollar assets to the non-Govt, that this is how it works is not some economists "opinion" its a hard boundary condition that is always satisfied. And if deficits add to Non-Govt $'s, then obviously they cant crowd out non-govt spending. So this question is illegitimate, its a logical fallacy.

Or this garbage about ricardian equivalence:

" The Keynesian remedy, the argument went, ignored the effect of fiscal policy on expectations. If public opinion believed that cutting the deficit was the right thing to do, then allowing the deficit to grow would annul any of its hoped-for stimulatory effect. Expecting that taxes would have to rise to “pay for” the extra spending, households and companies would increase their saving."

Again, this is simply junk. Ricardian equivalence has never held or been observed, EVER!!! Nobody has produced any research that demonstrates that when people receive extra money from the Govt for free (deficits) then they wont spend any of it. In other words, the fiscal multiplier has never been zero and can never be zero. Even tax cuts for millionaires has a positive multiplier.

Which brings us right to the next pile of shit:

"Fearing sovereign defaults, bond markets would charge governments punitive interest rates on their borrowing."

How is this something that is debatable? There can be no such thing as a sovereign default, bond markets do not dictate terms to sovereign govts. Doesnt he even understand how monopolies work?

This piece is an embarrassment. If a leading post-keynesian can pen something this wrong and this awful, then we are even worse off then I thought.