In the other thread, Teachers and Pro-D, I feel I've proven the case for modern socialism and Keynesian economics (used to varying extents in virtually every first world country) as being on the whole beneficial in terms of average quality of life, economic and political freedom, so I'll avoid redundancy and restrict my arguments there. That said, I've _never_ seen or heard of Keynesian economics as being 'debunked' in any way.

With respect to the rich and their usage of money, the solution I feel is relatively simple. Stop giving them generous tax breaks for asset classes that have minimal positive social/economic impact, and enhance the tax breaks on venture capital/IPO investments. This will cause the money to move in droves to more productive uses.


That's overtly simplistic unfortunately, and the impact of a tax break on bank lending as it relates to increased savings is usually immaterial. This is because of how bank credit generation and leveraging works; any increase in savings due to a tax reduction (excepting an extreme tax reduction) by even the ultrarich ultimately amounts to being a drop in this bucket.

Most investment products the rich invest in simply do not expand the economy or the job base much at all.

This is like arguing that allowing federal funding for abortions means that people are going to use "free abortions" as some sort of birth control. Such an attitude is based in a fundamental disrespect for humanity.

Poor people are obese because many of them don't have proper grocery stores in their area, but they do have plenty of convenience stores that sell predominantly snack foods with little nutritional value and high amounts of fat and calories. A poor person trying to feed themself or a family can get enough food at McDonald's for less money than they can at the grocery store, but you can't live exclusively on McDonald's food without becoming unhealthy. Further, after most of a lifetime of eating this way, it takes substantial education and training on how to eat in a nutritional manner.

Jamie Oliver's Food Revolution show has segments where he goes into the household of an overworked parent to show the family how to shop for nutritional food and how to prepare it. There are many working class famliies where the parent kinda knows that pizza, McDonald's, and all of the quick frozen foods in the supermarket aren't the best thing for their kids, but they're too exhausted and overwhelmed to make a drastic change in their lives without the impetus of an intervention of some kind. That might be Jamie Oliver showing up, or it might be your second child being diagnosed with diabetes. These exhausted parents not only have to figure out how to find time and money to shop and cook, but they also have to deal with kids who are used to eating pizza and twinkies and aren't onboard with making a healthy change. Oftentimes, the acting-out behavior of the annoyed kids is a direct behavioral effect of a crappy diet for many years, so it's not as easy as just reasoning with the kid.

I was a guest instructor at a college in northwestern Pennsylvania where I was amazed at the relative poverty in the non-college community. The town had two concentric rings of fast-food restaurants; I'd never seen that much fast-food per capita in my life before. All of the ads on the radio for the supermarkets were for steep discounts on 'family-sized' bags of chips, frozen food, Pepsi, and other junk food. The non-nutritional food was discounted, while the produce and nutritional food wasn't. The message was that you should feed your family on potato chips, Tator Tots, and Diet Coke.

I was on an Indian Reservation last year and visited the grocery store for the reservation. It was a large store filled with sugar and junk food, and their produce section was a converted ice cream cooler. Most of the produce there was iceberg lettuce, baby carrots, and unappealingly old cucumbers and peppers, and it was surrounded by much better-looking non-nutritious food. Not only was the selection relatively tiny, it was wholly unappealing in its quality. It's no surprise that rates of diabetes on the reservation are staggering.

This isn't simply a willful lack of health, this is a lack of access to quality goods at an affordable price, and access has been so scarce for generations for the poor that there simply isn't a culture of healthy food preparation any longer. Many poor people don't know how to cook more than a plate of spaghetti or frozen dinner, and their store-bought ragu may very well be non-nutritious itself. When students are broke, the go-to thing used to be Top Ramen noodles, which have next to no nutritional content. It very rarely is rice and beans, homemade tortillas, and vegetables from the garden.

Going back to healthcare, a parent trying to deal with a kid with kidney failure isn't going to disrespect healthcare more because s/he doesn't have to pay for it. That parent will be grateful for having some means to protecting the child's life. You're making assertions from the point-of-view of a single male. I don't know if that's what you are, but poor people with families are just as concerned about the health and welfare of their children as any other families. They simply lack access to the means of ensuring that health and welfare.

This isn't job creation, though. Investment in property, art, and gold contribute to the economy only in tiny ways. Investment in financial portfolios enriches banking institutions and their workers, but contributes very little to the rest of society. In many cases, those investments aren't even taxed.

If the value to society of money sitting in the bank is that it's available for loans, then that money has no value to society at a time when banks aren't giving out loans. Even when loans are being made available, it's quite difficult for small businesses (the sector attributed with most actual job creation) to secure meaningful loans at affordable interest rates.

You disagree with the following statement?

I'd appreciate it if you took a moment to justify your definition of capitalism as "helping someone when you have the means because it's the right thing to do, and not helping those who are able, but simply refuse to help themselves" in your example of entering a burning building and dragging the injured man away from the fire out of "a sense of moral duty or charity". I cannot reconcile this depiction in any way with any definition of capitalism that I've previously been exposed to.

Thank you for that link, Solaris. It was very revealing, and I'd like to share the conclusions from that link:

Reading the fine print, though it is clear that while the super-rich aren't saving a lot of their income (which is derived from interest, dividends, arbitrage, and, if Mitt Romney is any guide, buying businesses and cannibalizing them), they aren't taking their assets and investing them in ways that are any more efficient or productive than the government would through Keynesian spending. Endowing the business school at Harvard to get a building named after you is not going to do as much for the economy as building a factory or investing in a start-up company or funding scholarships to a state university for children of families with modest means who would otherwise need loans.

Under the present economic conditions, the super-rich aren't investing their dollars in creating jobs. They might be lured into doing that if we increase consumer demand, so that they'll be able to sell the products they are creating. But most of them right now are sitting on most of their wealth, not risking it for a dubious return.

How do we create consumer demand? Put money in the pockets of ordinary consumers. Laying federal, state, and local government workers off, declaring bankruptcy to bust your unions and offload your contractual pension obligations (viz. American Airlines, which turned a substantial profit last year but is going into chapter 11), and cutting spending on government contracts are going to have a negative effect on consumer demand, because (a) some consumers are being pushed into financial crisis by these actions, and (b) other consumers are looking down the road and wondering if they are next on the chopping block, or wondering if they should be saving 20% of their income for retirement as a hedge against their pension fund being jerked out from under them.

Keynesian spending does have problematic aspects--it tends to be less efficient than private market-determined spending in allocating resources. But it does help to kick start the economy, especially if spent on things that build our infrastructure and human capital--roads, education, information technology, programs to help the poor and undereducated get their lives on a better track. Inefficient investment is usually better than no investment.

And we do have the unfortunate problem that we ran a huge budget deficit in good times under Reagan, Bush I, and Bush II, which meant it only took one hard shove (the 2008 crash) to push our debt close to 100% of GDP. This has Standard & Poor wondering whether our government will default on that debt. On the other hand, interest rates are way low right now, so the interest on that national debt is not as big a burden as it might be. We have less room for Keynesian spending than we otherwise might. But not engaging in Keynesian spending doesn't seem to be getting us out of the doldrums either. And having historically low tax-rates isn't inducing the wealthy to invest their money. They've already made their money--it's sitting in an offshore bank collecting 2-3% interest and not being taxed, and they don't see that they are going to make any more by investing, so they don't. Dropping the tax rate further won't induce them to if there is no demand for the goods they'd be producing.

No. I didn't think that statement was in regards to my example. I thought your were looking too deeply at the example and not at what the scenario was meant to convey. The function of government, in my opinion the only legitimate end of government, is to protect the citizen in the enjoyment of life, liberty, and property while recognizing that all people are born free and independent, and are governed by their consent by a system with limited authority. If it's possible for a service to be provided at a profit, then it should be subject to the free market and not provided by a central authority. If it's not profitable, and yet the service is considered necessary, then it should be provided by the government as efficiently as possible until such time that technology has advanced to the point that private companies can enter the market. Going back to healthcare, we have a system that is nominally in the private sector. I say nominally, because the government has meddled and tinkered with it since its inception, and now they are trying once again, and again inefficiently, to meddle with it further. How does that benefit anyone?


If I choose to help someone, it's because I choose to and not because I'm forced to by the government. Capitalism, and the whole idea of a free market, is about spending scarce resources in the way one chooses because it provides them with the most utility. Capitalism allows me to help who I want for my own reasons, which generally leads to charities who focus on those who cannot help themselves, while Socialism Liberalism forces me to spend my resources trying to help everyone. Again, it wasn't meant to be a perfect example. I don't know why you're so hung up on the minutiae.

Probably because it paints capitalism as altruistic and socialism as an impossibility.

Here, I'll rebut Keynesian economics for you right now:

If the government has been "priming the pump" for the last ten years with the War on Emotion, then why did we have the "Great Recession"? Because the massive amount of government spending masked the mal-investments that were made in the housing and financial sectors, and caused us to believe that our economy was in better shape then it really was. The lack of true savings, coupled with the widespread (and still under reported) inflation, caused the latest Keynesian-fed bubble to burst. Now the government is pouring more money down the hole to try to artificially prop up the value of assets that would otherwise correct to their true values.

Again, tell me how we could have a recession when the Keynesian solution to recessions is something we were already doing, years before we had the recession.

Bah. I could easily come up with situations where capitalism is heartless and socialism liberalism is cute and fuzzy, but that's not my job. I'm not arguing in favor of socialism liberalism.

Keynesian economics talks about stock piling resources during the good times to spend during the bad times to boost the economy.

What stock-piles did we have before the recession?

200 dollars a month is nearly as high as my rent, I can't afford another 200 dollars a month on top of everything else I have to pay for. It isn't selfish at all, I simply don't have it, like millions of other people in the country.