Zeev's Turnips Patch-No Politics (ZEEV)

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Lee,

There is no such thing as collective income stream. You have your income stream, and I have my income stream; it is the difference between the two that decide who gets what first. That's the function of money: the tokens for a bidding process. To the extent that both us derive our incomes from offering someone else goods and services of value, it's fair competition. When the government gets into the game of printing up fiat money and giving it to people, what results is favoritism, cronyism and corruption. For example, if both of us were in the market for a house; if I get $1mil cash from the government, I can outbid you, I get my house and you are out bid and get nothing. To the extent that the recipients of that $1mil buy things that you want, you are out-bid over and over again subsequently. Now if the government comes to you later and collect tax from you to pay off that $1mil in the name of national debt, you are even worse off.

Now, another example from business production perspective: suppose you were a bread maker among 10 bread makers in a simple closed economy; the economy is down, people are buying less bread, the only solace is that the price of flour is down too because all 10 bread makers' turnover volume is down. Now suppose, the government steps in, and subsidizes one of the 10 bread makers to turn out a huge amount of cakes! Flour price will shoot up instantly, and make the lives of the remaining 9 bread makers all the more miserable! If the cakes then were given to people for free, the 9 bread makers may well find themselves entirely out of business. So you as one of the 9 would have to hire your own lobbist to get a slice of the subsidy, so money for the lobbying firm instead of your workers . . . Is cake making instead of bread making really the most efficient use of flour when people need food? The lobbyist is certainly producing less tangible value for the economy than a hired worker at your bakery would.

This little example explains why government subsidies typically can not go massively to industries that have private demand in the market place and people know the intimate details of how the industry should work in an efficient manor. Roads, bridges, Pyramids and the Great Wall are next up to be tried for government job creation. With today's construction technology heavily dependent on concrete cement, that means enormous amount of CO2 production; yes, the cement making industry produces more CO2 than all the cars of the world combined, that's before counting the heavy earth movers at both building sites and cement mines, plus all the transportation in between. CO2 critics won't even get to be the political force that stops such waste; the blatant cronyism and corruption when the third bridge is thrown over the same river within a few miles and when the Nth bridge to nowhere is built will eventually turn off the voters (or is that rile up So the Keynesian spending program will have to be aimed at the good old military industrial magic black box, where no one is the wiser, and where a toilet seat can cost $64k, and a GPS-guided artillery shell can run $150,000, for the purpose of killing a couple kids that would be making $2/day if hired in the local Afghan economy. Massive military buildup is usually followed by massive wars, as economic condition gets worse with this kind of resource misallocation.

No, Keynesiansm never worked. It did not work for Hitler (Autobahn), did not work for Hoover (Hoover Dam, not "FDR Dam"), and certainly did not work for FDR. Unemployment was in the mid to upper teens in the late 1930's, so that's obviously not recovery. The GDP number eventually went up because a battleship was counted the same as 1000 cars. The living standards plummetted in WWII despite the rise of GDP, as gasoline was rationed, no new car was available at all for nearly half a decade, and millions of moms had to go outside the home to work because their sons, brothers and husbands were shipped overseas to bleed and die on a different continent. The global GDP probably rose dramaticly as Stalingrad, Dresden, Berlin, Tokyo and Hiroshima were bombed into smithering, as all those bombs, aircrafts, fuel, and crews' wages were counted as GDP's, and so were the herculean rescue effort on the ground. Somehow I doubt anyone would suggest that's improvement of living standards.

Keynes wrote in the forward for the German version of his General Theory in the 1930's that a totalitarian regime would be able to implement his plan more easily than a liberal democratic government would be able to. That's about the only correct thing in that book. As you can see, Keynes was quite a servile creature as he was trying to sell his book in Nazi Germany.