PDA

View Full Version : Why do conservatives employ Keynesian thinking when discussing outsourcing and automation?




Boshembechle
04-17-2014, 10:46 PM
For both the automation and importing debates, free-marketers deny that jobs are lost, for people will pay less for products, thus being able to use their money elsewhere. But is this not Keynesian thinking, i.e. that money in the hands of consumers creates jobs? If a consumer who buys an imported good saves money because the domestic good is more expensive, then helps employment for using that saved money elsewhere, why wouldn't just giving him a lump sum also help employment? The idea is the same. More money in the hands of consumers creates jobs. Henry Hazlitt talks about this in his book "economics in one lesson".

Ecolibertarian
04-17-2014, 11:11 PM
Hmm. Maybe to win over Keynesians?

Boshembechle
04-17-2014, 11:39 PM
Hmm. Maybe to win over Keynesians?Keynesians do not oppose automation or imports.

Ecolibertarian
04-17-2014, 11:41 PM
Keynesians do not oppose automation or imports.

Yeah, sorry, I think I misunderstood the original post.

Ronin Truth
04-17-2014, 11:59 PM
Government school brainwashing runs deeper in some than in others. Maybe that's partly why they are conservatives.

Acala
04-18-2014, 08:55 AM
For both the automation and importing debates, free-marketers deny that jobs are lost, for people will pay less for products, thus being able to use their money elsewhere. But is this not Keynesian thinking, i.e. that money in the hands of consumers creates jobs? If a consumer who buys an imported good saves money because the domestic good is more expensive, then helps employment for using that saved money elsewhere, why wouldn't just giving him a lump sum also help employment? The idea is the same. More money in the hands of consumers creates jobs. Henry Hazlitt talks about this in his book "economics in one lesson".

I doubt that you are really interested, but in case you are, if you want to see through economic fallacies, you need to ask where the money comes from.

Automation increases wealth because it increases production.

I am less sanguine about moving production offshore than some. While moving production off shore is a market response, it is largely a market response to government creating burdens on domestic business and to government monetary shenanigans that help create wage disparity across the globe. If we had a truly free market, open trade, and sound money there would be much less movement of production offshore because there would be no advantage in it.

thoughtomator
04-18-2014, 09:03 AM
Why do conservatives employ Keynesian thinking when discussing outsourcing and automation?

"Conservatives" don't.

Why are we getting a sudden influx of trolls?

Occam's Banana
04-18-2014, 10:42 AM
For both the automation and importing debates, free-marketers deny that jobs are lost, [...]

No they don't. I don't recall ever hearing a "free-marketer" deny this. If there are any such, they are very much in the minority and not in the least representative. What I have heard is "free-marketers" acknowledging that jobs will be lost in some sectors due to automation and cheap imports - thus making more labor available for productive endeavors in other sectors.


[...] for people will pay less for products, thus being able to use their money elsewhere. But is this not Keynesian thinking, i.e. that money in the hands of consumers creates jobs?

No, it is not Keynesian. The argument is NOT just that cheap products will result in more people having more money to spend (though that is in part the case). It doesn't do any good to have more money to spend if you don't have other things to spend it on (and a person only needs or wants so many widgets). The way to get other things to spend it on is to have people employed in the production of those other things. But that is less likely to happen if some sectors are being "protected" from things like automation and imports - and thereby reducing the pool of labor available for other productive endeavors.

And of course, there is also the fact that "spending" is NOT the only thing one can or should do with one's money. One should be able to save it, as well. Savings are the "seed stock" for any healthy economy. The foolish notion that "spending" is the be-all-end-all engine of a healthy economy is the hallmark of "Keynesian thinking."


If a consumer who buys an imported good saves money because the domestic good is more expensive, then helps employment for using that saved money elsewhere, why wouldn't just giving him a lump sum also help employment? The idea is the same. More money in the hands of consumers creates jobs. Henry Hazlitt talks about this in his book "economics in one lesson".

Just giving someone a "lump sum" does not magically or automatically conjure up the employees needed to produce the particular other things that people might buy with the extra money they have been given (see above). Economies have a much deeper structure of production (and consumption, for that matter) than the absurd Keynesian "aggregates" are capable of representing.

Production is the source of all wealth - NOT consumption (or "spending").

Boshembechle
04-18-2014, 12:14 PM
After the machine has produced economies sufficient to offset its cost, the clothing manufacturer has more profits than before. (We shall assume that he merely sells his coats for the same price as his competitors, and makes no effort to undersell them.) At this point, it may seem, labor has suffered a net loss of employment, while it is only the manufacturer, the capi*talist, who has gained. But it is precisely out of these extra profits that the subsequent social gains must come. The manufacturer must use these extra profits in at least one of three ways, and possi*bly he will use part of them in all three: (1) he will use the extra profits to expand his operations by buying more machines to make more coats; or (2) he will invest the extra profits in some other in*dustry; or (3) he will spend the extra profits on increasing his own consumption. Whichever of these three courses he takes, he will in*crease employment.Pay particularly close attention to point 3. That is Keynesian thinking. That consumption creates employment.

jkr
04-18-2014, 12:20 PM
hmmm no mention of savings there...

Boshembechle
04-18-2014, 12:55 PM
hmmm no mention of savings there...He mentions both savings and consumption. But each of his three points is independent of one the others.

acptulsa
04-18-2014, 01:04 PM
Now tell us how Henry Hazlitt now constitutes all free market advocates. Also tell us how you managed to label one man 'conservatives' in the thread title.

Please.

Occam's Banana
04-18-2014, 01:42 PM
The manufacturer must use these extra profits in at least one of three ways, and possi*bly he will use part of them in all three: (1) he will use the extra profits to expand his operations by buying more machines to make more coats; or (2) he will invest the extra profits in some other in*dustry; or (3) he will spend the extra profits on increasing his own consumption. Whichever of these three courses he takes, he will in*crease employment.

Pay particularly close attention to point 3. That is Keynesian thinking. That consumption creates employment.

"Pay particularly close attention to point 2. That is NOT Keynesian thinking. That savings & investment creates employment."

See? I can do that, too. Here's another example: "On the micro level, Keynesians recognize and acknowledge the phenomenon of marginal utility. Therefore, anyone who accepts the principle of marginal utility is engaging in 'Keynesian thinking'." <--- This is bullshit.

Keynesianism (or "Keynesian thinking") is an elaborate system that involves FAR more than merely believing that "consumption can create employment." Thus, the mere fact that Hazlitt identifies increases in consumption as just one thing out of several that can lead to increases in employment does NOT make his thinking "Keynesian."

Boshembechle
04-18-2014, 03:13 PM
If consumption is one thing out of many that increases employment, why is giving people money to spend a bad thing, assuming it is not done through taxation?

Acala
04-18-2014, 04:42 PM
If consumption is one thing out of many that increases employment, why is giving people money to spend a bad thing, assuming it is not done through taxation?

Money comes from somewhere. Either it is taken out of the hands of people now, borrowed against future generations, or stolen through dilution of the money supply. Government cannot create wealth, it can only steal it, transfer it, or destroy it.

Occam's Banana
04-18-2014, 06:09 PM
If consumption is one thing out of many that increases employment, why is giving people money to spend a bad thing, assuming it is not done through taxation?

What Acala said.

And furthermore, if the object is to "increase employment" - or to do anything else, for that matter - by taking money away from person A (whether by taxation or any other means) and giving it to person B so that person B can then spend it, then this is utterly pointless. Exactly the same thing could be accomplished by simply allowing person A to spend the money to start with. Taking it away from A and giving it to B is entirely unnecessary and superfluous.

And even setting all that aside, who said that people having more money to spend (wherever it comes from) is a "bad thing" in and of itself? What "anti-Keynesians" such as Hazlitt and other Austrians say is that "people having more money to spend" is NOT the source of wealth or the engine of economic prosperity. But that is NOT the same thing as saying that "people having more money to spend" is a "bad thing."

In addition, the presupposition of "consumption being one thing out of many that increases employment" must be understood in the larger context of Hazlitt's argument. Specifically, make note of the following (emphasis added):

After the machine has produced economies sufficient to offset its cost, the clothing manufacturer has more profits than before. [...] At this point, it may seem, labor has suffered a net loss of employment [...]. The manufacturer must use these extra profits in at least one of three ways, [one of which may be that] he will spend the extra profits on increasing his own consumption [which] will increase employment.

You can't just pick out Hazlitt's comment about the clothing manufacturer "increasing employment" by spending his extra profits and treat it in isolation (as if those extra profits were money that was "given" to him - or that just popped into existence out of nowhere). He acquired those extra profits (and subsequently maybe increased employment by spending them) ONLY because he had previously reduced employment when he automated his clothing manufactury. You can't get something for nothing, and you can't get a healthy, robust economy by just "giving" people money to spend. It has to come from somewhere (and in the case of Hazlitt's illustration, it comes from the savings the clothing manufacturer realized when automation allowed him to reduce the number of his employees). This is a crucial distinction that "Keynesian thinking" glosses over or ignores altogether.

(Hazlitt, BTW, wrote a line-by-line refutation of Keynes' The General Theory of Employment, Interest and Money (http://mises.org/document/3655/Failure-of-the-New-Economics). So much for the notion that Hazlitt might be a "Keynesian thinker" ...)

Natural Citizen
04-18-2014, 06:23 PM
Keynesianism is just mercantilism with some equations tossed in. And mercantilism is dominant today, much like it was in the past, but just functions under the radar. Fair trade, I think they call it....

It's an interesting topic when discussed in the correct context with today's economic model and the rampant corporatism/corruption that exists/functions within our political process for representation.

CaptUSA
04-18-2014, 07:09 PM
Are we back to the mattress/bank question???

You act like "giving" people money doesn't mean you take it from somewhere else. Even if it were possible to make each millionaire give a bunch of poor people 1/2 of his money, he'd first have to withdraw it from his investments. You know, like the investments that were keeping the businesses that had jobs for those poor people afloat.

Remove you head from your nether regions and think things through, for crying out loud. The only ones who benefit from your line of reasoning are politicians and their cronies.

oyarde
04-18-2014, 07:57 PM
"Conservatives" don't.

Why are we getting a sudden influx of trolls?
They could be sent to the Religion sub forum to be eaten alive.

Occam's Banana
04-18-2014, 08:06 PM
They could be sent to the Religion sub forum to be eaten alive.

Great idea! Sort of like throwing Christians to the lions ... only the other way around ...

oyarde
04-18-2014, 08:11 PM
Great idea! Sort of like throwing Christians to the lions ... only the other way around ...
Yes , I like it .