My Keynesian Poli. Sci. Teacher Claiming that We (and Dr. Paul) are Empirically Irrational

[Salvial]

I had an exchange with my poli sci teacher last week after he cited WW2 as the only reason the Great Depression was ended.

I pointed out that the economy didn't see real growth till '47 AFTER tax reductions and soldiers coming home & spending.

He then said, "Oh I know about you people, the monetarist, Ron Paul types." He went on to say that people like us have been warning of hyperinflation occuring in 2006 and that we were wrong about that. I pointed out that that's one prediction and that he was shooting the messenger. Then he went on to make the claim that he's heard all this before and that there's no empirical evidence to support my position.

At the end of the class he mentioned that he was just trying to present both viewpoints and be non-biased.

These are the figures I need some help debunking... he gave us this definition:

Income Inequality: Share of the national income going to the 0.01%

and examined how since the neo-liberal revolution it has risen dramatically.
I am always quick to point out that the neo-liberal "revolution" was a sham and that fiat central banking has distorted the free market. He claims these figures prove Keynesian benevolence:

"Income Inequality"

USA:
1928: 5.02%
1975: 0.85%
2008: 5.03%

Sweden:
1916: 5.15%
1935: 0.24%
2008: 1.2%

What other points can I make to debunk his "proof"? Thanks!

[Salvial]

Also, any empirical evidence of Austrian economics supporting the middle class would be great, I'm citing some of Ron Paul's books in class tomorrow.

[Cutlerzzz]

"Oh I know about you people, the monetarist, Ron Paul types."

If he thinks Ron Paul is a monetarist, he needs to resign.

Income inequality is irrelevant, as there is no fixed amount of national income.

Show this graph, which displays the percentage of taxes paid by the top 1%.

http://www.heritage.org/budgetchartb...income-earners

The top 1% now pay 40% of all income taxes, before Reagan took office that number was 18%.

Show him that both Federal and composition government (federal, state, and local) taxes are all higher in gross terms now than they were at any point before the 1980s.

http://www.usgovernmentrevenue.com/revenue_history

Spending at all time highs.

http://www.usgovernmentspending.com/spending_brief.php


I would ask him what these Neo-Liberal policies are. Taxes are higher and more progressive, spending is higher, there are more regulation, and the dollar is no longer tier to Gold. Every time there is a crisis, the Fed intervenes while the government generally launches its own fiscal stimulus. I would say that the Keynesians have been getting their way the whole time.

[AuH20]

He's comparing a country of 9 million citizens with lesser wealth opportunities to a mega-nation 30 times Sweden's size in terms of population?

[Travlyr]

Your teacher is distorting the truth or he/she does not understand the truth. Since the Federal Reserve Act of 1913, the economy has been managed (mismanaged) by central planners. Sometimes they have done a better job of letting people prosper than other times.

They accomplish that task by debasing currency which means that when they "create" money they are not really creating money ... they are stealing it. For fundamental understanding read "The Mystery of Banking" by Murray Rothbard. Then explain to your teacher that economies do not need to be controlled. An honest economy simply happens when people trade with each other without cheating each other.

[low preference guy]

He then said, "Oh I know about you people, the monetarist, Ron Paul types."

your professor is clueless. i wouldn't even talk to someone so ignorant.

[brushfire]

[Salvial]

I kinda fibbed - it's not the actual professor, who I've had much more casual and fair conversations with about central banking.

The guy in this story is actually the Teacher's Assistant who teaches smaller groups after the main lecture.

I was going to raise a lot of the points you all are raising, but he ended class 10 minutes early rather than calling on me.

The main professor has done this a couple times too!

[heavenlyboy34]

Your prof is using these numbers as "proof"? He comparing apples and oranges here. He also doesn't take into account numerous important factors...does he know that the Swedish currency is only worth $0.15104? As bad as things are here, that is pretty $#@!in pathetic.

[Cutlerzzz]

I wonder what he would say if you told him that Sweden's economy is about as free as America's.

[XNavyNuke]

Apples & Turnips comparison. Economic controls, private property rights, and banking policies in the 20th century are completely different between the U.S. and Sweden. I suggest you take a look at Ulf Jakobsson's paper on the Swedish model of corporate ownership.

XNN

[HOLLYWOOD]

Central government Economic planning and controlling with conspiring banks and corporations is: FASCISM.

It started in 1913 and the government/bankers have planned on stealing the private sector's wealth ever since in inflation and borrowing of the debt based system that has imploded upon itself.

[Travlyr]

Central government Economic planning and controlling with conspiring banks and corporations is: FASCISM.

It started in 1913 and the government/bankers have planned on stealing the private sector's wealth ever since in inflation and borrowing of the debt based system that has imploded upon itself.

And they are now reaping the rewards of their efforts through massive foreclosures (even without proving promissory note ownership) and tax lien sales.

Wall Street Finds Lucrative Market In Tax Liens

[Simple]

You could win the battle and lose the war. If its a tenured professor, you might as well just keep your head down and talk to people who will listen. Choose your battles. I've seen libertarians in similar classes asked to drop subsequent classes because of their 'disruptive' challenges to the curriculum.

[Bordillo]

the great depression ended because FDR died

[zadrock]

I think the important thing is to have these discussions during class time, rather than one on one. You probably won't convert him, but you might convert some of your classmates who listen to the discussion.

Regarding WW2 and the Great Depression, ask him why the Depression didn't return after the war ended. Keynesian economists predicted exactly that at the time because spending was slashed in 1946, yet that was the greatest year (economically) in our history. Have you read the paper by Robert Higgs that discusses this?

Regarding predictions of hyperinflation, I think most of those have been coming from folks who have an incomplete understanding of Austrian Economics. First of all, it is impossible to predict a specific time frame when we are dealing with human action. Hyperinflation feeds on itself. Yes, the Fed has set the stage for hyperinflation because they tripled the monetary base since the Aug 2008. But prices won't rise until that money makes its way into the money supply - it hasn't done that until recently. Basically, the banks just parked all the excess money at the Fed where it earned .25% interest (above market rates!). But now money supply is growing at about a 15% annualized rate and it's been doing that for several weeks now. I don't know whether hyperinflation is coming, but surely significant inflation is. And the more people expect inflation, the more they wind up causing higher prices, as the best way to protect yourself is to trade your depreciating dollars for assets of value. This increases the velocity of money, which will push prices up, and cause more people to fear inflation, etc. Self-fulfilling prophecy here...

The point is, many people jumped the gun on predicting inflation or hyperinflation. This doesn't discredit AE. It just means people who purport to represent AE need to be more careful in their analysis.

[The Bavarian]

Your teachers assistant is empirically full of $#@!.

[vita3]

It's worth getting an older FORTUNE magazine from that time period, to realize how large the military buildup was. The US was supplying Germany many products throughout 30's.

Pretending the war & it's buildup had NO effect on the recovery of America, is insane.

[fatjohn]

What is the function of an economy? To produce as many things as possible or to produce the right things?
The economy did produce a lot of things like bombs and weapons which resulted in a high gdp, something all economist love to use to define depression.
However, from an American viewpoint the economy wasn't even strong enough to provide food. The depression was still going strong, people just stopped bitching about it because at least they weren't under nazi rule.