Greetings all,
I'm no scholar, but a few logical errors jumped out at me in this.
> Are recessions the inevitable payback for good times?
It is rarely possible to state with confidence that a complex state of
affairs is a necessary and sufficient cause for another complex state of
affairs. Also, the definition of "good times" is quite subjective. If he
means: are business cycles inevitable? - then one could answer "not
necessarily". There are possible system scenarios which could lead to a
long, flat, steady state economic period.
> Here's the problem: As a matter of simple arithmetic, total
> spending in the economy is necessarily equal to total income (every
> sale is also a purchase, and vice versa).
What about savings when that occurs? Then income exceeds spending. The zero
sum currency mkts are where sales equal purchases; when goods and services
are involved, IOUs (credit) can permit total purchases to exceed total
income.
> The Great Depression happened largely
> because policy-makers imagined that
> austerity was the way to fight a recession; the not-so-great
> depression that has enveloped much of Asia has been worsened by
> thesame instinct.
Maybe. Causation in human affairs is far too complex to say with any degree
of certainty. Perhaps the herd has outgrown the habitat, and outsourcing
via globalization has exceeded some natural limit(even if temporary and not
absolute).
> Keynes had it right: Often, if not always, "it is ideas,
> not vested interests, that are dangerous for good or evil."
So, normative economics is the thing to do; Sen just got a Nobel for his
work in that arena.
> How many articles have you read blaming Japan's current
> malaise on the excesses of the "bubble economy" of the 1980s--even
> though that bubble burst almost a decade ago?
Time between cause/effect doesn't necessarily negate the relationship. Some
cycles last far longer than ten years (Kondrateif sp?). The farther out of
line the valuations were, (high end Real Estate, golf course memberships,
US$75 canteloupes) the longer it can take for readjustment if the gov't
avoids a crash/implosion. I heard on Nat'l Public Radio just yesterday that
special beef is being cloned in Japan for the perfect marbled appearance
and tender, rich taste - cost for a steak in a restaurant: US$350. The
bubble may have developed a hole in it, but it hasn't yet fully collapsed.
Just check current relative prices for food, shelter, clothing,
entertainment...
It is my experience that political economists spin like journalists.
Usually I am politely thanked for my comments (not rebutted), and the
ideology continues unaltered by reason.
Steve
