Monetarism and Keynesianism: Identical Sides of the Same Adolescent Coin

[Abu-Salman]

Thomas Friedman, an Hungarian Jewish immigrant taught at Chicago and disciple of Keynes, was in charge of computing national accounts during the second World war (national accounts to keep track of national production or GDP was another key innovation of Keynes).

The war oversaw a dramatic increase of taxation (no significant, generalised income or overall taxation beforehand) such that budget increased faster than GDP growth leaving the State with huge spending power in the post-war period (The USA irony was that the country developed already before any real taxation or huge central spending):

 

 

"Ironic also is that these twin ideologies both put the cart before the horse. Keynesians believe government spending is the path to economic growth, as opposed to an effect of same. The U.S. isn’t a rich country today because our federal government spends gargantuan sums, rather the federal government can spend horrifying sums precisely because the U.S. is rich.

 

Monetarists believe growth of money in circulation is the path to nirvana, but since their ideology perverts money’s sole purpose as a stable measure of value, money in circulation never reaches pre-set ‘targets’ when this failed idea gains traction mainly because unstable money is an investor repellent, and consequently lays a wet blanket on the very production that drives the supply of money upward. The notion that the creation of paper is what would make us rich or boost the economy is the stuff of youthful fantasy, but for adults who believe that the Fed can create more Intels and IBMs through excessive purchase of Treasuries and mortgage securities, Monetarism presently seeks converts. Back to reality, stable money in terms of value is credible, and because it’s credible it’s widely demanded and circulated. Monetarists desire unstable money that floats in value, meaning money that lacks credibility and that isn’t highly demanded. In short, monetarism is its own worst enemy.

 

What’s perhaps most comical about these two Schools, and it speaks to just how similar they are, is that both sides think a lack of their economic poison is at the heart of our malaise. Readers are surely familiar with Paul Krugman’s frequent Keynesian droolings about how the U.S. economy suffers because the federal government hasn’t spent enough of our money. Monetarists claim much the same; their view that the economy hasn’t recovered because our central bank hasn’t printed enough of our money. How these two Schools are enemies is one of life’s major mysteries given how they both put demand on a pedestal above all else, and both are convinced economic rebirth is only a trillion dollars of spending or many more trillions of dollar printing away".

 

Monetarism and Keynesianism: Identical Sides of the Same Adolescent Coin

 

 

PS: Still believe the more spiritual and self-taught brilliant henry Georges, through his seminal work Progress and Poverty makes most sense as economist who proposes Land value taxation as the most efficient one (as far as we can consider economics, in particular microeconomics and analysis, as reliable).

Try Foundations of Economics, by Yanis Varoufakis for economics debunked as ideologies driven, self-serving theories.

Ironically, neither land as public property nor zero interest rates are recent propositions...

[DoctorKenney]

Keynesianism and Monetarism are such discredited ideologies today, its time people wake up and realize how much damage these economic ideologies have caused in the last century. I agree with a lot of what Milton Friedman had to say, but I completely disagree with him on some of his monaterist viewpoints.

 

The government should get out of the way when it comes to economic planning, and should allow the Private Sector to do what it does best; Maximize Production and hire people. Capitalism at its finest

[SomaliPhilosopher]

^doofar kapitaalist baad tahay

[DoctorKenney]

SomaliPhilosopher;954153 wrote:

^doofar kapitaalist baad tahay

Abahaa cuun warya

[DoctorKenney]

Oodweyne;954154 wrote:

Both of these school of political economy do not apply to a poverty-stricken Somali peninsula. But down the line if proper state emerge then that state will be better off in cleaving closely to the a modified version of Keynesian school of thought since this school at least acknowledge a place or a role for a state and its government for the economical management of society.

 

But still Somali peninsula of the present day really requires to make its various states strong enough for the long haul and leave the debate of this kind for the future leaders who will be at the helm with a solid government and it's institutions.

 

And on this point I think the absence of states in the last two decades or so may have already tip the scale into a libertarian view of society and that in turn may also have skewered any future state to be on the Monetarism school since pure market capitalism is what we have come to practice in the Somali peninsula since at least 1991.

 

All in all I would prefer for Somalis to view a larger role for the state in the affairs of managing their nomadic capitalism (since at least strong state will look after the week of the nation) but I fear the kind of Somali capitalism we will see going forward will be merciless capitalism that would even make Milton Freidman pause in wonder in what Somalis are incline to go for it.

Oodweyne, in order for a State to look after the weak and downtrodden, the State itself would have to be strong and prosperous. And the only way for the State to be prosperous would be too let Private Companies produce and create jobs, which would result in prosperity for all Somalis. So I agree that the current generation of Somali Politicians should focus on stabilizing the country and setting up the State..... And then let future politicians debate economics and other issues.

 

The State should play a minimal role in organizing the economy. Let the Somali Entrepreneurs take care of the rest

[DoctorKenney]

I totally disagree with you as history has shown that a large State apparatus has always resulted in corruption and reduced living standards. But yes....that is a fight and argument Somalis should be having in 10-20 years or so, Insha Allah.

 

Focus on the basics first