NancyLebovitz comments on Open Thread June 2010, Part 3 - Less Wrong

6 Post author: Kevin 14 June 2010 06:14AM

You are viewing a comment permalink. View the original post to see all comments and the full post content.

Comments (606)

You are viewing a single comment's thread. Show more comments above.

Comment author: James_K 16 June 2010 05:28:40AM *  5 points [-]

I don't understand where you acquired this view of economists. I am an economist and I assure you economists don't ascribe to the "measured GDP is everything" view you attribute to them.

This absurdity reveals itself when you see economists scratching their heads, thinking how we can get people to spend more than they want to, in order to help the economy. Unpack those terms: they want people to hurt themselves, in order to hurt less.

This is not an accurate portrayal of what Keynesians believe. The Keynesian theory of depressions and recessions is that excessive pessimism leads people to avoid investing or starting businesses, which lowers economic activity further, which promotes more pessimism, and so on.

The goal of stimulus is effectively to trick people into thinking the economy is better than it is, which then becomes a self-fulfilling prophesy; low quality spending by government drives high quality spending by the private sector.

If you wish to be sceptical of this story (I'm fairly dubious about it myself), then fine, but Keynesians aren't arguing what you think they're arguing.

Comment author: NancyLebovitz 16 June 2010 08:56:29AM 1 point [-]

I've heard that the trick works less well each time it's used (perhaps within a limited time period). Is this plausible?