How to refute demand side Keynesian economics?

bah

bah

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How to refute keynesian demand side economics? The person gives this example. I have 10,000 dollars in capital, but I don't want to invest it in a grocery store, because there is no demand. The govt taxes me 2,000 dollars to give to the poor to create demand for groceries. Now I can invest 8,000 dollars in a grocery store... and it then cascades down into economic growth, where when I wasn't taxed the 2,000 dollars, there would've been a stagnant economy.
 
bah said:
How to refute keynesian demand side economics? The person gives this example. I have 10,000 dollars in capital, but I don't want to invest it in a grocery store, because there is no demand. The govt taxes me 2,000 dollars to give to the poor to create demand for groceries. Now I can invest 8,000 dollars in a grocery store... and it then cascades down into economic growth, where when I wasn't taxed the 2,000 dollars, there would've been a stagnant economy.
Click to expand...
THAT is Keynesian demand side economics?

And people buy that?
 
Ugg okay so the big problem is there there is no economic growth in this, there was $10k to begin with and there is $10k to end with (except in reality there will be lost value in the effort spend collecting and distributing the money to the poor people). Economic activity is not the same as growth, aslo this assumes that poor people have $0 and that they stand around and starve and die without the government. Man there are so many ways to pick this apart.
 
That only works if your choice is between investing in the grocery store, or stashing the money under a rock. In reality if you decided not to invest in the grocery store you would instead invest in something else. That investment would eventually lead to workers being hired, etc, thereby also leading to economic growth.
 
Keynesian economics is all about creating artificial demands, and all fake things eventually collapse under the weight of their own deception.

You can't pump money into things to give it the illusion it's valuable. Total bullshit.
 
how about lending your 2000 bucks to the poor ? after you have been so nice to drive the economy and create jobs they are sure happy as hell to pay you back the moderate interest you charged
 
This is a trick question. Keynesian economics is all about a trick question.

The assumption that your money/the economy is stagnant because a grocery store is not a positive investment at this time is false. You will invest your money in a field that IS profitable which would trickle down eventually to jobs for those prospective shoppers which translates to grocery money and hence a market for a new grocery store in the future.
 
bah said:
How to refute keynesian demand side economics? The person gives this example. I have 10,000 dollars in capital, but I don't want to invest it in a grocery store, because there is no demand. The govt taxes me 2,000 dollars to give to the poor to create demand for groceries. Now I can invest 8,000 dollars in a grocery store... and it then cascades down into economic growth, where when I wasn't taxed the 2,000 dollars, there would've been a stagnant economy.
Click to expand...

Uh invest your $10000 dollars in something else??? duh? The real world isn't "grocery store or nothing"
 
your example doesnt make any sense in a open economy ... .because ......there are more investment opportunities then just a grocery store...


the free market funnels capital into the highest yeilding returns... How can there not be demand for a grocery store??? how are people getting food? is it beacause everyone is a self relient farmer and fishermen?


why would you want to have a sunk cost of 20% to intially start a business by paying a user fee to the government? in your example the only possible return is to receive the 2000 back as revenue so your losing money by paying cost of goods and wages and property plant and equipment?
 
lots of ways..just explode your imagination on it.

Classic failure to invest in what was really needed. 10K can be invested in tons of other things besides grocery stores. The government created a false market. They will have to continue to prop it up.

Also the people probably would have bought brand name sneakers instead of saving for essentials. Why worry when the government will just dole out some more.
 
Last edited:
bah said:
How to refute keynesian demand side economics? The person gives this example. I have 10,000 dollars in capital, but I don't want to invest it in a grocery store, because there is no demand. The govt taxes me 2,000 dollars to give to the poor to create demand for groceries. Now I can invest 8,000 dollars in a grocery store... and it then cascades down into economic growth, where when I wasn't taxed the 2,000 dollars, there would've been a stagnant economy.
Click to expand...

Troll!

Your scenario is a total trick. You cant justify an $8000 grocery store investment with a $2000 tax payment given to your potential customers. You cant legislate prosperity.
 
To me, the Keynesians place too much emphasis on the Gov't Spending multiplier, ignoring the inflationary pressure. Increased aggregate demand leads to an increased price level and gov't spending does not necessarily get us to full employment. In this case the investment is probably not the most efficient use of resources. The USSR could never figure out how to properly allocate resources and set prices. I don't see why the west continues to believe they can attempt the same in even the most limited scenarios.
 
Show them the national debt and the plummeting dollar. Ask them if those two things seem good.
 
Well here is the reality of it. They take your $2000 to give it to the poor. They form a committee to study the impact of your $2000 on the poor. The Committee spends $100,000.000 on a study on how to best spend your $2000. Plans are formulated and new taxes are levied to cover the study. Just send in your other $8,000. enough said.
 
One of the many flaws in Keynesian economics is that the government (central planners) is smarter than the free market.

In the example you gave, if there's no demand for a grocery store, then in a free market, investment would be attracted elsewhere (perhaps fishing boats, along the lines of one of the earlier posts). The Keynesians point to the dead grocery store and cry foul. A free market investor would say "good riddance".

Another flaw in the argument is that economic growth could only happen by the government redistributing your capital -- which is total BS. It's really a form of socialism, if you think about it. Why should we believe that growth can only happen with government intervention?
 
i wrote a good article in the economics section that explains the differences between keynesian and classical economics if anyone is interesting but it is rather technical
 
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