Wednesday, July 20, 2011

No answer, time for a brief answer, and no time to read just yet

- Ryan Murphy has a question about Keynesianism that I have no answer to. Do readers have any thoughts on this?

- Tyler Cowen speculates on alien economics. I do have thoughts on this but don't have time to answer in too much detail here. In brief, I have a hard time imagining that technologically advanced and intelligent aliens wouldn't develop market economies of some sort, so long as their intelligences are distinct. If there's some kind of mind-meld going on, perhaps the price mechanism would be superfluous. We're at an unusual inflection point in human history - as we get more technologically advanced, I generally disagree with Keynes that we'll somehow sit around and enjoy leisure. Ideally inter-planetary and inter-stellar investment opportunities will emerge and we'll continue to invest. If that doesn't pan out, it seems to me human leisure has a tendency to be heavy on consumption. So regardless on the route we take, I don't think we're likely to sit around and enjoy leisure (which might result in the emergence of socialism - what's the use of a market if you satiate needs?). What do you all think?

- Bob Murphy comes back from the Keynesian brink with his silly liquidity preference talk and writes this. I haven't had the time to sit down and give it my complete attention. Have you? What do you think?


  1. On Bob Murphy: If it's true that labor markets are generally mobile and free (and that unemployment can be naturally cured by competitive forces pushing wages low), then I fail to see where Keynes can be implemented. Again, if the above is true, then it seems that the only impediment to full employment is not a snag in the MEC/effective demand schedules, but government and union impediments to labor mobility.

    If the labor market does not clear as the orthodox economists explain (and this would be strange because the markets for ALL commodities behave this way), then perhaps Keynes can enlighten us on the reason and potential solution.

    In any case, Keynes should have spent more time on that point than he did.

  2. On Bob Murphy, my instinct is to say 6 and *possibly* 2. However, 2 doesn't seem right: the Old Keynesian position was inflation was solely a function of employment, so it wouldn't make sense to say that inflation will do what it's going to do and fiscal policy will only affect employment. (I do think that the supposed quotation in question may have been Joan Robinson hitting on an early iteration of the rational expectations story of inflation that we associate with Friedman).


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