Economics: A Little About It

Knowing few will be interested, today is about economics. I taught economics for decades. What I taught were the ideas and conventional wisdom in the field. I liked teaching students microeconomics, macroeconomics not so much.

There are constant criticisms of economics by those who say economists’ predictions do not pan out . It seems like they do not predict very well. Those who are paid to make predictions don’t want to pass up a paycheck so they claim to predict the future even though not accurately.

Slowly, the field is returning to what it was before John Maynard Keynes came along. Keynes was a Brit who saw a relationship between government stimulus spending and broad economic stimulation. Roosevelt adopted Keynes’ recommendations and a new branch of economics was born, macro economics. This, in turn, gave rise to the notion economists could make predictions about the economy.

Micro economics, the behavior of individuals and firms was what the first economist, Adam Smith, talked about. He described the motivation of all those involved in a nail factory. This focus is returning. The direction of the macro economy is caused by the collective behaviors of all these firms and individuals. .

Micro economics might tell you that when individuals do not receive anything from a product they buy over and over again, many will stop buying it. The firms selling it may go out of business.

That explains why individual religions never live on forever. The motive to profit means new ones start everyday.

7 Responses

  1. “Slowly, the field is returning to what it was before John Maynard Keynes came along. Keynes was a Brit who saw a relationship between government stimulus spending and broad economic stimulation.”

    I think the term is “fine tuning”. Yes we will get way from the theories of Keynes, the socialist, atheist, and homosexual on which our economic system has been based since the founding of the Fed. But it will not be “slowly” The prophet Isaiah describes the end of this debt based, highly regulated , heavily taxed, ponsi system:

    Therefore this iniquity will be to you
    Like a breach about to fall,
    A bulge in a high wall,
    Whose collapse comes suddenly in an instant,

    14Whose collapse is like the smashing of a potter’s jar,
    So ruthlessly shattered
    That a sherd will not be found among its pieces
    To take fire from a hearth
    Or to scoop water from a cistern.(Isiah 30:13-14)

    1. Michael 10:49 theories of Keynes, the socialist, atheist and homosexual on which our economic system has been based on since the founding of the Fed.

      I don’t want to bore readers with esoteric details of economics, but that statement is incorrect. Keynes had nothing to do with Federal Reserve policy. He did make reference the money supply but had no interest in it as a tool for stimulating the economy. In fact, since the 1930’s there have been warring camps within economics, the Federal Reserve camp against the Keynes camp.

      In recent decades the Federal Reserve has become the villain of some conservatives. The conservatives within economics, like Milton Friedman, want economic policy by the Federal Reserve because it does not add to the deficit.

      I agree with you, however, that both camps may have been over reaching to “fine tune” the economy, its inflation and unemployment rate. It is a tough sell about their success.

      1. mark anthony

        for my money, one serious problem with the Keynesian paradigm. public spending is to increase during bad times and decrease during good times. in reality, tho’ we just keep spending. public debt just keeps going up and up.

        1. mark 3:10 public debt keeps going up and up

          Yes, it does. In my view the debt itself is not a serious problem. We can quite easily handle more debt as the population and economy grow. The bigger problem is spending money on things that are totally worthless. Even worse, spending that harms us. Invading Afghanistan and Iraq look like examples.
          In cities it is building freeways to make traffic jams, more expense and dirtier places.

          1. mark anthony

            the fault dear Jon lies not so much in our wars as it does in our entitlements. not much we can do about that. but at what point will foreign investors and domestic investors continue to loan money at reasonable rates? or will they eventually lose confidence in a government that does not seem able to control its spending. and how much GDP growth do we need to keep pace with a burgeoning public debt: 3 percent, 10 percent? what? and what do we do if we get into real trouble? inflate our way out? tax to the hilt? default? cut the bennies? all of the above. as an economist, what say ye?

          2. mark 6:22 but at what point will foreign investors and domestic investors continue of loan money at reasonable rates?

            I don’t know the answer to that. Our government securities are still the best product in town–at least the last I heard.

Comments are closed.