Keynes - sumario debate The Economist

Economist (EIU) Intelligence Unit world debate - may 2012 – Ronaldo Carneiro´s intervention It’s Official: Keynes Was Right, Paul Krugman: The Big Wrong krugman.blogs.nytimes.com Ronaldo Carneiro • Keynesian monetarists legitimated the presence of Government in the economy, in a world destroyed by war. That was like taking an aspirin to relieve a headache – but in the medium and long term results have been disastrous. Ronaldo Carneiro • Some presence of the State can only be justified during a limited time, to regain balance. A constant presence of the government in the economy replaces the invariable law of supply and demand on the free market with the questionable action of human will. "In the medium term we will all be dead", could have been the response of Keynes to the implications of his proposals. He is now dead and cannot witness the disaster, after nearly seven decades, of his proposals to formalizing government interference in the economy. Ronaldo Carneiro • General Theory of John Maynard Keynes - one must recognize that the monetarist proposals were conceived in a post-1929 crisis and discussed in Bretton Woods in 1944, in a world where Europe had been destroyed by World War II. Though recognized in its time, in the long run the Keynesian theory proved to be a disaster. After 68 years of practical application, this economic formulation exposed stagflation as its best result: a compromise solution between unemployment and inflation. An offence to human intelligence. By enthronizing government in the economy, that is, by replacing the inexorable and impersonal law of supply and demand by the questionable and personalist aegis of human will, Adam Smith and all responsible thinkers must have revolved in their tombs, trying to understand the obscene inconsequences of the Keynesian theory. I blame the monetarist theory for the vast social exclusion disseminated all over the world and for all the armed conflicts too: many resources in the hands of a few, to decide according to human will is anti-democratic by definition! And children are lacking food and minimal comfort! Michelle - look at unemployement rate of US and Europe - in Spain 1 from 4 is unemployed!!!! social exclusion all over the world and so on> Forward your mail and I´ll send you some of my academic texts. Ronaldo Carneiro • Government, as the Supreme human ethical creation, in Hegel's view, should be revised – erring is not tragic, the tragedy resides in not learning from error! Ronaldo Carneiro • • Economics is a science in which all agents are governed by the impersonal and inexorable law of supply and demand, whenever there is no market manipulation; • Politics is an art in which the protagonists decide according to questionable, circumstantial and personalistic human desires We are living the consequences of monetarism, that places abundant money in the hands of politicians and bureaucrats, but scarce food in the mouth of children. It would be comical, were it not tragic, to imagine that the control of financial flows: currency, exchange and credit, could generate development. Only simple productive work can generate capital which, in its essence, is nothing more than cumulative work Ronaldo Carneiro • @Poncela - you´re right - real markets are different of our dreams, but think about: What would be happened if government stayed out of energy markets? or in other words: monopoly / oligopoly is an economy distortion in private or public sector. What´s the government responsibility in all carbohidrate dependency as a source of energy? Too much money in hands of politicians and bureaucrats and scarce food in mouth of our children. Too much money according rulers human will instead market forces. I Learned with Mises and Hayek that nothing beats the power of the spontaneous organization of the market price mechanisms. Vast amounts of resources to be allocated by acts of human will stimulates unscrupulous politicians to search power at any cost, "not disdaining, in certain cases, to establish an alliance with cheating, fraud and corruption", in the words of Vilfredo Pareto. Michelle - have you receive my academic texts? Ronaldo Carneiro • Dear Mr. Zahid Khalid - that´s not my proposal - if you are interested seriously in discussing issue I´ll be glad to forward you some of my academic texts, as already send to Michelle by request. (I need your mail). But don´t lose your time, according Mr Jose Milton advise - he is trying to find solution discussing financial flows, it´s better Mr Jose stay there - banking system is not the solution - he will die thinking that people eat currency or paper. My focus is over human being. Ronaldo Carneiro • The lack of equal opportunities has led some governments worldwide to take from the strong to give to the weak, impoverishing the rich to enrich the poor – this robin-hoodian philanthropic view in fact destroys two of the most powerful driving forces of man: initiative and dignity. Whatever the concept that one may have of democracy, the fate of citizens cannot depend on the virtue of their rulers. The quest for world peace is inexorably determined by the progressive reduction of resources in the hands of Governments, to take them to the private provision of nutrition, health and education for all. It is a great inconsistency to imagine that manufacturing TV sets is an economic process and that providing health is a social process. Both processes are socio-economic. When in charge of providing health, the government will take resources from the television factory, by levying taxes on the workers salary and the entrepreneurs profit, since it does not generate its own resources. The world witnesses nowadays, between perplexed and impotent, the supremacy and domination of the bureaucratic class, for in their practical evolution the capitalist and communist systems converge inevitably to a totalitarian regime. That is to say, the inequality of opportunities under the rules of human coexistence is generating the most terrible process of domination and human bondage: the dictatorship of bureaucracy. Ronaldo Carneiro • If development were left in private hands, we would have several energy sources being developed simultaneously, using the sun, the wind, hydrogen, alcohol, etc., all competing among themselves for a lower cost and reducing the vulnerability of most societies It is even understandable when politicians adopt issuance of currency without economic growth, ignoring the economical consequences of their decisions. But any technocrat who lends credibility to this solution is a charlatan more interested in keeping his post than in managing a sound financial system. Job-generation is not a task for the State, which produces only lesser jobs. It is private initiative that creates productive employment Government is an institution that invariably spends more than it collects, either because of the high social demand in societies with concentrated income, or because of a perverse desire to feed the military might in rich societies Capitalism and socialism are two dated theories that did not work in the history of mankind. They can be compared to a boat with two oars: one is the social, the other the economic dimension. Directing this boat is the political dimension. Capitalism concentrates on the economic oar, whereas socialism emphasizes the social oar. That is why the boat keeps turning around itself, with evident damage to the political dimension. These two systems of human coexistence are circular theories: no matter what the starting point, their dynamic will always bring you back to where you started. It is useless to change the oarsman or to replace the ruler, because the mechanism remains the same. Without any unjustified nostalgia, I want to emphasize my belief in the values defended by outstanding thinkers: Adam Smith, Karl Marx, Joan Robinson and Von Mises, according to whom an independent, active and productive human being writes his own history. To better understanding forward me your mail and I´ll send, for reflections, some of my academic texts. I´ll be out of office from may 2 to 10. Ronaldo Carneiro • Mr Poncela - let me underline your comment - "people don´t compete just for the sake of the competition, they compete to earn profits" - I absolutely agree, but, and about in a new social pact where health become a private companie´s responsibility? They already pay the health bill through tax system!! Link health to profit, or in other words - profit will depend in the level of communities health? We´re close to my proposal. Mr. Lorrie - there is no solution discussing financial flows - that´s the reason keynesians followers are trying using public tax to open a hole in earth in day shift and close it in night shift to create jobs!!! Human being needs must be the focus - equal opportunities for all - nutrition, health and education No productive job was created. Results are: unemployment and inflation Mr Peter - political and economics discourse must be discussed togheter - see above my concept: boat and oars Ronaldo Carneiro • Sorry Ms Lorrie Ronaldo Carneiro • Finally back home. Congratulations on level of discussion: Back to basic: "A General Theory on Employment, Interest and Currency" (1936). This book was, undoubtedly, the most influential in the industrialized societies after World War II, in an Europe destroyed by war, where governments started to play a decisive role in the economy. Certainly, the success of FDR's New Deal in the 1930s spurred this English economist to advocate the presence of the State in the economy. Keynes' treatise was a response to the crisis that struck the economy of that time, dominated by the marginalist theory, that was unable to explain the great depression that had hit the Western world in the thirties of last century. According to Keynes, the State can play a very important role in preventing economic crises, by an increase in public spending that will prevent the rupture of aggregate demand, at a time of negative expectations among private agents. "We must therefore equip the State with effective instruments of economic policy, to regulate the interest rate in order to keep it below the " marginal efficiency of capital ", to increase consumption by expanding public spending and to expand investment through government loans that will absorb idle resources." It would be comical, were it not tragic, to imagine that the control of financial flows: currency, exchange and credit, could generate development. Ronaldo Carneiro • Peter - corporations act unethically cause they´re acting in no full productive employment - think how things change in this situation? free market at the beggining of industrial revolution cause a big development - What I´m suggesting is intervention x austerity is a false question, cause both mean a strong presence of government in the economy. Keynes was perfect for crisis, all economic formulation was to achieve a balance among economic agents, but, what are the solution preconize by Keynes for social exclusion? that´s a big difference between economic formulators and thinkers - I strongly suggest to read more Adam Smith and Karl Marx. That´s the reason why priviledged brains as nobel laureates Stiglitz, Krugman and potential formulator like Jose Milton don´t reach solution - they´re reading a wrong book. All solutions are more of the same and the result will be the same - nothing new in the area!!!! After 68 years of practical application, Keynes economic formulation exposed stagflation as its best result: a compromise solution between unemployment and inflation. An offence to human intelligence. Ronaldo Carneiro • Peter - what I´m suggesting is appraise situation before Keynes - marxist critics on capitalism never answered so far - I have learned from Marx that the workforce must not suffer wear – "The worker sells his labor to keep it unscathed, except for the natural wear, but not to have it destroyed." Workers need to eat and to have access to health and education systems, so that their labor does not get destroyed. many have been sensible to recognize errors in capitalism but then acted like Marxist priests burning incense to their god. Nutrition, health and education are biologic needs and not fluctuate according free market laws. A constant presence of the government in the economy replaces the invariable law of supply and demand on the free market with the questionable action of human will. I am talking about introducing the substantial criticism of Marx – on the deterioration of the labor force – into the basic research of Adam Smith, and substantially reduce the presence of the State in the economy, to rescue the situation of full productive employment observed at the beginning of the 19th century Ronaldo Carneiro • Troy and Adriano It is clear that, with the current rules for human coexistence, the government needs to intervene increasingly, but the real need for government intervention is in the fact that 3 sectors: agriculture, health and education cannot walk alone – The government needs to pump resources into these 3 sectors – something necessary, even if inefficient. Under the current rules, the reduction of government intervention in the economy would considerably increase the distance between poor and rich. But in a new social pact where nutrition, health and education became private responsibilities in the productive process, the Government would proportionately reduce taxation and its interference in the economy. Instead of transferring resources from rich to poor, society would provide equal the opportunities for nutrition, health and education. This is not philanthropy, but a new concept of human labor as a transformation process of human energy into physical or intellectual power. It will replace the changing logic of ideas – ideology – with the invariable logic of life - biology. Total freedom to produce and consume will reach a full productive employment – “laissez fare, laissez passer” – invisible hands acting in a whole economy. Send me your mail and I´ll forward some of my academic texts. Ronaldo Carneiro • Troy - change human nature is not my proposal - a new social pact considering actual human nature - redistribution of responsibility is my focus - at first glance it seems to be difficult - but consider a big social imbroglio with high unemployment in US and Europe and rulers applying more of the same with no results. I´m not sure if I make me understand - cause your insight is rerverse of my convictions. Marx never try to change human nature - he and Adam Smith understood as nobody did a human nature. Human stupidity is apply more of the same - financial flows and financial stimulous is a joke to heal such a huge disease Ronaldo C. • Benoit - no, not at all - homo was, is and will be "economicus". Supply and demand law always acting as never before. Religious rules are trying to change human nature since at least 4000 years without success. All my proposal is based in real human nature - thats why I do not understood Troy insight??? Let´s clarify my proposal: The productive process, that is workers and entrepreneurs, will directly take responsibility for providing nutrition, education and health care to the social nucleus depending on the production of goods and services, after acquiring them for their free market prices; and the government will reduce its taxes in an amount corresponding to the cost of these new responsibilities taken by the productive process. I´m just redistributing the bill payer - nothing more. Ronaldo C. • Lets nominate "Humanist regime" this new social pact and speculate on results: In the Humanist Regime agriculture no longer requires subsidies, because it becomes an extremely attractive sector, spontaneously capitalized through the stock market under totally free prices. The Malthusian limiting law will no longer impose itself. In an equal manner, the sectors of education and health care no longer need the crutches of the State and become naturally profitable, receiving resources from the stock market. With the spontaneous capitalization of agriculture, the development of this sector is tied to the other sectors of the economy, that is, the results sought by land reform are obtained: land for the working peasants. Ethical principles are not violated and the right to property is respected Decentralization will be automatic, because the social cost will become one of the factors for companies to choose their location. The stagnation and later reversion of the migratory flow will promote a balanced occupation of rural and urban areas, bringing evident advantages to the quality of life Ronaldo C. • Bernardo - all countries over the world must subsidize agriculture - and they are doing as much as they can - I totally agree with Adriano "the cost of food is relatively low in face of strong subsidies and huge inequalities around the world" same for health care and education. Basic point is: Who always pay the bill? productive process pay everything through tax system. What I propose is cancel expensive resource flow through government. Troy - underlining your point - If the wage is insufficient to provide what they need they should provide a more valuable service - look: nutrition, health and education never fluctuate according market law and are not human decision and not cumulative goods and services. Big mistake of capitalism is consider biological needs as part of market laws. In other words - you only can afford food for your family depending on supply and demand - if it doesn´t allow, you must work with empty stomach!!!! Car need fuel to run Ronaldo C. • Troy - idea is not nationalize health care - and not take away incentives for the best - idea is privatize everything and private companies pay the bill - it´ll gonna be a social cost introduced in companies budget instead pay for government - in other words - is a dream of US democrats using US republican means - private sector is much better than public one. Quoting you - hungry people work harder its the law of survival - this statement is against all findings and recommendations of HR practices. Certainly some countries due to political distortion don´t allow progress to their people. Sooner or later dictators will fall. The lack of concrete solutions for the aspirations and expectations of the people is totally discrediting politicians. Human production is an energy-transforming process. To make it occur, human energy based on nutrition, health and education must be managed a priori, and not as payment for the work performed. Just as a vehicle needs fuel to go, so does a human need nutrition, health and education to fulfill his god-given role in society. Ronaldo C. • These two comments below were particularly felicitating for me, because they revealed a perfect attunement with my theses: • "Regarding its proposal for the health sector, that is all that US Democrats have been willing for decades -health for all- but the proposal you present is neither like the British model, where the State does everything, nor like the Canadian one, where the State pays to private initiative: your proposal follows a third model, Republican-style, directly by private initiative!" When you thus associate economic profit to the health of people, you will have a tremendously positive impact on the ecological balance of the planet; I´m not against doctor driving a porsche and I´m absolutely sure that everyone will leave for "greener pasture" (great Troy) Canada public services is much better than american ones!!! Ronaldo C. • Socialism fell down along with Berlin Wall in 1989 and the capitalism has its bases being ruined with this world crisis. We have to go back to Adam Smith’s topics and proposals at Scotland on the end of 18th Century and combine them with Karl Marx’s proposals of the end of 19th Century – in other words, to reach Marx’s ends using Smith’s means. Thus burring at last Bretton Woods monetary ideas – a historic mistake to make possible have government on economy – this theory only led to commitment solution between stagnation and inflation throughout its 68 years in use – an offense to human intelligence beside generating a terrible and growing social exclusion. It is a simple idea: if private productive process embrace social responsibilities of nutrition, health and education buying for free market price to all dependents, the sectors of agriculture, health and education will gain their own energy and wont need government support anymore – thus government can reduce taxes and make it possible this humanist system Ronaldo C. • Benoit - social cost includes payment to employees and dependent - in summary - all people envolved in goods and service production. In that way, companies will have 2 different types of cost - economic and social - and government reduce the correspondent tax - its a trade off Allow health services in different ways to consumers is absolutely unethical. Human being below to same categories - the best one - there is no first or second class Ronaldo C. • Troy - Definitely I only recognize 2 classes of citizenry all over the world: 1) Those who have had opportunities in life, that is, proper nourishment and health services since their childhood, coupled with access to the educational system; 2) the rest of people; When system allow equal opportunities for all, things change dramatically Ronaldo C. • Benoit - consumer will pay the bill, cause social cost will be part of final price - same as economic cost Ronaldo C. • Troy – economic logic depends on supply and demand – and to operate or to generate demand people must be feeded, healthy and educated, otherwise it doesn´t work - it means the dependency of all mankind. I´m also not support the concept of philantrophy, cause in long term doesn´t help people. The French writer Victor Hugo said : "We will practice charity when we could not impose justice". Because it is not charity that we need. Justice reaches the causes of the problem; charity mitigates its effects. Monsignor Jacques Gaillot, also a Frenchman, with a serene look and pondered voice, dedicated his religious vocation to the defense of human rights, particularly those of the poor and of the prisoners of justice. He completed this reasoning: "I do not say that one must deny a plate of soup or a warm shelter to someone living in the streets. There are urgencies". "I will do this, but my conscience will not be at peace, because I think that we must struggle against the structural causes that bond these people to injustice." The saddest thing for me is that people get accustomed to injustice. For this reason I say: "Wake up! This is shameful! Let us show our indignation towards injustice!". Ronaldo C. • Jose Milton - when only few competitors are in race its easy to manipulate market. Imagine in a society with equal opportunities for all how difficult will be to manipulate markets with hundreds or thousands of competitors!!! Benoit - not only education, but nutrition anf health are basic conditions to survival and progress - idea is privatize everything and private companies buy this goods and services in free market and make then avaiable to all people envolved in goods and service production. Ronaldo C. • Valdomiro - government start intervention cause system didn´t allow equal opportunities for all - thats the reason of big increasing of human resource protection legislation - taken from rich to give to poor never work, but it was necessary. The only and main government intervention in economy is pumping resources to agriculture, health and education cause this sector don´t walk alone, everywhere this sectors needs strong government iron hands. Proposed social pact is a simple idea: if private productive process embrace social responsibilities of nutrition, health and education buying for free market price to all dependents, the sectors of agriculture, health and education will gain their own energy and wont need government support anymore – thus government can reduce taxes and make it possible this humanist system, Man is driving by profit not by spiritual belief - don´t mixture different things - he was, is and will be "economicus" for ever - is part of human nature Peter - lawyers or economists could be a great politicians - each one give their professional contributions - there is no superior or inferior classes. Landon - welcome aboard. Concept of economy and politic is just to stressed necessity to reduce resources from tax system - human will distribution - and increasing resources in a free market - nobody can manipulate in a non distorced market. Real man is always acting and constructing market.  "Each person, as the Stoics affirmed, should be first and foremost left to their own care; and each person is certainly, in all respects, more capable and able to take care of themselves than any other person " Adam Smith Private initiative, operating in a competitive market with full productive employment, is a superior model for the production of goods and services. This does not mean that workers and employers in the private sector are superior beings, privileged by divine election. The model of private initiative is superior because it operates in an environment where the human will is limited by the natural and inexorable law of supply and demand. 1 dia atrás