The Instigator
Myrant
Con (against)
Winning
20 Points
The Contender
larztheloser
Pro (for)
Losing
8 Points

Keynesian Economics

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Post Voting Period
The voting period for this debate has ended.
after 6 votes the winner is...
Myrant
Voting Style: Open Point System: 7 Point
Started: 9/16/2011 Category: Economics
Updated: 3 years ago Status: Post Voting Period
Viewed: 4,459 times Debate No: 18367
Debate Rounds (3)
Comments (15)
Votes (6)

 

Myrant

Con

I am not a fan of John Keynes' economic theory. Basically, while it may seem appealing in a theoretical sense - I believe it does not work in practice.

Please feel free to accept the debate or present an argument.
larztheloser

Pro

I thank my opponent for the opportunity to debate this topic. In this debate I will argue that, generally speaking, Keynesian economic theory describes how an economy operates in practice. For the sake of not having an extra round, I invite my opponent to open the substantive part of the debate.
Debate Round No. 1
Myrant

Con

Pro, thanks for taking the debate. I look forward to reading your viewpoint.

Imagine John Q Taxpayer. Last year he made $46,000, spent $62,000, and his overall debt is $154,760. For 26 of the last 30 years he has spent more than he made. From this, we can conclude that John's economic outlook is not good. John seeks financial advice. His financial guru, Mr. Keynes, suggests, "John, what you need to do is increase spending." Should John increase spending or should John fire Mr. Keynes? In this situation would you ever conclude that the solution involves a spending increase? Mr. Keynes plan, "prosperity through deficit spending" would, for John, be a bafflingly self-destructive solution. That logic, when applied to personal health, would indicate that the solution to your lung problem would be to smoke two packs per day instead of one. In reality, John's problem is the U.S. taxpayer's problem with a few substitutions: $46k is $4.6 trillion, $62k is $6.2 trillion, $154,760 is $15.4 trillion. [1] When this idea is scaled up to the level of the U.S. economy it will work – correct?

Keynesian economic theory was put forth by John Keynes in 1936.The most important part of his theory deals with the role of government in the financial sector during an economic downturn. Keynes argued that it was the government's role to "prime the pump" during an economic downturn. Government needed to increase spending to replace the money that was not in the economy (in theory). The idea is, when the economy is bad, people stop spending and start saving. When the people stop spending and start saving, demand goes down and the economy gets worse. Keynes advocated consumption, and more consumption. Keynes hated saving. Another part of this theory is the redistribution of wealth. Keynes believed that the best use of government overspending is to give it to the poor. He believed that the poor will not save any of their newly gained wealth. They will spend it thus helping the economy. [2] One last key feature of Keynes theory is multipliers. In the theory as money is spent, this money gets "multiplied" as it goes from the people to business. [3] For the theory to work the multiplier must be greater than one. Perhaps Nancy Pelosi explained multipliers best when she stated that for every $1 the government spends on food stamps, we get $1.79 back. [4] Food stamps as an investment strategy?

Inexplicably, there are some problems with Keynes theory. A big problem is: where does this stimulus money come from? There are three possibilities: 1) increase tax revenue, 2) print more money or 3) borrowing money.

Option 1), increasing taxes will only take money from one part of the economy and put it in another. In reality, savings in a bank is simply reinvested in the economy by the bank. The belief that money has left the economy is simply wrong. In any case, even Keynes did not advocate this action. Keynes supported tax refunds (money directly to the people) for stimulus. Option one is not Keynesian.

Option 2), printing more money may work for a short time. However, the consequences of rampant money printing have been well established. Overuse of this method can lead to hyperinflation. Ask the Argentines, Brazilians, or Germans. Additionally, during the 1970's stagflation occurred because government spending crowded out private investment and inflation resulted from excessive money printing. [5] Option two leads to failure.

That leaves Option 3), deficit spending, the preferred Keynesian option.

There are problems with option 3). You need to believe that the government has the knowledge and capability to improve the market. In June 2011 President Obama admitted that, "Shovel-ready was not as shovel-ready as expected." This was in response to a question about how the permit process often caused projects to be abandoned. [6] So much for knowledge and capability. Additionally for option 3), you must believe that government is acting in the best interest and will not squander money for political gain. That is na�ve. The U.S. government has a history of spending for political gain. For example the government heavily subsidizes Ethanol production even though it is a negative energy fuel. Al Gore admits ethanol was a politically motivated mistake. [7] More recently, the government wasted $500 million on the Solyndra debacle. [8] Governments do not spend money in the best interest of all; governments spend money in the best interests of whomever is in power. Finally for option 3), what happens when we have to pay back the loans? For a Keynesian this is no problem. Keynes is remembered for stating that "in the long run we are all dead." [9] Robert Skidelsky, noted that Keynes' had a "lifelong bias against long-run thinking" and "He was not prepared to risk too much of the present for the sake of a better future." To be a Keynesian you must not believe, or simply not care, that the money has to be repaid. [10] Ask Greece if that works.

Does Keynes' theory work in practice? A good example is Japan. During their "bubbles" in the 1990's, Japan tried 10 separate stimulus packages that didn't create much economic growth or significantly lower unemployment. [11] Their debt went from 71% of GDP in 1990 to 228% of GDP in 2011. [12&13]Bush started and Obama boosted stimulus spending to a new high. During Obama's Presidency, unemployment has gone from 7.2% to 9.2% and around 13 million more people have been added to food stamps. [14] When Obama took office the debt was 10.6 trillion when 2011 is done it will be 15.4 trillion. [1] This, after 30 years of deficit spending.

For Keynesian theory to work you must believe: 1) multipliers increase money, 2) government acts in the best interest, 3) no repayment of loans and 4) it will be different this time.

[1] http://www.usgovernmentspending.com...
[2] http://www.wisegeek.com...
[3] http://www.econ.washington.edu...
[4] http://politicalticker.blogs.cnn.com...
[5] http://www.investopedia.com...
[6] http://nation.foxnews.com...
[7] http://www.huffingtonpost.com...
[8] http://abcnews.go.com...
[9] http://blog.cleveland.com...
[10] http://www.tkc.com...
[11] http://brianekoenig.com...
[12] http://www.washingtonpost.com...
[13] http://www.economicshelp.org...
[14] http://michellemalkin.com...
larztheloser

Pro

I thank my opponent for his argument, and John Q Taxpayer for agreeing to be our guinea pig in this debate.

The first thing to note about Keynesianism is that it's a general theory. Like Einstein's general theory, Keynes' general theory usually holds true, but does not always. Keynes himself noted this in his books. There are literally thousands of data points that my opponent can point to where the theory didn't work, but the theory was never designed to explain all of economics. The most obvious exception to Keynes' theory is in the long run, as my opponent rightly points out. Keynes admitted this, claiming that the short run was all his theory dealt with. When questioned why he did not write a long-run general theory (which I believe he was quite capable of doing), he famously replied "In the long run, we're all dead." Shortly afterwards, Keynes did indeed die. What I need to emphasize though, is that just because the theory does not always hold true, does not mean that the theory is wrong. It still explains how an economy generally operates - in the US, using Keynes' advice led to a period of growth lasting almost 20 years [1].

The second thing to note about Keynesianism is the central message: when things are being bought and sold, things are easier to buy and sell. The measure of buying and selling in an economy is the "aggregate demand." When this increases, it means people are buying more. Why is that good? It means that firms have more money, and are thus able to expand and diversify, as well as increase wages. Firm expansion and diversification drives them to competition, which is even better for consumers as goods become more available and more tailored to their individual needs. Keynes also saw a drawback to following this policy - increased prices. This was because when money moves around faster, more people are able to bid for the same goods and services, making them relatively more valuable. This is a phenomenon known as "inflation."

The third thing to note about Keynesianism is that it isn't anti-saving. Keynes knew about something called the "business cycle" - a continuous cycle of booms and busts in the economy. This is because the economy is not perfect, and as a result will often operate without "full" (optimal) employment [2]. In other words, when the economy is doing badly, you can expect to see lots of perfectly capable people begging for welfare money. Keynes believed that this was because businesses were saving (the so-called "Paradox of Thrift"), hoping to clutch on to their savings until the recession ended. By saving, however, they reduced production to reduce costs, worsening the recession further. To remedy this problem, Keynes proposed spending when times were bad. Keynes hoped that this money-injection into the economy would be spent, increasing employment. When the economy got into full swing and inflation became a problem, Keynes advocated saving to curb the problem. Yes, he did. Keynes loved saving in a time of prosperity. Saving would reduce employment, thereby reducing inflation. In this way, Keynes offered that a government could control the business cycle and reduce the severity of its effects. As it so happens, governments can.

The fourth thing to note about Keynesianism is that it's proven. Pretty much the only good economist to come out of New Zealand was a man named A.W.H. Phillips. Phillips investigated the relationship between umemployment and wage behavior and discovered that they were consistantly inversely related [1]. This is the only conclusion consistant with Keynes' central prediction - buying and selling makes buying and selling easy. The Phillips curve remains virtually unchallenged in economics in the short run. In the long run it may not always work, but Keynes never said it would. Keynesianism is a short run system, with predictions that generally consistantly hold true. The Phillips study has been duplicated with thousands of datasets, and works for every short run.

Now let me turn to my old pal John Q Taypayer, whose financial advisor leaves him $16,000 out of pocket every year. Angry at his advisor, he goes on Judge Judy and sues Keynes for bad advice. He asks of Keynes: "Why oh why did you advise me so poorly?" Keynes replies calmly: "My advice was absolutely perfect. If you had listened to my earlier advice to save when you had excess money, you would now be able to spend it." To this Mr Taxpayer retorts: "Yes, but now that I foolishly didn't follow your advice, your advice was to put me into debt. Surely that makes me worse off!" Keynes responds, "Yes, but I told you to spend your money on the workers in your factories, getting them to produce goods that you can take to the market and sell tomorrow. But that's not all. When you spend even $1 on producing those widgets, your workers will spend some of that money. So your spending of $1 adds not just $1 to aggregate demand, but also whatever your workers spend. When those workers spend, the money passes to other workers, who pass on to others, who pass on to still others, and so on. The economy as a whole benefits along with you." Judy looks down from her seat and asks skeptically: "One last question, Mr Keynes. What is the name of this principle?" Keynes responds: "The multiplier effect." Obviously Keynes wins, just in time to launch into a rap battle with Hayek in the studio next door.

Hold on - don't multipliers increase money? Wrong! The Keynesian multiplier only affects aggregate demand [3]. It means that your buck does more for the economy as a whole than just what you buy with it. You can in fact work out how much each dollar of spending really contributes to the economy. You can even work it out in dollar terms - although this is deeply misleading, because it implies the money has magically increased, when really it has just done the equivalent of more money with the same. That's what Nancy Pelosi did - she isn't wrong, you've just misunderstood her conclusion. How does it do this? As the master himself explained in the last paragraph, one person earning means that person can spend, which means another person can earn and spend, and so on. In this way $1 of spending quickly becomes $1.70 of spending when taken throughout the whole economy - not because 70c have magically appeared, but because a portion of that $1 will be respent by whoever gets it.

Next my opponent objects that we're giving power to those big heavy-handed bureaucrats in their secure crystal palaces and ivory towers (no, not Disney, I mean the government!) - and indeed, Keynes was frequently called a socialist in his time, something he strongly yet politely denied. But what if a Stalin comes along and abuses this immense power? Well, that's a scary thought whatever economic theory you subscribe to. So since government spending is so bad, I guess governments should just tax and save, right? Leave us with less and less money, dry us out until we have no money left and lose all incentive for production. Sounds really bad actually. The other option is that they could just not tax - but without money, it isn't really a government at all, is it? How could they ever enforce their laws if they can't pay the police? So, either we trust our government, or we force our governments to screw us over, or we abolish governments. I wonder which one my opponent prefers?

In conclusion, I have shown Keynesianism works. I look forward to reading my opponent's closing statements.

Web Sources
1 - http://www.econlib.org...
2 - http://en.wikipedia.org...
3 - http://en.wikipedia.org...(economics)#Keynesian_multiplier
Debate Round No. 2
Myrant

Con

Pro - thanks for the debate!

Rebuttal

Paragraph 1

“Einstein’s general theory…..usually holds true.” Einstein’s theory does not usually hold true – it always holds true, if not it simple becomes wrong. Someday physics may prove that Einstein wrong, just as Einstein did to Newton; but, until evidence disproves Einstein, Einstein’s theory is still a valid theory. This, in contrast to Mr. Keynes theory, which my opponent admits is wrong. I agree that Mr. Keynes could have written a long-run theory. The rub is he would have been forced to discard the lunacy of his short-run theory to make a viable long-run theory. My opponent emphasized that Keynes theory is not “always” true; meaning, it is wrong.

Keynes gets the credit for 20 years of prosperity? So he should get credit for what happened after! Let’s examine the US housing market, which precipitated the US downfall. Fannie Mae and Freddie Mac are Government Sponsored Enterprises (GSEs). Fannie and Freddy buy mortgages from banks; that’s what they do. In 2008 Fannie’s and Freddie’s stated goal was a total of 56% of purchases to be low and moderate income borrowers (the poor – sound like Keynesian wealth redistribution?). They tried to do this by buying sub-prime loans. [2] Sub-prime loans only work as the price of housing continues to rise. Banks, which knew Freddie and Fannie would buy these bad loans, lowered the standards and gave money to people who could not pay the loans back without borrowing more or selling the house for a profit. President Bush and the Democratic Leaders tripped all over each other running to the press conferences to claim credit for the “record home ownership”. Then, the bubble burst, prices fell and people could no longer sell or get loans to pay a $500,000 dollar mortgage for a house worth $200,000. A classic example of what happens at the end of a Keynesian experiment. Solyndra was a huge success for a short time and proof the good ole sweet, ingenuity, and a double metric butt load of US Government cash can make anything viable for a little while. Keynesian ideas ultimately lead to failure.

Paragraph 2

“When things are being bought and sold, things are easier to buy and sell” I agree because when things are not being bought and sold it is harder, if not impossible, to buy and sell things because things are not being bought and sold. This is not the cornerstone on which Keynes theory was built.

This phenomenon known as “inflation.” What exactly is the thought here? Expansion drives business into greater competition and this makes prices go up? That is not how it works. So you are proposing that when consumers have greater choices about where they buy their “things” these “things” cost more? In reality, inflation has several causes; however, these include: A) Government prints more money making the money less valuable, B) increased government debt because the government now has to pay interest on that debt C) tax increases - for example, a fuel tax that drives production costs up and D) a rise in production costs for things like increased wages (what Keynes was referring to). [3] Inflationary causes A and B are tenants of Keynes’ theory. Inflationary cause C is the government raising revenue to do Keynesian spending. Inflationary cause D is irrelevant because when tried, it routinely drives unemployment up and wages don’t rise. The idea that fast moving money moving causes inflation is gibberish.

Paragraph 3

Keynesianism isn’t anti saving? Really? Perhaps the thing Keynes is known best for is his “war against savings.” Keynes believed that consumption was the key to recovery and savings were the chains holding the economy down. [4] Lets ask Keynes.

All of these examples from just chapter 16 of Keynes theory [5]
1) Keynes states that savings is adverse to employment:

the immediate effect of the saving would still be adverse to employment……

2) Keynes states that savings is worse than consumption:

The absurd, though almost universal, idea that an act of individual saving is just as good for effective demand as an act of individual consumption….

3) Keynes states that when you save you screw someone else:

The mere act of saving by one individual, ……, forces some other individual to transfer to him some article of wealth……

4) Keynes states that when you save you “force” another to pay you:

Every act of saving involves a “forced” inevitable transfer of wealth to him who saves……

5) Keynes states that it would be better to dig holes for no reason rather than save:

“To dig holes in the ground,” paid for out of savings, will increase, not only employment, but the real national dividend of useful goods and services.

To declare that Keynes was not anti-saving is absurd. There are literally hundreds of more examples like these. Additional, at the end, you declare that government can control the business cycle. Hasn’t worked so far.

Paragraph 4

Keynesianism is proven? Really? Based on Phillips? Really? Phillips “discovered” that the relationship between unemployment and wages were inversely related. Let us decipher that bit of economic intelligence. In layman’s terms: he figured out that when unemployment is low (i.e. everybody has a job) employers have to pay more for their workers ----- when unemployment is high (i.e. nobody has a job) employers can get people to work for less. Isn’t this obvious? Do we really need world class economists to tell us this? This is really weak “theoretical” evidence at best and ignores real world events. How about some history: the Japanese tried 10 stimulus packages and got the same result all 10 times while their debt went through the roof. Just to make sure, President’s Bush and Obama tried Keynesianism and verified the same failing result. Because Phillips came up with an obvious relationship does not mean a graph “proves” anything. I defer to Einstein, he defined insanity as, “doing the same thing over and over again and expecting different results.” [6]

Paragraph 5

Judge Judy and the rap war?

Wiki wiki wiki wiki, buda boom boom boom “

My name is Canes

My theory brings Pain

I needs some Money

To pay my Honey

We gots no Cash

Up in our A$$

So give yo Stash

And We’ll smoke Grass

wiki wiki wiki wiki buda boom.

Paragraph 6

Hold on - don't multipliers increase money? Wrong! Yes, I agree completely. I know exactly what Nancy Pelosi meant. What you fail understand is that she is one of the most disingenuous politicians on earth. She also told us that we would have to pass the health care bill so we would know what was in the health care build. I like that you can work it out in dollar terms – please do so in your rebuttal and show the math.

Paragraph 7

We abolish governments? No reasonable person advocates this course of action but only a fool blindly trusts government. I will end with Will, Voegeli, and Thatcher:

"By blackening the skies with crisscrossing dollars," Voegeli says, the welfare state encourages people "to believe an impossibility: that every household can be a net importer of the wealth redistributed by the government." But the welfare state's problem, today becoming vivid, is socialism's problem, as Margaret Thatcher defined it: Socialist governments "always run out of other people's money." [7]

Just like governments using Keynesian principals – which also always run out of other people’s money.

[1] http://en.wikipedia.org...

[2] http://www.therealestatebloggers.com...

[3] http://www.wisegeek.com...

[4] http://www.investopedia.com...

[5] http://www.marxists.org...

[6] http://www.brainyquote.com...

[7] http://www.washingtonpost.com...

larztheloser

Pro

I thank con for his last-minute rebuttals.

First my opponent tells us that Einstein's theory always holds true. Wrong. Einstein knew it doesn't always hold true, so he called it a "general" theory. He also wrote a "special" theory for when the theory wasn't true [1]. Whatever form Keynes' long-run theory would have taken, I doubt it would contradict his short-run, but this is pure speculation so not worth debating about.

Second, my opponent states Keynes should get the credit for the disastrous things that happened in 2008. Let me state right now that I'm not a fan of subprime loans either. Deficits to get an economy working are different to lending to somebody who won't pay it back. Since most of the money lended went straight into a house, the money didn't flow around the economy but was rather stuck in an asset. Keynes hated money being stuck in businesses, houses and land - the whole point of Keynes' theory was to keep aggregate demand afloat in a recession, and keep it steady otherwise. So if not Keynes' idea, whose idea was this? Well, how about some history? After Keynes' theory had been working for 20 years, there was 1% stagflation (inflation and unemployment - see my first source last round where it's charted). That's because policymakers kept using the Phillips curve too precisely, allowing people to predict what would happen to the economy accurately (again proving Keynes right), and act accordingly before the economy had even shifted. Rather than to tell people to not foolishly try and short-cut Keynes' model, policymakers turned in 1976 to Milton Friedman's Chicago school of economics and abandoned Keynes. The Chicago school was responsible for US policy up until late 2008 [2]. After people turned back to using Keynes' theories, while the economy did not immediately bounce back, the effects of the recession stopped worsening, and a second great depression was averted. Why should Keynes get the credit for a recession when policymakers were ignoring him for 30 years? (during which time, I should add, the business cycle had always been far more severe than it had, say, under Eisenhower or another Keynesian president!)

Third, my opponent says there is no inflationary side-effect to Keynes' theory. Funny that he should say "it's so obvious! We don't need Phillips to tell us that!" when drawn on a curve, but when I explain it in words he disputes it. The funny thing is that if my opponent was correct, then Keynes' theory would be even better - there would be no downside to spending. Unfortunately, we don't live in my opponent's world. Realistically speaking, even Keynes knew there were two sides to the coin. If more people spend more money, there are more people bidding more money for the same goods. They therefore "bid up the price." This is a concept that goes back to Adam Smith, the founder of modern economics. It's called the problem of scarcity.

Fourth, I agree saving is adverse to employment, effective demand, the multiplier effect and so on. There may be times, however (and Keynes agreed if you read his book) when too many people are employed, driving up prices as too many people bid for the same goods, making goods more scarce. The economy will have reached a short-run equilibrium with too much aggregate demand and not enough supply, so Keynes told us to slow down the rate of aggregate demand's growth by saving, to give supply a chance to catch up. In these circumstances, we want employment, effective demand, and the multiplier effect to decrease so there's no problem there. This is important: in the short run, the business cycle operates both above and below the full employment level. When above full employment, we should save to slow down our economy's growth.

Fifth, that the graph wasn't proven. Actually, Phillips took the curve directly from 50 years of British government policy, as opposed to just his "theoretical" reading of Keynes (check my source from last round). Phillips also repeated the curve for many countries around the world, based on their real-world data, and got the same result, including the United States and his own country, New Zealand. The Japanese stimulus didn't work because they agreed with your country's Chicago school demands to float their currency, which is continuously screwing them over to this day. Again, Keynes cannot be blamed for this. I've already dealt with your American counter-example.

Now back to rappin':

Yoyoyoyo I'm da man you need
As economists aplenty have agreed
If you want your economy to run along
You better have some dough to run it on
If you want it to slow down a bit
Don't spend your money, just save it
I ain't smokin' no grass, and I ain't no dumb
Even Phillips could confirm my theorum
You can control employment, and inflation
As the business cycle goes through its many gyrations
And if you gots no cash, then it ain't cause of me
My theory, it works, oh so perfectly
I just proved it to Judge Judy in the studio before
I proved it in America, after the world war
If you don't want to enter a unwholesome depression
Or escape from the '08 financial recession
We don't want liquidity to be trapped
(and by the way, mate, you are being out-rapped)
We want money flowing, just like I said
In the short run it works, in the long run we're dead
That's why I say you've lost this battle already
For 20 years I held the economy steady
I invite you to join me, and sing a duet
Otherwise prepare to face my strongest rhyme yet:

[freestyle]
My rhymes so potent that in this small bit
I made all of the anti-Keynes lobbyists quit!

Back to the rap, I get economies fit
Unless they are governed by some idiot
I hope con never lead da fedral reserve
Cause Americans should have what they deserve
An economy flowin' like the lyrics I say
This was John Maynard Keynes, I wish you all a good day!

Thanks Keynes. Sixth, my opponent asks how you can work the Keynesian multiplier out in dollar terms. Either he can ask Pelosi, or he can do any stage-1 university economics paper to find the answer, but I'll explain it quickly. The forumla is monetary injection divided by (1 minus the marginal propensity to consume). To get the marginal propensity to consume you work out what proportion of $1 a person spends [3]. Nobody doubts this formula, probably because Keynes was an accomplished mathmatician before he began trading stocks. His work on probability theory was inspiring.

Finally, that governments run out of other people's money. First, by listening to Keynes and running surpluses, they don't have to use other people's money. Second, by borrowing, it's wrong to say they'll run out of borrowed money if they spend it, because spending encourages production, which makes a state able to repay their loans. Third, encouraging workers to spend money is far from the definition of socialism. I don't advocate blindly following the government. I advocate constraining the government to following Keynes' well-proven theory, rather than horde up wealth while the economy and people suffer.

That's all the comebacks my opponent had. I don't think it's enough to topple Keynes' theory. My opponent began by saying he believes it's theoretically appealing. Now he says the practical side of things - so obvious we "didn't need" Phillips to prove it - is appealing too. In other words, he's conceeded the debate, from both a theoretical and practical standpoint.

At the end of this debate, the question is simple: does Keynes' theory usually work? Phillips proved it practically. Keynes proved it principally. It's prudent. It was written by a cool rapper. John Q Taxpayer agrees. The question is simple: do you?

Sources
1 - http://www.bartleby.com...
2 - http://en.wikipedia.org...
3 - http://pages.towson.edu...
Debate Round No. 3
15 comments have been posted on this debate. Showing 1 through 10 records.
Posted by zipfenat000 2 years ago
zipfenat000
Keynes was a smart man, thats a given however other ways about going about our economy is a much better idea many countries are the "burnt ashes of Keynes' cigars."
Posted by zipfenat000 2 years ago
zipfenat000
Keynes was a smart man, thats a given however other ways about going about our economy is a much better idea many countries are the "burnt ashes of Keynes' cigars."
Posted by larztheloser 3 years ago
larztheloser
The general theory generalized the special theory to include gravity. Thus the general theory applies except when gravity is not significant (such as when moving close to light speed), at which point you apply the special theory. Both theories only deal with physics, and can't be used to explain why my toaster is broken. Then there are the basic assumptions of science that the general theory uses: deductive logic, mathematics and so forth. Every theory makes assumptions.

The point is that you can't expect Keynes' theories to explain something that they didn't set out to explain, and call them invalid on that basis. The general theory explained the special theory with respect to gravity, Keynes explained how an economy operates in the short term. That's not to say the long term consequences of focusing on Keynes' short term theories are positive or negative (although they are overwhelmingly positive), but the point is that they're correct at explaining what they meant to explain, which is nothing more than the short term operation of an economy. That doesn't make them wrong any more than Einstein is wrong because none of his theories are an answer to everything. Keynes never said everything in an economy could be explained by his theories, but what he did say was absolutely correct.

While you're here, perhaps you could explain where my opponent made the other argument you cite in your vote?
Posted by F-16_Fighting_Falcon 3 years ago
F-16_Fighting_Falcon
This is a little unrelated but Einstein's general theory of relativity ALWAYS works. I have no idea from where Pro made the assumption that "general" indicates that it doesn't always work. In scientific terms "general" means it can be applied to a general case with no assumptions. "Specific" means that certain assumptions need to be made before the theory can be held valid.
Posted by Myrant 3 years ago
Myrant
Ok Larz. Failed means it does not work.
Posted by larztheloser 3 years ago
larztheloser
I'm not a liberal or conservative, so there's no issue there :)

I think you and I have a different standard of what a "failed" theory means. If businesses and government stop playing along with a theory (as I showed they did in the 70s), that doesn't mean the theory has failed in my books - it means the businesses and government have failed to follow the theory. I've already responded to Japan and America, so it's a lie to say I didn't respond to Keynes' supposed failures.

Finally, arguing that the theory is wrong because it doesn't apply over the long run is silly. All policy decisions are short run (as opposed to short term - your gun analogy confuses the two - I did show how Keynes' theory has long-term positive impacts) macroeconomics. Keynes was trying to help policymakers, not theoretical economists. You'll also note that this was the very first thing I responded to. So if there are obvious failures I didn't answer, you didn't bring them up in the debate.

Either way, I don't want to start a comments debate either, I just think that the reasoning of that one particular vote was silly.
Posted by Myrant 3 years ago
Myrant
Larz - If we hold a single shot gun 6 inches away from our head and pull the trigger we have safed the gun and are "safe" for a moment......but soon we will die. Keynes never said his "theory" was long term when he was pressed to explain why it would not destroy us eventually. I don't want to start another debate in the comments; however, you never even tried to respond to the obvious failures of Keynes and gave Keynes credit for growth that was not his. His theory was abandoned in the late 70's / early 80's after it failed and, as usual, we repeated the mistakes from the past and tried it again. Regardless of the outcome of this debate - Keynes will be abandonded again for it is the only way out of our current mess. Japan, then Bush & Obama tried it - Keynes does not work! Liberal ot Conservative - it does not matter.
Posted by larztheloser 3 years ago
larztheloser
Don't you just hate it when voters vote without reading your argument ... yes, the Phillips curve was disproven for the LONG TERM. Exactly the thing Keynes never set out to deal with. In the short term it's still perfectly valid. But that's beside the point. My opponent conceded that the curve was true, so how can anyone give him a win on the basis that they think it's not true? The only way is that they allowed their prior beliefs about the Phillips curve to influence the debate, as opposed to actually reading both of our arguments. I don't want to be a sore loser, but that reasoning (whether it had been for or against my favor) is really off.
Posted by Kinesis 3 years ago
Kinesis
Wow, awesome first rounds guys. Also, those rap battles are great. :)
Posted by Myrant 3 years ago
Myrant
He may.
6 votes have been placed for this debate. Showing 1 through 6 records.
Vote Placed by F-16_Fighting_Falcon 3 years ago
F-16_Fighting_Falcon
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Reasons for voting decision: Pro says that Keynes advocates saving during times when you have more money and spending when you have little. However, it is when you have little money that you need to judiciously choose what you are spending on. Pro admits that Keynes's theory is short term and does not always work.
Vote Placed by ShrawderA 3 years ago
ShrawderA
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Reasons for voting decision: Better logic and cases presented by the con, but great job both of you.
Vote Placed by Ore_Ele 3 years ago
Ore_Ele
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Total points awarded:23 
Reasons for voting decision: I agree with Kensis, this was way too short. It needed at least 1 more round, if not 2. Larz had an issue with using sources. I know that when you're talking about a theory, you only need one source for the theory and everything is derived from that, however, historical example should have plenty of sources to reference. Myrant didn't seem to understand Keynesian economics, since we have not been using it for decades. He also misquotes Keynes, he is talking speifically about recession times
Vote Placed by Kinesis 3 years ago
Kinesis
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Reasons for voting decision: I thought this debate was unfinished - it could have gone on for at least another two rounds, so there wasn't any clear winner. Both sides brought up potential explanations of certain economic phenomena (Japan, 20 years growth crash etc), but neither side really had the time to dispute them. I thought Con came out just ahead. 3-2.
Vote Placed by wiploc 3 years ago
wiploc
MyrantlarztheloserTied
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Reasons for voting decision: Con said, "Keyes hated savings," which is absurd. And his citation didn't back that absurd claim. Pro properly pointed out that we didn't get into debt by following Keynes advice and cutting back government spending in the good times. Would have been nice if Pro had pointed out that failing to do effective stimulus will cause income to shrink, which _may_ increase the deficit more than increasing spending will.
Vote Placed by jimtimmy 3 years ago
jimtimmy
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Reasons for voting decision: Does Pro Know that the Phillips Curve was disproven 30 years ago? Yes, all the time... No serious economist, Keynesian or not, still believes in this...