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posted by martyb on Monday July 06 2015, @08:57AM   Printer-friendly
from the getting-what-you-asked-for-may-not-be-getting-what-you-want dept.

The Greeks voted no to the European Union's terms, despite warnings from the EU that rejecting new austerity terms would set their country on a path out of the Eurozone. 62% voted "No" while 38% voted "Yes".


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  • (Score: 2, Insightful) by Justin Case on Monday July 06 2015, @11:23AM

    by Justin Case (4239) on Monday July 06 2015, @11:23AM (#205562) Journal

    It will be very interesting to see how the Greeks spend themselves to prosperity. I view this as nothing less than the final acid test of Keynesianism. It should be educational to the rest of the world. Sucks to be Greek though. You can't keep spending free money forever. Sooner or later you run out of other people's money.

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  • (Score: 3, Informative) by geb on Monday July 06 2015, @11:52AM

    by geb (529) on Monday July 06 2015, @11:52AM (#205572)

    Keynesian stimulus spending is supposed to take place in the context of a mostly healthy economy that is suffering from some short term pain. The idea being that if you're reasonably sure the conditions leading to hardship are not going to last forever, why let all the systems and infrastructure break down? Paying to keep stuff running in the short term is cheaper than watching it burn then rebuilding from scratch. It's also supposed to take place after a government built up reserves during the good times.

    These conditions definitely did not apply in Greece. Their problems were deep rooted structural failings, not any short term loss. Greece was absolutely insane to try stimulus spending alone as a way to grow their economy, but that has nothing to do with Keynes.

    • (Score: 2) by schad on Monday July 06 2015, @12:50PM

      by schad (2398) on Monday July 06 2015, @12:50PM (#205595)

      but that has nothing to do with Keynes

      I'm not going to go so far as to call that a no-true-Scotsman, but it is in the same vein. We've had nearly 100 years to implement his ideas, and we haven't done it. That says, to me, that there is something fundamentally unworkable about those ideas. You just can't tell a government that sometimes it's OK to spend more than you take in. I mean, if 1% of GDP in deficit spending is good, then 2% must be better, right? And if 2% during a recession helps the economy, then 3% during growth must help it even more, right? And it does. Until one day nobody will lend you money any more, and then you've got trouble.

      So sure, maybe in Candide's world where politicians are selfless and have the courage to make hard decisions sometimes -- and where voters are intelligent and informed enough to allow it to happen -- maybe in that world Keynes' ideas would work. But that's not the world we live in.

      • (Score: 3, Insightful) by FatPhil on Monday July 06 2015, @01:41PM

        I have to reiterate what the grandparent poster wrote. There is an explicit dependence on the country as a whole not being bankrupt. For that, it requires the politicians to have the wisdom to strive for better financial stability when the economy's doing well, which is of course when there's the least incentive so to do. (Even though it's no harder a concept than stockpiling grains during high yield years, rather than during drought years.)

        That requires non-corrupt politicians, with brains. Noganahapen.

        I view Keynsianism as mostly less wrong. Look at the utter crap that came before it, and compare. How can anyone with more than two brain cells to rub together think that Say's Law will hold in a modern industrialised economy? (Say didn't, and he can't be held to blame for people taking his theories completely out of their original context, however, that doesn't mean that his theory shouldn't now be filed in the cylindrical filing cabinet.) If anything the exact opposite will hold true. Have you noticed any advertisements during your daily life recently, walking/driving down the street, or whilst browsing the internet? If so, that's because there's so much shit that we don't want that they want us to want - i.e. there is a glut. Also, have you noticed that those who are wise with money have savings and investments, and actually aren't desperate to get rid of their money as soon as possible, as predicted by Say. Keynsianism is a million times less wrong than that.
        --
        I know I'm God, because every time I pray to him, I find I'm talking to myself.
        • (Score: 2) by M. Baranczak on Monday July 06 2015, @04:00PM

          by M. Baranczak (1673) on Monday July 06 2015, @04:00PM (#205693)

          Have you noticed any advertisements during your daily life recently, walking/driving down the street, or whilst browsing the internet?

          I have AdBlock+ installed. Does that make me immune to the laws of macroeconomics?

      • (Score: 4, Informative) by TheLink on Monday July 06 2015, @02:10PM

        by TheLink (332) on Monday July 06 2015, @02:10PM (#205626) Journal

        You just can't tell a government that sometimes it's OK to spend more than you take in.

        Printing money actually works quite well when you are printing the petrodollar (US Dollar).

        It's quite simple really: when you create more of a currency, each unit of that currency becomes worth less (may take some time for people to realize it). Thus those with net positive amounts of it (including being owed debts in that currency) become poorer. Thus when the US Gov creates[1] US dollars it transfers wealth from those who have US dollars to itself. Its much like an involuntary tax.

        Similarly when the Zimbabwe Government printed Zimbabwe dollars, it transferred wealth from those holding Zimbabwe dollars to Mugabe and his friends.

        The big difference is hardly anyone outside of Zimbabwe held Zimbabwe dolllars, in contrast much of the world keeps around trillions of US dollars to buy and sell petroleum, CPUs, DRAMs, wheat, juice, planes, weapons, financial securities, etc it means the US Gov becomes richer and the rest of the world becomes poorer (exporting inflation).

        So when Mugabe printed Zimbabwe dollars, everyone else laughed. But when the USA printed US dollars, those with a clue didn't laugh[2].

        In the old days the US Gov may have spent some of the wealth on worthwhile projects (e.g. highways) thus benefiting the US citizens, but nowadays the US Gov ("Mugabe") doesn't seem to regard the US citizens as good friends anymore and seems to be giving the transferred wealth to a smaller group of friends.

        Other governments can still succeed when printing money and transferring wealth from its citizens, but the difference is since they are just transferring wealth within the country and not from the rest of the world, they need to spend that "taxed" wealth on quality projects with better return on investment (ROI) than leaving the wealth with the people. If you pick the right projects it helps the country, otherwise you can end up like Zimbabwe. However it is not that easy to get a good ROI so it's harder for other countries to make themselves wealthier that way compared to the US Gov printing money and taxing everyone else.

        But keep in mind, I'm not an economist. So feel free to show where I'm wrong and how.

        [1] Doesn't really matter that much whether the US dollars are created outright or via "Quantitative Easing" or other means.

        [2] The Gov of China wasn't laughing during the USA's various Quantitative Easing. Only the ignorant or stupid say the US is in deep shit because it owes China trillions of US dollars. If necessary the USA can go "OK China, here's the 2 trillion US dollars we owe you", fresh from the Fed Reserve.

    • (Score: 1) by khallow on Monday July 06 2015, @01:38PM

      by khallow (3766) Subscriber Badge on Monday July 06 2015, @01:38PM (#205616) Journal

      Keynesian stimulus spending is supposed to take place in the context of a mostly healthy economy that is suffering from some short term pain.

      In other words, an economy where it would have recovered naturally and quickly anyway.

      • (Score: 2) by SecurityGuy on Monday July 06 2015, @02:00PM

        by SecurityGuy (1453) on Monday July 06 2015, @02:00PM (#205621)

        Misses the point. The economy as a whole might recover naturally and quickly (a few years), but a few years with no income can be really bad for the tiny cogs in that economy.

        • (Score: 1) by khallow on Monday July 06 2015, @02:09PM

          by khallow (3766) Subscriber Badge on Monday July 06 2015, @02:09PM (#205625) Journal

          but a few years with no income can be really bad for the tiny cogs in that economy.

          A few decades without income can be even worse.

          • (Score: 0, Troll) by Anonymous Coward on Monday July 06 2015, @02:46PM

            by Anonymous Coward on Monday July 06 2015, @02:46PM (#205643)

            And so can asteroid hit. Which is about as insightful as your post.

            • (Score: 1) by khallow on Tuesday July 07 2015, @12:15AM

              by khallow (3766) Subscriber Badge on Tuesday July 07 2015, @12:15AM (#205918) Journal
              Greece has a present day long term unemployment rate of almost 20% [tradingeconomics.com]. They've done plenty of Keynesian games without doing anything to actually improve their society and it shows.
      • (Score: 2) by aristarchus on Monday July 06 2015, @09:47PM

        by aristarchus (2645) on Monday July 06 2015, @09:47PM (#205851) Journal

        Economics is social science, not Ango-Austrian fanboyism. Contraction is a self-reinforcing downward spiral, not just a minor problem. This was Keynes insight. Austerity will only produce more austerity, and ultimately all economies will be sucked down the drain with it. So what is this, "end of times" capitalism"?

        --
        "Believe it or not, your opinion on this topic is really not necessary,"
        • (Score: 1, Insightful) by khallow on Tuesday July 07 2015, @12:12AM

          by khallow (3766) Subscriber Badge on Tuesday July 07 2015, @12:12AM (#205914) Journal

          Contraction is a self-reinforcing downward spiral, not just a minor problem.

          Except of course, that it's not. One could make similar arguments for economic bubbles and one would be wrong for similar reasons. To maintain the downward spiral indefinitely, one needs almost everyone on board. But at some point, you will buy stuff. And the further down the spiral went, the less activity is required to reverse it. And once everyone realizes that the contraction is over, their behavior changes and we have economic growth once again.

          Austerity will only produce more austerity, and ultimately all economies will be sucked down the drain with it.

          Unless, of course, it doesn't do that.

          So what is this, "end of times" capitalism"?

          If you break capitalism, then it's not going to work. Plenty of countries have capitalism-based systems that are working just fine. Why can't Greece be one of those countries?

    • (Score: 2, Funny) by curunir_wolf on Monday July 06 2015, @03:15PM

      by curunir_wolf (4772) on Monday July 06 2015, @03:15PM (#205655)

      Interesting story from one of Keynes' college courses. He was rather intolerant of students not paying attention, and would make a point of it. During one lecture, he noticed one of his students dozing during a lecture. So he quietly asked a question, then in a loud voice called out "Mr. Dodson, what do you think?"

      The student became quickly alert when hearing his name, but did not hesitate to answer:

      "I'm sorry, Dr. Keynes, I did not hear the question. But the answer is 'We need more stimulus!'"

      --
      I am a crackpot
    • (Score: 0) by Anonymous Coward on Monday July 06 2015, @08:34PM

      by Anonymous Coward on Monday July 06 2015, @08:34PM (#205827)

      Keynesian stimulus spending works the exact same way as it does for normal people.

      If you borrow/grant money to buy a capital good that saves or earns you money it is usually a good deal.

      If you borrow/grant money to pay back someone else you have a real problem that will only get worse with more loans. The reason it gets worse is because you did not fix the underlying issue.

      Keynesian was very up front about it. You use stimulus to build things. Where most people get wrong is to assume he meant 'free money'. The theory is you use government spending to build capital which creates jobs and wealth. If you are using it to pay back loans that does neither. In fact it usually does the opposite. The 'flaw' with his theory is that the gov can create capital. That is a major assumption. If the gov can not create capital it will end up making maters much worse as it would actually destroy wealth and at a scale which can make it much worse.

      Normally in these sorts of economic arguments I can pick one or two chapters out of this book http://steshaw.org/economics-in-one-lesson/ [steshaw.org] and be pretty close to what not to do. In this case they pretty much went thru the book and did them all. My speculation is next up will be the gov actually seizing assets from people and high monthly double digit inflation. Especially if they exit the euro.

      I for one would not want to live in Greece right now.

    • (Score: 2) by tibman on Monday July 06 2015, @08:53PM

      by tibman (134) Subscriber Badge on Monday July 06 2015, @08:53PM (#205834)

      Debt based economies can build up reserve money? I'm an outsider looking in, so please don't bash me too hard if that was a stupid question.

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