I got this email from Robert Reich about John Maynard Keynes

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I got this email from Robert Reich about John Maynard Keynes can anyone help explain his answer and or post where in his book he talks about this thank you for answering ?

He didn’t use the word “infrastructure,” which came into general usage
long after the 1930s, but he wrote at length about the importance of
government public-works projects when consumers and businesses failed to
spend or invest enough to maintain adequate demand. You should read his
famous “General Theory…” from 1936 (I believe that was the year).



Thanks for writing.

Hello Mr. Reich my question is does infrastructure spending have anything
to do with keynesianism ? I have looked at the general theory of
employment interest and money by John Maynard Keynes but I can't find
anything about infrastructure do you know if he spoke about this ? Correct
me if im wrong but doesn't Keynes say Government Spending puts money in
the pockets of the Consumers and they spend money in the Private Sector
which will create demand which will create Jobs thank you ?

To begin with, having had to endure reading both of them while I was in college, I think that Keynes was a blubbering idiot and that Reich is a loon strung out from some really bad acid and too much bad weed.

Reich has always been a revisionist who put words in other people's mouths, and when I exposed Reich's paraphrasing of Marx in econ class, I got an A, but it was given to me very grudgingly. Reich is a far left academic who should really be given a serious taste of reality by being forced to search for and work in a real job. Having said that, Keynes basically implied what Reich said, but in different words. No, Keynes did not say infrastructure - but that's where government spending goes. The problem with Keynes is that the little moron forgot that the government drains money from the private sector to pay for its operations and that if you tax the private sector too much, it loses it's will or desire to produce - a fact that Keynes admitted to on his deathbed. Yes, folks, that's right, Keynes admitted that he was wrong.

Longshanks

[youtube]http://www.youtube.com/watch?v=b0q8CXuo-3I[/youtube]

well appearantly that limit lies higher than most people would like to admit.
in some areas of the world as high as 40-50%

That's a really odd opinion.

1) Keynesian economics isn't about taxing the private sector too much, its about counter-cyclical fiscal policy maintained through deficit financing. Sure, this deficit financing must include some taxation in the good times to get back what was pumped into the system and avoid fiscal problems, however, the indirectness of this hardly justifies your comment.
2) As pointed out by Oodain, even high tax countries have some economic success. Even if there are some costs to higher taxes(which I don't think it unreasonable to think), it isn't as if this kills Keynes.
3) Finally, probably any overview of the profession shows that most people, even some of the opponents of Keynes, don't actually consider him an idiot. I mean, usually a comment claiming that experts are idiots is more likely itself to be idiocy.

Guess what? When I'm not in uniform, besides being a law student, I'm a tax accountant. That means I'm an expert, especially since I see the bottom line effect of taxes. As an expert, it is my professional opinion that Keynes was an economic idiot and that Reich is an economic loon.

Longshanks

Did you even read my response? First point: "Keynesian economics isn't about taxing the private sector too much, its about counter-cyclical fiscal policy maintained through deficit financing.". It was my first point because it was the most important point, as it invalidates the entire relevance of your comment on taxation. If this isn't central to the guy's ideas, then it's not really relevant to evaluating him. (I mean, true, Keynes didn't ignore every issue of taxation when writing about ideas OTHER than the one he's famous for, but that particular writing that touches more on budgetary issues, The Economic Consequences of the Peace, is known for it's foresight into the problems of Europe)

Additionally, being a tax accountant doesn't make you an expert on every single theoretical tax issue. Accounting classes aren't even known for being heavy on theory like finance classes or economics classes. Being in uniform is utterly irrelevant. Being a law student is largely irrelevant. And everything you've seen as a tax accountant technically would count as an anecdote anyway, not that it really matters in the first place because your area of expertise is at MOST peripheral to their area of expertise.

Longshanks, you aren't an expert. The kind of background that it takes to get an accounting degree really only requires you take introductory economics classes, and law strictly doesn't require any economics classes. Saying you are an expert to rest on your own authority is at BEST a fallacious appeal to authority, and at worst it's just stupidity. I mean, f**k it, why don't you start telling me that you have a BS in Civil Engineering and thus qualified to dispute evolution while we're at invalid appeals to one's own authority. Maybe even that you're an art history major and so you know stars well enough to know that the earth doesn't revolve around the sun.

Lawyers are some of the least reality-based people out there. Longshank's whole argument, as a matter of fact, reeks of dirty corporate lawyer tricks and gimmicks.

http://www.sciencedaily.com/releases/20 ... 171416.htm

Dude, take a lude and chill. Having said that, I did fight for my right, as well as yours, to state my opinion. There is nothing that says that you have to like it. But I do have a right - which, unlike you - I earned. Now, this is my perspective:

Economists: The guys and gals that come up with different theories as to how financial and fiscal matters should be handled.

Accountants: The guys and gals that are hired by plain everyday people and small businesses to save them from the economists.

Longshanks

You just wanted to post that article. Most experts run into similar overconfidence issues.

I mean, maybe it is true that lawyers are the least reality-based people there, as after all, politicians tend to be lawyers, but... this isn't a dirty trick, it's just a poor way to address a point. I mean, my impression I am getting is that Longshanks' impression of Keynes is largely formed by his idolization of supply-side economics. (Which is where the tax comment would come from.) I don't get the feeling that this relates to Keynes, only to how supply-side economics tried to position itself as "contra-Keynes" even though technically, the issues are different. (Supply side is more about long-term growth through incentives to produce and invest in capital, and Keynes is about short-term stabilization. So, one could totally favor flatter tax structures and cutting capital gains taxes, while still favoring Keynesian stimulus at certain time periods)

Longshanks, military service is utterly irrelevant to whether you are a competent thinker. My criticism isn't about whether you have a right to speak your mind, it's about whether you're competent. Not only that, but if it's a "Natural Right", y'know, as in a fundamental right for free beings, it's not actually earned. It's part of what is naturally yours. You did a service(well.... arguably... the US hasn't fought a defensive war since long before either of us were born, so you probably didn't defend my right to anything), but the right was always mine, and that's just part of the conception of something being a "right". Frankly, you trying to trumpet military service as if it makes you a more important human being just strikes me that you have some form of ego that you have to maintain in every exchange. Which is why you also told us you made an A in your economics class, even though this is kind of irrelevant. (Not that Reich is likely much of an exegete of Marx anyway, because almost nobody in economics actually knows what Marx ever said because they stopped caring a century ago)


That's interesting, but it has nothing to do with reality.
1) This shows you don't know the discipline of economics. Economists don't narrowly focus on finance or fiscal matters, but rather they focus on any area where trade-offs exist. Some economists even research crime. Others focus on labor market policy. They're also primarily academics, so they aren't creating theories on how to handle things, they're trying to study the world, and then after they have an idea how the world works, then they figure out how this might be applied. For the most part, your definition REALLY refers to the discipline of Finance. This may be a sub-discipline of economics, but.... they really work a lot with accountants anyway, and usually finance guys have to take a few accounting courses.
2) Accountants aren't actually in contrast to economists either. Academic accountants do work that overlaps heavily with economics, so one prof I had talked about how his research involved corporations fudging the numbers in response to their incentives not to have negative income. That's totally economics, but that's his accounting issue.
3) Most of the stuff economists ever do, doesn't really impact accounting issues directly anyway. Economists try to set the broad course of policy, but they don't usually write the nitpicking details that accountants have to concern themselves with, and their power is usually not sufficient to actually dictate the ideas of the laws anyway, as politicians write the laws.

So, that seems really bizarre. I mean, I don't that reflects reality that well.

If you look at companies in the US, especially large companies, they've amassed sizable amounts of money which they are hoarding rather than putting in the hands of consumers in the form of salaries. Alternatively, they've put it in the hands of foreign consumers and governments such as India and China through excessive outsourcing.

They've done this due to huge holes in the US taxcodes, exploiting loopholes and taking bailout money on false pretense. The problem is that US policy has largely been based on the premise that what's good for the company is what's good for the country and that the interests of the private sector have been those of the public sector.

This premise is false, in a time where such large amounts of corporate investments, hirings and income stems from foreign countries. US companies created hundreds of thousands if not millions of jobs in China and India from 2008 to 2011.

When consumers do not have money in their hands, because its being hoarded by companies and not invested in job creation, then demand falls. When demand falls, there is no need for hirings in the private sector, in fact the private sector cuts jobs, which then results in less demand.

Taxation does mean less jobs, but only if the premise "taxation takes away capital that would be used for job creation within the country". For instance, if I take $100.000 and buy gold, that doesn't create jobs in the US. It would be better for domestic demand in the US, if the government taxed me $35000 and used it to pay for something, so that they spur demand.

Tax the private sector "too much"? How much is too much? Everyone understands that taxing the private sector 90% is excessive, but I can't say I feel the way about 20% - 30% depending on circumstances. At that stage I get to keep 70 - 80 cents on every dollar after expenses, that's a fair deal to me. Especially considering that large parts of public sector services are still used by my corporation and my employees. I doubt I'd have much luck operating in a city, where there was no police force, no fire department, no public schools and so on. Furthermore, schools secures me a nice conveyor belt of potential employees that have decent qualifications.

If only his followers would do the same!

Boy, have I succeeded in getting you ticked off. This post is proof positive of that. In fact, you're the kind of guy I really enjoy seeing fly off the handle. Lay off the obsessiveness and just agree to disagree and you'll save yourself from having a massive coronary. I have yet to meet an economist grounded in reality. Just look at our current economy as proof of that. Politicians may write the laws, but it's based on advice from economists. Conversely, there is only one CPA in congress right now, who by way, tells both parties and the economists that they are all full of cow pies. True fiscal discipline comes from the old-fashioned principle of: I have X dollars to spend. That means I can only afford to spend X dollars - no more - period. This is how most households live - and they can't borrow like the government does (thank God). There is only one economist that I have ever read that has a near grasp of reality - Adam Smith.

You're not going to convince me - leave it at that and move on with your life.

Longshanks

The next time you get a Email like that pleas don't read it.

This is orthodoxly put. My compliments, sir.

I concede to the first and second paragraphs, keeping in mind that the sole goal of capitalism is to make money. And yes, the people who issued the bailouts were not real far-sighted as to what would or could happen. However, concerning the loopholes, may I ask if you have taken into account that we still do have the highest business taxes in the world?

You mention that consumers don't have money because the various companies hoarding it. Possibility. Likewise, govenrment debt has a serious effect on the value of a nation's currency. Ours is what - $15 trillion. Why is that? How about entitlement fraud? Please permit me to give you an example. When I investigated medical fraud for the Defense Department, we had a program known as the Civilian Health and Medical Program for the Uniformed Services (CHAMPUS), now known as Tri-Care. I was an investigator for them from the beginning of 1990 to the middle of 1994. My biggest case, which hit the national news, involved some $72.4 Billion in fraudulent payments to a 110 mental hospital chain known as Psychiatric Institutions of America. The case eventually blossomed into fraudulent billing for Medicare, and, if memory serves me correctly, the amount went up to $114 Billion. Now, arguably, that may be a drop in the bucket. But - that's just one case. For CHAMPUS alone, in 1994, there were 115 fraud investigators nationwide. The average fraud case was worth $403 Million. Again - that's an average. Multiply $403 Million x 115 and you'll see where I'm going with this. The scary thing is that Medicare and Medicaid deal with a much bigger population and what's even more scary is that the fraud controls to Obamacare are far more scant. I know because I read the bill and do occasion the new regs coming out. Based on the figures I have previously given you, to hear that over $1 Trillion of our taxes go to medical fraud at the present time wouldn't cause me to bat an eye.

While, morally, I understand the good intent behind the social programs, good intent isn't enough to keep people with bad intent from perverting them. And white collar crime, while the easiest to prove, takes the longest to prosecute because to do so you have to be able to show patterns over a long period of time and by then the money is already spent and unrecoverable. Not a cent was recovered on that case I told you about.

This is why, in my view, we are in such big trouble right now. And the economists never take it into account. And really, and very sadly, these programs need to be halted until we can control the fraud. And as it is, we will never - say again - never have enough people availible to do that. And raising taxes only continues to feed the fraud - not cure it.

Longshanks