[ExI] "recession is going to end in about 6 weeks"

Rafal Smigrodzki rafal.smigrodzki at gmail.com
Thu May 14 20:37:45 UTC 2009

On Wed, May 6, 2009 at 11:53 AM, Brent Neal <brentn at freeshell.org> wrote:

> I disagree. Your statement that people always want more stuff is not
> necessarily true. When it costs too much to get it, people make a rational
> decision to forgo that consumption.

### Yes, we always want stuff. The only limitation is the ability to
produce what we want. The ability to produce is described by labor
productivity, and labor productivity is the primary determinant of
long-term real incomes. If labor and capital productivity do not
change, and the cost of other inputs remains the same, the cost of
consumer goods (expressed in real terms, e.g. hours of work) does not
change. Are you telling me you expect a long-term change in consumer
behavior in the absence of changes in productivity? On what basis?

Which, in turn, leads to a wage-price downward spiral.

### Krugman-ism raising its ugly head! I'll need to link to some
dissections of his babysitting association parable.


> There is nothing particularly right or wrong about Keynesian economics nor
> monetarism. They have both shown to be efficacious in understanding
> behaviors of markets in certain situations. I recognize your irrational
> ideological bias,

### Wait, pointing to irrational assumptions of a system of thought is
a sign of irrational bias?

> Remember, economics is fundamentally driven by two things - psychology and
> information.
### Exactly, which is why making the wrong assumptions about
psychology leads to wrong conclusions.


>> ### Reverse income tax? :)
>> Sounds like something fun to rip into, once you explain what you mean.

> The reverse income tax is what some call Milton Friedman's guaranteed income
> scheme, which has been discussed in another thread.

### Yeah, discussed to ignominous death. Better not to stir this can
of worms again.


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