2nd March 2012
Demand deficiency? (Or, do people suddenly achieve nirvana during recessions?)
It is a FOUNDATIONAL PRINCIPLE of human nature that people want more of a good thing. Except for sanyasis and monks, everyone wants more of this or more of that.
What is a want? The foundation of a demand – for something: say, a better mobile phone, better TV, better car, better jewellery for one's spouse, etc. Better something.
But what constrains us from demanding ever more?
Our budget constraint. We don't have unlimited money.
So what is the BASIC ECONOMIC PRINCIPLE? That there is NEVER ANY SHORTAGE OF DEMAND. There is only shortage of resources. The price of what we want might be too high. Our savings might not be sufficient. Our credit-worthiness might no longer be good. We can only buy equivalent to what we produce (through our services).
What does this imply? That the idea of demand deficiency is NONSENSE ON STILTS.
Who talks about demand deficiency?
So what are Keynesians?
Fools on mind-altering drugs. They need serious mental therapy to bring them back to earth. Their "theory" is based on every conceivable violation of the BASIC PRECEPTS OF HUMAN NATURE.
Steve Kates is a brilliant researcher, who has exposed Keynes's RIDICULOUSLY POOR knowledge of economics. The fact of Keynes's unbelievable ignorance as an economist is something I've commented on earlier, as well. But the more one thinks about Keynes (a muddle-headed copycat of Malthus and of the Fabian socialists he was), the less one is able to understand the inability of the economics profession today to ENTIRELY THROW HIS WORK INTO THE DUSTBIN.
Sure, Keynes was a miserably incompetent fool (or more). But why should allegedly educated economists not be capable of comprehending this basic fact?
I'd have loved to publish the slides Steve Kates presented today. But in the meanwhile here are two readings by him and a book that everyone must get hold of: Free Market Economics: An Introduction for the General Reader
I'll OCR and publish Kates's full article, entitled "INFLUENCING KEYNES: THE INTELLECTUAL ORIGINS OF THE GENERAL THEORY" as text file separately. That article will be very long (70 pages), but it deserves MUCH wider presence on the internet.