Thoughts on economics and liberty

Demand deficiency? (Or, do people suddenly achieve nirvana during recessions?)

A few thoughts arose during Steve Kates's brilliant lecture today (based on this article).

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?

Keynesians.

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

Readings

The Dangerous Return to Keynesian Economics by Steven Kates,  February 3, 2009,  Quadrant Magazine, March 2009

SLIDES: Keynesian Economics: How to Ruin Your Economy in One Easy Lesson

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.

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Sanjeev Sabhlok

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5 thoughts on “Demand deficiency? (Or, do people suddenly achieve nirvana during recessions?)
  1. allwyn

    from resources I’m reminded of zeitgeist movies series, the 3rd installment – zeitgeist:moving forward advocates a resource based economy designed by jacque fresco founder of Venus project. I mean it sounds too much but somewhere they do have a point, they are against capitalism and all other ‘isms’ and its like money is the root of all trouble in society and the monetary based system should be removed and everything should be free as it all comes from the earth/nature ultimately.

     
  2. Sanjeev Sabhlok

    “Everything should be free”. Such a sentiment says it all – about the TOTAL lack of understanding of the human enterprise. And no, 80 per cent of what we consume and 99 per cent of what we are does NOT come from ‘earth/nature’. It comes from the human brain. Human intelligence.

    When we want a new mobile phone/tv/even house, we don’t want more of what nature gives us, but more of what MAN creates. And the capacity of man to create wealth (from his brain) is basically limitless.

    s

     
  3. Tim Curtin

    Sanjeev

    You are mistaken on Keynes, as I have pointed out to you before, and Kates is a far from reliable source on anything relating to Keynes’ General Theory, including the sources acknowledged therein.

    Best regards

    Tim

     
  4. Sanjeev Sabhlok

    Dear Tim

    I do like to think for myself, as you well know. And your valuable thoughts, despite my regard for you, do not make sense on this topic of Keynes. I have read and understood enough of Keynes and Keynesianism to know that Keynes was very, very wrong. Steve Kates’s comments are actually much more modest than mine. I think that Keynes comes from the socialist tradition. I don’t even consider Keynes to be an economist. Kates at least thinks of Keynes as the last of the great classical economists.

    Let me form my own views. I do not form views lightly, but when I do, I speak very clearly and boldly.

    s

     
  5. Sanjeev Sabhlok

    [I’m deleting my comment – in order to review it more carefully. Pl. excuse me. Had a small technical doubt that will take me some time to think through]

     

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