voluntaryXchange

Keynes’ Antecedents

Consumption as a driver of business cycles is a key part of Keynes’ general theory. Steve Horwitz points out that others had that idea first.

Foster and Catchings:

… Argued that insufficient consumer income is what leads to collapses in consumption and hence profits, prices and outputs.  They base their theory on a primitive but clumsy version of a multiplier-accelerator mechanism.   If retained company profits are hoarded (rather than being lent out), then consumer income is insufficient for consumers to absorb output. They argued that even if the firm invests this hoarded money itself (and thus pays the income out to workers), the problem is not solved: increased investment increases demand, yes, but it also pushes out output even further.  The imbalance between aggregate demand and supply, Foster and Catchings argue, will thus maintain itself. 

No one talks about those guys anymore … but this all sounds similar to what you hear from a lot of progressive thinkers.

Via Steven Horwitz via Newmark’s Door.

Cuba Cheats At Healthcare Measurement

Btw the Gonzalez 2015 study is a doozy, it shows how obvious the reclassification of early neonatal mortality to late fetal mortality is pic.twitter.com/qQTEf00eQ5

— River_Tam (@RiverTamYDN) February 26, 2020

Gee, d’ya think?

Improvements in Life (Just Since the 90’s)

Economists are dismayed by the people who routinely claim that life in not getting better.

FWIW: I seriously wonder if inability to process this is actually a psychological condition that will one day get into the DSM, or be treated with pharmaceuticals.†

Anyway, Gwern brings us “My Ordinary Life: Improvements Since the 1990s”, a long and diverse list of things that have gotten better.

In terms of macroeconomics, each one of these is a way in which real GDP and/or real GDP per capita growth rates understate changes in well-being.

† This is not a view I have come to lightly. For example, the obsession with measuring which country is “winning” by who exports the most most, had completely turned the truth upside down: on their own, exports requite work without any benefit. Or take the example of plastic pollution in the oceans. People are concerned both about large pieces floating in the Pacific because they have not broken down, and microplastics floating in the oceans because they have broken down. Yes, I understand and want no plastics in the ocean at all. But what concerns me is the number of people who don’t recognize those as potentially contradictory dislikes that one should be able to prioritize.

Cross-posted from SUU Macroblog, which is required reading for my advanced macro students.