Staler87 said:
And how don't Hayek's theories have something to do with the real world.
Depends what theories you're talking about. Ever read
The Road To Serfdom? That's the Market Fundamentalist Bible, the book that argues that using any tool other than the market to solve any social problem will result in Hitler- or Stalin-like tyranny.
That's one of Hayek's theories which is patently untrue on its face.
Staler87 said:
1. The government will never raise taxes and reduce spending because it isn't popular. All modern day governments are populist.
This has nothing to do with Keynesian economics as such, and it is also obviously false as governments do this literally all the time.
Staler87 said:
2. Even if the government did increase spending (such as in the new deal) it only creates a temporary boom that artificially enhances the economy for a short while. Then the economy crashes again (such as the new deal).
This isn't specific enough for me to really argue against.
Staler87 said:
3. The whole theory behind Keynesian methodologies have been largely disproven by modern economics. Although the method and results are still debated the theory behind them, as laid out in Keynes's theories are completely disregarded today.
Again, this is not specific enough to argue against. What "whole theory" are you talking about?
Btw, it is wrong that Keynes is 'completely disregarded' by modern economics. I am curious, how much formal economics education do you have? Because even in macro 101 you learn what are called Keynesian macroeconomics. The mainstream consensus is around something called "new Keynesian" economics which purports to be a synthesis of Keynesian theory and classical economics, primarily via the IS-LM model.
My own argument would be that economics has made itself more-or-less worthless as a policy tool to the extent it has disregarded Keynes. But it's important to note that Keynes shied away from some of the more radical implications of his own ideas. A Polish Marxist economist named Michael Kalecki independently came up with the theory of the business cycle and of effective demand and he was able to perceive the implications far more clearly, due to a lack of classical dogma clouding the issues.
Staler87 said:
4. Although you may be thinking that this whole artificial boom/bust thing isn't terrible as the economy is still moderated. However you have forgotten about inflation. Keynes's methodologies cause sky high inflation if applied as he said. I generally think that inflation itself is not a good thing, although this may not be shared by many others including yourself, but nobody thinks hyper-inflation is a good thing. But this is exactly what spending tons of money and suddenly introducing more capital into the economy than there are products gets you.
Ahh, so this is a better argument, there is actually something substantial to grasp here.
What you are saying is in fact (again) untrue. Inflation does not correlate with government spending, for the simple reason that there is not a fixed amount of capital sitting around.
All spending (including private spending!) has the potential to create inflation, if it isn't accompanied by productive investment that increases the supply of real goods and services available for consumption. The question is whether your spending is productive - there is no straightforward relationship between government spending and inflation. This can be confirmed by comparing the budget deficit with the inflation rate in any country over time - there is no strong relationship.
Staler87 said:
So everyone being enlisted into the army and paid similar wages reduces income inequality? To me this is the biggest farce in modern economics. War doesn't help the economy it may increase the amount of goods produced and for a little while may seemingly help the economy, but I'm sure I don't need to list examples of war bankrupting countries and ruining the economy. Rations, enlistment, heavy debt incursion, and mass citizen buying of governmental bonds are not signs of a healthy economy even if the GDP is up.
This is all very muddled and some of these measures of a healthy economy reflect your prejudices (government bonds mean the economy is unhealthy? lol) rather than objective analysis.
During World War II the government very effectively managed the economy to produce an unheard-of volume of war material. Massive amounts of resources were put to highly efficient use driving the Allied war effort. Consumption was effectively deferred through the use of bonds and other means, in order to limit demand-driven inflation, because so much production was being diverted to the war rather than used for consumer goods.
After the war the government's policies very effectively shifted the war-economy to a consumer-goods-oriented economy.
After the war, far from being "ruined," the US economy enjoyed two decades of unprecedented growth and prosperity for unheard-of numbers of people.
Your idea that the economy of ww2 and after was 'unhealthy' is just silly.
Staler87 said:
Both are relevant. Both inject more currency into the economy than there is actual capital.
Ahh, you claim to be into Austrian economics and yet you've apparently never read the only Austrian economist of any worth (Schumpeter).
One of the major features of capitalism is that investment requires money. Production is M-C-M, money is used to produce commodities which are sold for more money.
So spending, provided it is done intelligently, can of course drive up the amount of real production, neutralizing inflation.
I will address the last two points later when I have more time. I don't have detailed knowledge of the trucking industry but it's a truism that deregulation destroyed the power of the Teamsters union over the industry.
As for financialization and financial deregulation, that has contributed to inequality in all kinds of ways. You could fill up books with that stuff.