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So I think it's simplistic and empirically disconfirmed to suggest that all we have to do is return to the redistributive policies of the 70s and resource constraints will drift back down into the economic background noise.

On the contrary, resource constraints would return to the forefront of our economic problems if we (re)turned to unconditional fiscal defense of full employment. Which is what we want to happen: We want the binding constraint on economic activity to be real resource availability, not by the fake constraint of money availability.

But by pretending that real resources are the currently binding constraint, you would be arguing that the crisis is already over as far as fiscal and monetary policy is concerned. All that can be done, then, is industrial and R&D policy to improve resource utilisation.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Jan 30th, 2012 at 08:37:02 AM EST
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No, I'm arguing that the process is fundamentally insane, unstable, hysterical and utterly irrational.

I agree that we should build an awareness of physical constraints into economic modelling. But that's a much bigger issue of wide-scale rational planning. It's disconnected from the current political need to label a few people super-winners at the expense of everyone else and the carrying capacity of the planet as a whole.

The wide differentials that generates are always followed by a mass crash in confidence. But this is considered a feature, not a bug, because it prevents democratic accountability and is a convenient way to keep working populations repressed.

Economic theory makes as much sense as a drunk does. A drunk will lurch from over-confidence to utter panic for largely trivial reasons, before dying of something stupid and utterly avoidable.

The perception of triggers for emotional states is very distant from intelligent sober analysis.

It's also a feature of the drunken state that important features of reality are ignored.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Jan 31st, 2012 at 06:34:14 AM EST
[ Parent ]