Category: Economics, Finance, and Political Economy

CURT WHY DO YOU ATTRIBUTE NEGATIVE INFLUENCE TO KEYNES AND RAWLS?
Great Question:

TLDR; The Conversion of economics from the science of cooperation over the long term (capitalization) to the science of manipulation of the public in the short term (consumption) – under the presumption that the industrial revolution and it’s consequences had produced a horn of plenty that would lead to eternal growth.

Context: I was educated in science, engineering, computer science, economics, and law. So I have an engineers perspective on problems in social science.

As such I have maintained a foundation in the Austrian school of economics as the study of economic science, compatible with the empiricism of western common law, and concurrent legislation, with a cautious acceptance for the Chicago “freshwater” school which seeks to insure economies and facilitate the production of such commons as education, and a disdain for the Keynesian, New York, “saltwater” school of economics, that seeks to maximize consumption and debt at the consequence of cumulative risks: kicking the can down the road. These three fields all claim the title of economics but they are instead economics, it’s insurance against shocks, and it’s manipulation.

Now, that said, in economics I consider Keynes (as did my mentor Hayek) a disaster for economics and policy, and

I consider John Rawls a disaster for both law legislation and economic policy – because it is their collective efforts that have brought about the present economic crisis in the west: their pretense of endless growth and endless risk, has come to roost.

So, my critiques of Keynes and Rawls emphasizes their roles in baiting ignorant legislators and willing financiers into economic and legal policies that have led to unsustainable growth, increased debt, and extraordinary economic risks.

CRITIQUE OF JOHN MAYNARD KEYNES:

Short-term focus: Keynes advocated for government intervention and increased spending to stimulate economic growth during recessions. However, critics argue that this short-term focus on boosting consumption and aggregate demand neglects the long-term consequences of accumulating debt and the potential for creating economic bubbles.

Disregard for savings and investment: The Keynesian approach often involves lowering interest rates to encourage borrowing and discourage saving. This can lead to a misallocation of resources, as the artificially low cost of capital may encourage investments in projects that are not economically viable in the long run.

Inflation and currency devaluation: Keynesian policies, such as expansionary monetary policy and deficit spending, can lead to inflation and currency devaluation over time. This erodes the purchasing power of money, disproportionately affecting savers and those on fixed incomes.

Crowding out of private investment: When governments borrow heavily to finance spending, they compete with the private sector for available funds. This can lead to higher interest rates and reduced private investment, hindering long-term economic growth.

Ignoring the role of prices: Keynesian economics often focuses on aggregate demand and overlooks the crucial role of prices in allocating resources efficiently. This can result in market distortions and a misallocation of resources.

CRITIQUE OF JOHN RAWLS:

Disregard for individual rights and property: Rawls’ “veil of ignorance” and “difference principle” prioritize redistributive policies over individual rights and property ownership. This can undermine incentives for innovation, risk-taking, and wealth creation.

Encouragement of rent-seeking behavior: Rawls’ focus on redistribution can encourage rent-seeking behavior, where individuals and groups lobby for special privileges and transfers rather than engaging in productive economic activities.

Centralized decision-making: The implementation of Rawlsian principles often involves centralized decision-making and government intervention, which can lead to inefficiencies, unintended consequences, and the concentration of power in the hands of a few.

Disregard for the knowledge problem: Rawls’ theory assumes that a central authority can gather and process all the necessary information to make optimal redistributive decisions. However, this ignores the inherent complexity of economic systems and the dispersed nature of knowledge, as highlighted by the Austrian school.

Conflict with the rule of law: Rawls’ emphasis on redistributive justice can come into conflict with the principles of the rule of law, such as generality, predictability, and equal treatment. This can lead to arbitrary and discriminatory policies.

In summary, my criticism of Keynes and Rawls emphasizes their role in promoting short-term thinking, unsustainable policies, and the erosion of individual rights and market efficiency.

They are the innovators and justificationists of policies whose short term goals produced unintended consequences and long-term risks associated with their ideas, which are seen as contributing factors to the current economic crisis in the West.

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