In modern economies, various instruments of budgetary and fiscal policy are used, supporting the activities of business entities, and also instruments of socio-economic policy, including housing, etc., aimed at activating economic processes.
In view of the above, does Keynesian state interventionism mainly activate growth or economic development?
Please reply
Dear Friends and Colleagues of RG
The issues of specific programs to improve the economic, financial, material and housing situation of households as key instruments of pro-development state intervention and significant components of the socio-economic policy of the state I described in the publications:
Article FAMILY 500 PLUS PROGRAMS AND FLAT PLUS WITH KEY INSTRUMENTS ...
Article Ability to Generate Financial Savings by Households in Poland
_in_PolandArticle ECONOMIC AND FINANCIAL SITUATION OF HOUSEHOLDS IN POLAND – A...
I invite you to discussion and cooperation.
Best wishes
The Keynesian development theory considers the macro equilibrium-growth ‘tandem’. Partial equilibriums’ static (e.g. aggregate demand & supply; full employment national income on the short term) difference(s) might induce the growth (as) dynamic, as consequence, but not in all hypotheses & hypostasis. Namely (concretely) growth expects to be valid when investment resources will meet the (correspondingly available) ones of labour – and not otherwise. In other words, only the unemployment economy is susceptible to bear growth immediately, and never the full employment achieved one – of course, except for longer time terms that permits restructuring, here including another full employment level and its corresponding national income.
Keynes was the one contradicting his former classic-liberal colleagues by arguing that intervention(ism) could be able to (re)make some equilibrium(s), growth and development, but then he equally keeps the merit of understanding & indicating limits of the interventions’ capability in such a way.
The other interesting point for the so-called ‘Keynesian State interventionism’ here revealed by Dariusz is something that, on the contrary, doesn’t make ‘Master’ Keynes too comfortable. Of course, he also was the one pointing on unemployment as a real – and not transitory or otherwise – problem of the modern economy. But up to the end of his logic, 'his' employment was rather following the ‘principle of interconnecting vessels’, i.e. ever ready and skilled to fill all available and disposable jobs. Or, the labour and employment-unemployment topic area proves much more complex and meets many policy problems that Keynes didn't do too much for.
Keynesian economic philosophy strengthens the demand side of an economy, meaning the state puts money in people's pocket by creating employment. This is often achieved through deficit spending. The government becomes an investor (e.g. in infrastructure projects) and earns the monies invested through higher tax returns when employment picks up. This creates economic growth and it makes people earn money (if this is what you mean with the expression 'economic development'.
In less developed economies it tends to do both. In developed economies growth is the main interest. Unless, of course, the "developed" economy is actually littered with areas of business and production which are no longer efficient. Then it just drags out the inevitable! Compare immediate post-war Britain with 1970s Britain.
Christopher NOCK
The Keynesian development theory considers the macro equilibrium-growth ‘tandem’. Partial equilibriums’ static (e.g. aggregate demand & supply; full employment national income on the short term) difference(s) might induce the growth (as) dynamic, as consequence, but not in all hypotheses & hypostasis. Namely (concretely) growth expects to be valid when investment resources will meet the (correspondingly available) ones of labour – and not otherwise. In other words, only the unemployment economy is susceptible to bear growth immediately, and never the full employment achieved one – of course, except for longer time terms that permits restructuring, here including another full employment level and its corresponding national income.
Keynes was the one contradicting his former classic-liberal colleagues by arguing that intervention(ism) could be able to (re)make some equilibrium(s), growth and development, but then he equally keeps the merit of understanding & indicating limits of the interventions’ capability in such a way.
The other interesting point for the so-called ‘Keynesian State interventionism’ here revealed by Dariusz is something that, on the contrary, doesn’t make ‘Master’ Keynes too comfortable. Of course, he also was the one pointing on unemployment as a real – and not transitory or otherwise – problem of the modern economy. But up to the end of his logic, 'his' employment was rather following the ‘principle of interconnecting vessels’, i.e. ever ready and skilled to fill all available and disposable jobs. Or, the labour and employment-unemployment topic area proves much more complex and meets many policy problems that Keynes didn't do too much for.
Keynesian means different things to different people. In its original version (in the General Theory) it was all about demand management under circumstances of less than full employment. Therefore it was not really directed toward treating issues of growth (in the sense of added resources moving the production possibility frontier outward) or development (changing the mix of product toward higher value added goods and services). In a more general sense Keynesian type government spending and/or tax policy can affect either growth or development but which (if either) it does depends on the microeconomic details of such policies. If oriented toward encouraging (eg via tax breaks) investment in current industries that would be growth enhancing. If oriented towards creation of new industries that would be more development oriented.
Very interesting question. There is no empirical evidence and little theoretical predictions showing that Keynes recipes have long-run effects, and more specifically in terms of growth. Keynesian policies are designed to stabilize the business cycle instead, and most of the evidence shows that their effects disappear after 3 or 4 years, failing to produce a continues growth path. Now, state incentives to R&D or investment infrastructures seem to have positive effects on growth and development, but these policies are in the line of the supply side of the economy and out of the Keynesian scope. Thus, while Keynesian policies can temporarily reactivate the economy, these policies need to be attached to supply policies to create long-run growth.
Yea, it was about stabilising the business cycle, but then governments decided not to withdraw when the corner was turned and the employment/inflation circle restored. Why would they? Not many votes in saying "all's well, we're going to cut back now!" But the blame lay with democracy, not Keynes. By the 1970s the reality had changed. Internationalisation of trade meant less protection of home markets. New forex arrangements meant less control of interest rates etc. Again, no Keynes' fault.
NOCK
Dear Dariusz,
As far as I know, there cannot be development without growth. In addition, the replies from our expert colleagues pretty much sums up Keynesian interventionism in times of economic contractions. Indeed, Keynesian policies were/are short-term and demand side targeting policies, which were designed to deal with the ills of the "Great Depression" particularly. Given the tremendous slack in the productive capacity during the "Great Depression," Keynes suggested the use of mainly Fiscal Policy intervention as a way to prop up aggregate spending due to the liquidity trap problem with the Monetary Policy. However, the Keynesian policy suggestion was not to rely on deficit spending (i.e. fiscal stimulus) forever. Keynes used the term "leaning against the wind," which refers to running fiscal deficits during recessions and surpluses during expansions. As such, the national debt is/was not supposed to be affected much. However, politicians made the Keynesian suggestion (i.e. fiscal stimulus via deficit spending) their motto and kept running deficits even in good times (i.e. the US budget deficit currently widening to $310 billion -an increase of 77% on a yoy basis- in the first four months of the fiscal year).
Best,
--
M.D.
l'interventionnisme de l'Etat peut bien sur relancer la croissance économique à court terme et le développement économique à long terme en utilisant le multiplicateur keynésien et l'accélérateur keynésien en s'appuyant sur l'effet revenu et l'effet capacité.
As said by earlier by others, John Maynard Keynes was proposing an approach to deal economic recession popularly known as the great depression but it was later realize that his suggestion or views can only hold in a short term which may possibly leads to economic growth. But the question as to when does economic growth translate in to economic development? Is a debate among researchers.
Dear All, I tend to agree with others that Keyn didn’t care much about development. So, Keynes policies are short-run, if only because he said that in the long-run, we are all dead (even if more or less developed).
Yet, looking at practical issues and not at theory, it seems that when people remain unemployed for long period, they lose part/most of their human capital (understood as the capacity to produce at least as much valueas they cost to their employers). Reducing unemployment may therefore prevent the erosion of the stock of human capital, and therefore be pro-long-time-growth.
Paul: When used properly, I believe that Keynesian policy can and does promote economic growth. During periods of recession and/or economic downturn, the government should increase the money supply, lower interest rates, increase government spending, and/or cut taxes.
The challenge is that during economic recoveries and/or growth, the government should lower the money supply, raise interest rates, cut government spending, and/or raises taxes.
Very interesting question - let me re-write your question. The starts with:
In modern economies, various instruments of budgetary and fiscal policy are used, supporting the activities of business entities, and also instruments of socio-economic policy, including housing, etc., aimed at activating economic processes.
In view of the above, does Keynesian state interventionism mainly activate growth or economic development?
It is obvious that the approach and model Keynes offered and used was for different state of economy then. Though, I do agree with our colleagues' answers on most points - would say that interventions are necessary with a Clear Purpose or Aim and may be it would offer a particular solution under specific scenario for a short to medium period.
Dear Friends and Colleagues of RG
The issues of specific programs to improve the economic, financial, material and housing situation of households as key instruments of pro-development state intervention and significant components of the socio-economic policy of the state I described in the publications:
Article FAMILY 500 PLUS PROGRAMS AND FLAT PLUS WITH KEY INSTRUMENTS ...
Article Ability to Generate Financial Savings by Households in Poland
Article ECONOMIC AND FINANCIAL SITUATION OF HOUSEHOLDS IN POLAND – A...
I invite you to discussion and cooperation.
Best wishes
Dear Colleagues:
As you know public expenditure has a key role in promote economic growth. Besides, private investment follows the trend of public investment, this was the experience of the Mexican economy in the period 1978-1981.
State interventionism mainly activate growth, because development economic is more complex to reach it, there are many social, political, economic and externalities that constraints it.
Dear Friends and Colleagues of RG
The issues of specific programs to improve the economic, financial, material and housing situation of households as key instruments of pro-development keynesian anti-crisis state intervention and significant components of the socio-economic policy of the state I described in the publications:
Article FAMILY 500 PLUS PROGRAMS AND FLAT PLUS WITH KEY INSTRUMENTS ...
Article Ability to Generate Financial Savings by Households in Poland
Article ECONOMIC AND FINANCIAL SITUATION OF HOUSEHOLDS IN POLAND – A...
Article The role and application of Keynesian macroeconomic anti-cri...
Article Soft monetary central banking policy and Plan for Responsibl...
Article Importance and implementation of improvement process of prud...
I invite you to discussion and cooperation.
Best wishes
Dear Dariusz:
I think is not correct to use State keynesian, because State is a complex term, there are many definitions " A nation or territory considered as an organized political community under one government".
. Keynesian Theory. It is an economic doctrine inspired by the ideas of John M. Keynes that argues that through effective demand can expand the growth of the economy and government spending has a fundamental role.
Dear:
Keynesian economic policy, promotes economic growth through effective demand that is a very efficient mechanism.
The Keynesian State promotes economic growth and economic development, the first through public spending and the second through social programs.
The Keyensian state intervention mainly activate economic development particularly in developing countries. In these countries private investment which is the main driver of economic development are lacking or miniscule presence due to various bottlenecks. So state intervention required to accelerate the development process. He
Hi Raj
In developed countries state intervention in the main driver of economic development.
I must disagree with the reply by Martha Pantoja. In developed countries state intervention in the form of infrastructure investment including education, road networks, etc. but the main contribution to development (I define that as structural change as well as growth in per capita income) comes from technological change -- which is assisted by the state but largely originates in the private sector. In less developed countries without a highly viable and energetic private sector the state can be more central to development as well as to growth. This requires a competent and reasonably honest government.
Dear Neil:
I know people in United States that recieve help, because of Government social programs; government programs that can help pay for food, housing, and medical care, among others.
Dear Martha:
All that you say is correct, but none of it relates to growth or development by any reasonable definitions of those terms. Those expenditures relate to a) social welfare and b) economic stabilization (reducing the effects of income fluctuations on spending and therefore reducing the size of the Keynesian spending multiplier--so any initial shock has a smaller overall impact on GDP.
Dear Neil:
As yo know, government invests Government invests in infrastructure through public spending. Likewise, many of the goods and services are produced by public companies.
Dear Dairusz.
I check the meaning of interventionism and is the tendency to intervene, in the case of governments in the fields of politics and economics, Interventionism has a negative connotations. However, in your topic interventionism has a positive connotation.
Best Regards
Dear Martha
You are certainly correct that government does many things in terms of public goods that contribute to growth and/or development. However your original question related to Keynesian state intervention and that is what I addressed. Not all state activity is Keynesian, at least when I use the term I mean, as Keynes did, intervention to manage aggregate demand in order to control business cycles.
Dear Neil:
There is a confusion, because definition about State is in terms of Politics. Keynesian Policy is a strategy that which emphasizes the increase in public spending as an anticyclical policy, and its effects on output and employment
Precisely, and when you move to state control of aspects of the economy to "guide" or "seize the commanding heights" you have left the Keynesian paradigm and moved on to what is generally called "dirigisme" which is another matter altogether.
Dear Neil:
I didn´t know this term, I found this definition: "Dirigismo (from the French "dirigisme") is a political-economic concept used to designate a system in which the government exercises a strong directive influence in the economic sectors, generally not through interventionism or nationalization but the use of incentives to promote practices that are of public or general interest" (Wikipedia).
It´s clear that appplied economic policy in every country is strong influenced by the most power economic sectors.
It is the French who pioneered the modern practice but the origins of the modern version can easily be seen in the state established by Cardinal Richelieu and continued into the reign of Louis XIV and onward.
The Keynesian development theory is a Statist's dream come true.
It seems to suggest that when things are going economically bad, government can borrow, spend, intervene, and do whatever it takes to push things along.
The idea being, that when things finally get going, that same government will tax the now-booming production and slow the run-away growth they've inspired, repaying the debts that were made in the hard times.
But there is a bug in the ointment called "human-nature."
The problem is, times are never seen to get better. We're always a step away from disaster.
Politicians only keep their jobs through PERPETUAL ALARMISM.
-The national health crises
-The hoards of invading immigrants
-The opioid epidemic
-Global Warming
--the list is guaranteed to remain endless...
There are never any good times in the world of politicians seeking re-election.
Right now America has the lowest unemployment rate in modern history and everyone is living rich, with cells phones and two cars, and air conditioning ....
But if you listen to many politicians we are all but a half-step away from starvation, sickness, and world ending catastrophes of one sort or another (i.e. over-population or maybe mass extinctions!).
So, Keynes justifies that we spend, spend, spend ... and when we've done that, we need to start spending some more.
The welfare state and the warfare state are insatiable.
The world is off the gold standard and pegged to an ever inflating dollar standard. Fantastic increases in productivity due to the application of computerization has prolonged the bursting of the financial bubble.
But history teaches that endless government money printing eventually causes productive disruptions.
Keynes didn't alter the basic rules of economics. He just gave politicians intellectual cover to spend like there is no tomorrow while patting themselves on the back for doing so.
To: Martha
One of the lacks that often handicaps economists dealing with the big questions is a lack of historical perspective. (A one time colleague who claimed to be a Marxist--whose paradigm emphasized historical context asked me what side Russia (USSR) had been on in WWII.) It is not enough to say "old" about the origins and nature of state intervention, it is necessary to actually read the histories and understand how and why matters such as state involvement in the economy developed. This does not necessarily mean getting deep into a political perspective such as that of Stephen Martin Fritz's.
Oops, correction Cardinal Richelieu was chief minister (in modern terms) to Louis XIII not XIV, The minister for Louis XIV who did even more to enshrine state direction in late 17th century France was Cardinal Mazarin. I never could keep those Cardinals straight.
Keynesian has an impact on the economy, but it also can contribute to development by bringing people back into employment. However it does not always work. There must be scope for public investment...
Dear Eberhard:
You must to take into account that many private companies generate jobs due to fiscal stimuli by the government.
Considering the emphasis on reducing unemployment, and may be poverty as well, Keynesian state interventionism would certainly activates economic development in addition to growth.
The 2009 recession in the U.S. was brought about by artificially low interest rates and the manipulation of the housing market to guarantee anyone who wanted a mortgage could get one.
The result was over-building a default.
This (as always) is blamed on GREEDY WALL STREET.
A similar pattern is developing today. Politicians are spending like crazy and pushing interest rates lower to create artificial demand. The future result is as predictable as it has always been.
The flaw in the Keynesian model is that it suggests government spending whenever the economy is in need of a boost. And government always dream that their economies are in need of a boost. So it just leads to perpetual mis-allocation of resources.
I must disagree with Mr Fritz. First, the suggestion that government spending be increased when there is insufficient aggregate demand to maintain full employment is only one of the possible policies for the purpose in that model (cutting taxes or raising the money supply are basic alternatives). Second, it is not a flaw of the model if governments misuse it. I do not think governments always think their economies need a boost. Sometimes they erroneously think that restraints are needed, and whether spending increases cause misallocation of resources depends on what kind of spending they do..
Finally, I think that the financial collapse in 2009 was not really due to low interest rates but to bad financial practices, some done with government encouragement, others due to unwise deregulation of financial institutions,. Greed may of course always be assumed to be present whether there is a crisis or not.
Keynesian economic policy affects economic growth Keynesian economic policy affects economic growth when the multiplier effect is positive.
Ms. Pantoja, With all due respect, I am puzzled. I have a question: Do you mean that private investment project will be undertaken when there is public investment? As an example, let's say you invented a brand new process which turns plastic shopping bags into washable and durable paper. In addition, you have a patent on your invention and were able to raise $1b. from wealthy and willing investors to build a new factory to pursue your dreams. Also, the icing on the cake is that your profit margin is 50% net of everything. Where is the public investment? None. So, your investment would be an autonomous investment independent of the public sector and other things.
Mr Doral: Some private investment is indeed independent of public investment but much is not, with public and private investments being complementary. Take your example: If there were no public investment in roads, ports, etc there might be little profit in turning plastic bags into paper line products because the cost of shipping would be too high, both for getting the materials (bags) in and getting the paper to customers. Creating the new process might have required public spending on education, as might getting a useful work force.
Mr. Garston, Of course your modified version is correct. I was just trying to point out that some investments are "autonomous" and others are "induced." But we cannot conclude that Private Investments = f (Public Investments).
As you point out public investment has a key role in promote economic growth. State interventionism promotes economic growth and in a second stage it has to boost economic development, mainly in the most disadvantaged sectors of the population.
Ms. Pantoja,
The vertical distance between the red line (R) and the blue line (B) is the gross public sector investment. Though R and B are most of the time in synch, it looks like at times they deviate or at least are apart from each other, which should give us the idea that some of the private investments are "autonomous" and not a function of public sector investments (e.g. a major technological breakthrough).
Best Regards,
--
M.D.
Hello Murat
You´re right,
The Effect of Investment on the Gross Domestic Product, "some of the private investments are "autonomous" and not a function of public sector investments (e.g. a major technological breakthrough)".
However, I refer that The Effect of Investment on the Gross Domestic Product in general. Four factors drive Gross Domestic Product, GDP: government spending, consumer spending, investments (Public and Private) and exports.
Dear Colleagues and Friends from RG,
The above discussion inspired me to the following considerations:
In my opinion, well-conducted national, socio-economic policy based on Keynesian state interventionism can be an instrument to limit the negative effects of a possible future financial or economic crisis. The key issue is the government's financial capacity, i.e. the financial situation of the state budget. In the event of a budget surplus, there would be no problems to pursue an active socio-economic policy, including launching large public investment projects financed from public funds in business sectors.
In this way, additional jobs are created, income increases, and consumption increases. The result is an increase in production and tax receipts to the state budget. However, paradoxically, the greatest needs for conducting national socio-economic policy based on Keynesian state intervention appear in the situation of recession in the national economy, in a situation of crisis, high unemployment, a decrease in production, a decrease in investment, a decrease in tax revenues to the state budget, in a situation of often high debt of state finances, i.e. high budget deficit and public debt.
Paradoxically, the need for high expenditure from the state budget in order to conduct national socio-economic policy based on Keynesian interventionism arises when the financial resources available for this purpose in the public finance system are scarce. Therefore, in a situation of a good economic situation in the national economy, in a situation of high tax revenues to the state budget, in a situation of a budget surplus, financial resources should be accumulated, national investment funds should be created for the implementation of investment projects that will be implemented when the economic situation of the domestic economy is significantly affected deteriorated.
Therefore, the financial capital of the state's public finance system in the form of a budget surplus and also the accumulation and reinvestment of central bank profits should be accumulated in the period of high economic growth and should be a source of financing for active, pro-development, interventionist, Keynesian socio-economic policy during the economic crisis . Currently (end of August 2019) the risk of the emergence of another financial and economic crisis similar to the crisis of autumn 2008 is considered by most macroeconomic analysts as low. It is therefore a good period for the restructuring of heavily indebted public finances in many countries and the accumulation of funds to be used, when it may be only in a few years that another global financial and economic crisis will appear.
What do you think about this topic?
What is your opinion on this topic?
Do you agree with me on the above matter?
Please reply
Dariusz Prokopowicz The great problem government development projects is that they are invariably wasteful, remove capital from the private sector which could have been invested more wisely, and tend to support political rather than social aims and ends.
A recent example was the 1.5 mile (big Dig) tunnel built in Boston at the cost of 24 billion dollars. Under the watchful eye of government it cost 250,000 dollars per inch to dig.
Then there is the vaunted Obama American Reinvestment and Recovery Act billed at 800+ billion dollars.... can anyone name anything that came of it?
The Keynesian outlook suggests we spend to stimulate economic activity during times of slowing ... but government bureaucrats always imagine things are slowing somewhere and we always need to spend more.
Keynes also suggested (as you mention) the idea of paying off debts and accumulating capital during the good times. But in government the times are never so good as to not require more spending (just look around right now).
Keynes just gave a pseudo-intellectual veneer for endless government spending on anything and everything.
And when infinite government debt ends up with the economy going into a recession anyway ... what do the Keynesian's say is the solution?
MORE SPENDING OF COURSE!
When the economy is expanding the Keynesians want to credit government spending and oversight .... and when all that spending-and-oversight still leads to a contraction, the solution is invariably for more government spending and oversight.
In the decades ahead we will see the result of fantastic government spending and oversight in China ... The cost of the huge number of newly built {but completely empty) ghost-cities will make itself felt.
But debt is not the big problem. The people who have the money also express social authority. And as government spends and spends more-and-more social activity come under the auspices of the State and beyond that of the people.
Luckily, most western economies still manage to grow faster than the State apparatus that is always struggling to tax it, control it and corral it.
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2 Recommendations
23rd Aug, 2019
Murat Doral
Kennesaw State University
Dear Prof. Fritz,
You nailed it. As always, it's easier said than done. The wastefulness of the government is an obstacle for Keynesian interventionism to be successful. Like the "Big Dig," there are many public spending projects where tax payers dollars are wasted. As such, though Keynes talked about "leaning against the wind" it seems like the wind has been blowing in only one direction. That is, more spending of course regardless of the business cycle. Please see the attached example from the US. The US government has been leaning in one direction (i.e. deficit spending) for a long time.
Best,
--
M.D.
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1 Recommendation
1st Nov, 2019
Dariusz Prokopowicz
Cardinal Stefan Wyszynski University in Warsaw
Dear Colleagues and Friends from RG, After the global financial crisis of 2008, in many countries interventionist counter-cyclical, pro-development socio-economic policies were used, with simultaneous use of instruments of active fiscal policy activating economic entities and monetary policy applied by central banking increasing liquidity in the banking system. In this way, active economic policy based on Keynism, known since the 1930s, has been enriched with new instruments or the same instruments enriched technically, systemically and with the involvement of much larger financial resources from public finances. For decades, this type of approach has become a standard in many developed and developing countries. However, in order to be able to pursue an active, Keynsian or post-Keynesian socio-economic policy, it is necessary to have a good state of public finances, i.e. low public debt and a budget deficit if in a given business cycle situation it is not possible to generate a budget surplus.
Thanks to technological progress and increasing production, the standard of living of the citizens is rising and the possibilities of pro-social, active social, socio-economic and housing policy are increasing. The possibilities of applying this type of socio-economic policy, including housing, and implementing pro-development economic functions are usually greater in highly developed or technologically fast developing countries. Contemporary interventionist socio-economic, fiscal, monetary, etc. policies enable active housing policy as interventionist, post-Keynesian, anti-crisis, activating consumption and economic activity. When applying an active housing policy, new apartments are built, housing estates available to citizens of the middle class, achieving average and lower incomes. Active anti-crisis, anti-cyclical, post-Keynesian housing policy applied in the situation of a progressive decline in the economic growth rate and a change in the scope of implementation of this socio-economic policy in the context of the cyclical nature of economic processes taking place in the long-term cyclical nature can significantly reduce the scale of the recession. However, during the recession of the national economy through the use of active anti-crisis, anti-cyclical, post-Keynesian housing policy. Fiscal instruments are one of the key determinants of the use of housing policies that stimulate economic processes, and good public finances are essential, i.e. low public debt and budget deficit if it is not possible to generate a budget surplus in a given business cycle situation.
In highly developed countries, where due to technological progress and growing production, the standard of living of citizens increases and the possibilities of implementing pro-social, active social, socio-economic and housing policy are increasing. Contemporary interventionist socio-economic, fiscal, monetary, etc. policies in highly developed countries allow their use, i.e. socio-economic policies as interventionist, post-Keynesian, anti-crisis, activating consumption and / or entrepreneurship and innovation in the situation of a progressive decline in economic growth and change the scope of implementation of this socio-economic policy in the context of the cyclical nature of economic processes that take place over many years. Activation of entrepreneurship and innovation can be one of the elements of interventionist socio-economic policy. One of the key instruments of this policy are fiscal instruments and a good state of public finances is necessary, i.e. low public debt and budget deficit if it is not possible to generate a budget surplus.
Contemporary interventionist socio-economic, fiscal, monetary, etc. policies in highly developed countries allow their use, i.e. socio-economic policies as interventionist, post-Keynesian, anti-crisis, activating consumption and / or entrepreneurship in the event of a progressive decline in economic growth and changes in the scope of implementation of this socio-economic policy in the context of the cyclical nature of economic processes that take place over many years. However, due to the growing public debts, the aging of the societies of the most developed countries, the rising costs of civilization progress that will have to be spent on ecology and the reduction of the growing income disparity between the richest and poorest countries, the possibilities of applying socio- economic as interventionist, post-Keynesian, anti-crisis, activating consumption and / or entrepreneurship in a situation of a progressive decline in economic growth.
The widespread opinion is that if the state did not launch anti-crisis programs of state interventionism in the situation of the emerging major global financial and economic crises, such as during the 2008 global financial crisis, the scale of negative economic and financial aspects of such crises would be many times larger. Then it could lead to an institutional, political and organizational crisis, a lack of citizens' confidence in financial institutions and state institutions, money would lose its economic functions, a deepened multi-faceted crisis of developed economies would appear, and there could be a risk of collapse of the capitalist system. I conduct research in this area. The conclusions of the research I published in scientific publications that are available on the Research Gate portal. I invite you to cooperation.
In view of the above, I am asking you the following question: However, can it happen that during the implementation of a specific model of Keynesian socio-economic development policy, such mistakes can be made that instead of balancing the national economy, there will be an increase in systemic credit risk and, as a consequence, another financial and economic crisis may be generated?
What do you think about this topic?
What is your opinion on this topic?
Please reply
I invite you to discussion
Thank you very much
Best wishes
Dariusz Prokopowicz
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1 Recommendation
2nd Nov, 2019
Stephen Martin Fritz
The validity of the proposition you propose :
" The widespread opinion is that if the state did not launch anti-crisis programs of state interventionism in the situation of the emerging major global financial and economic crises, such as during the 2008 global financial crisis, the scale of negative economic and financial aspects of such crises would be many times larger.
The validity of this cannot be tested as fantastic and unprecedented interventionist tactics are always applied. Always!
No alternative is ever tried.
Most recessions in American history lasted between 2-4 years.
The great recession from 1929-1949 lasted 20+ years because of fantastic government intervention in the marketplace.
But the interventionists insist that if they did not intervene, things would have been worse.
So, instead of saying that FDR extended pain and suffering for 20 years... historians say he saved society from something far worse.
How can we know?
We can only know when (and if) they day ever comes that they stop printing endless streams of money and allow some time to view what results.
But money is power, and governments never have enough power, so they all want to print, borrow, and spend as much as they can get their hands on.
The USA is in the hands of the greatest economic expansion in its history.
Even Keynes argued that during these times we should be PAYING OFF THE DEBT.
Instead we are running trillion dollar deficits!
What do you imagine is going to happen during the next economic downturn?
Luckily, production and trade is making the world materially RICH.
So, we may have monetary disruption, but it is unlikely that many will actually starve.
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2 Recommendations
2nd Nov, 2019
Neil H Garston
California State University, Los Angeles
. Testing such propositions is indeed difficult. As with many aspects of economics the availability or lack thereof of experiments with control (no intervention) versus experiment (intervention) makes "proof" hard to come by. However it would be good if the debate kept to historical accuracy. at least. The Great Depression did not run from 1929 to 1949 by any reasonable definition. During World War II (Dec 1941 - August 1945) the unemployment rate in the US was as near zero as it has ever been, and it must be said that massive government deficits could have had something to do with that.
Yes Keynes did favor something on the order of balancing the budget over a business cycle and there are arguments for that (or for deficits falling due to expansions and rising due to downturns at least). The next downturn will have fiscal tools hard to use given that the deficit is already large. Monetary policy will be hard to use since interest rates are near zero in the US (and somewhat negative in the EU).
Perhaps it is time for innovations, past the quantitative the FED has been using for the last few years, whether Milton Friedman's "helicopter money, or the suggestion by one Democratic candidate (Yang I think) of giving every adult $1000, or my personal favorite--a positive sum national lottery with payouts varying with the ratio of output to potential output. Any of these would fit in to Keynesian interventionism.
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1 Recommendation
2nd Nov, 2019
Stephen Martin Fritz
The State can conscript everyone in a nationwide army to do little or nothing (or go off to foreign wars while building tanks at home) and claim zero unemployment, that does not mean much is being produced at home or that the people are living well or eating well or doing well.
The prosperity of the twenties was resumed in the 50s....
That is not to say there were not a lot of advances in between, but the two decades of the 30s and 40s are hardly exemplary of historic economic achievement.
What was historic was private sector economic achievement in the 50s and 60s ...
this slowed in the 70s ... resumed in the 80s and continues now in the computer age.
The question that needs to be answered (and I hope you can answer it) is where is the current TRILLION dollar deficit is going tomorrow?
There is no real war going on. We are chasing sandal wearing sheep herders around in caves and may do that for a few more decades. But they are hardly a threat to national security.
Certainly the defense budget could be cut in half.
But it will not be.
In prior centuries "government spending" was understood to be little more than "military spending." Now the warfare state, as bloated as it is, is completely over shadowed by the welfare state.
This has no historical precedent.
Interestingly, no major candidate is speaking in an serious way of doing anything at all about the deficit. Instead, most are talking about increasing the debt even further.
No amount of ships or tanks fill compel conservatives to say:
"ENOUGH ALREADY, please don't raise military pay this year, and we have enough jets!"
And no amount of fraud or debt will ever compel liberals to say:
"ENOUGH ALREADY, please don't allocate more to food-stamps, and we have more than enough going to education."
Elizabeth Warren has recently noted her that only a portion of her platform would cost an additional 52 TRILLION dollars over the next 10 years.
You are a DOCTOR in the field of Economics. You have some knowledge of economic history. When nations run utterly fantastic and unprecedented deficits for extended periods of time, what has been the usual result for other nations?
What is it that you would recommend?
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1 Recommendation
3rd Nov, 2019
Stephen Martin Fritz
Neil H Garston (I didn't mean to sound so strident!)
I am curious as to what you might recommend the American government do under the current circumstance?
And what you foresee in the future as it is apparent that neither political party has any interest in doing anything other than spending as much money as they cab lay their hand on.
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1 Recommendation
3rd Nov, 2019
Neil H Garston
California State University, Los Angeles
Curiously I do not think anyone in the US government cares what I recommend, or even what the economics profession as a whole recommends (except the Fed may care). However the first and most obvious thing would be to stop waging trade wars with China, the EU, and anyone else they can find. The resulting uncertainty is not doing anything good for investment spending or consumer outlooks, and of course the tariffs are not helping either.
My only special recommendation involves planning for the future downturns (given the slow pace of legislation these days it is probably too late to do anything about the next one unless it is very long delayed). I have been working on a paper (so far turned down by two journals--not a record for me tho almost everything I have written got out somewhere) with a proposal. That is the positive sum lottery I mentioned, one which offers a way to boost income during recessions and reduce it (negative sum lottery) during booms. In other words I recommend more in the way of automatic stabilizers which do not require agreement between political forces or long delays in decision and implementation.
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1 Recommendation
3rd Nov, 2019
Stephen Martin Fritz
Good luck with your papers on the positive sum lottery.
And I agree that the Trade Wars are self-inflicted wounds.
The problem is that politicians would be in charge of these lottos and if there is any excess money to grab from anywhere, it will be spent!
I'm not too concerned.
Wealth is really STUFF ... money is just legal tender or exchange chits, and as long as there is plenty of STUFF created, it's logical distribution is what will matter.
The great political debate of the 19th century was how government could manipulate laws to enhance wealth production
But the emphasis of government for the past century has been on wealth redistribution.
How do we get all this wealth to people who are hardly producing anything to MERIT it?
We have enough to support the producers as well as the non-producers.... but how do we justify shoveling so much to those at the bottom of the welfare state so as not to appear to be giving up entirely on the concept of just reward or discouraging the notion of "a-days-work-for-a-days-pay?"
Computerization is making wealth production and productivity even more efficient. And as the third-world begins to join the effort, the amount of STUFF produced in the world will continue to exceed all historic levels.
How to spread it around!?!? While maintaining a society of good order, merit, and just reward?
Something like a minimum guaranteed income seems unavoidable in the future.
But government accomplishes nearly the same thing by providing roads, schools, and police protection to the lower orders of society, even though they pay nothing in taxes and even pay "negative" taxes.
They get many social benefits seemingly for free and tax refunds larger than their contributions.
IT'S A GREAT PROBLEM TO HAVE!
Most of humanity throughout all of history wished they had such troubles
I hope you find time to check out DUAL MORALITY ... it proposes that we are all born with two distinct moral outlooks within us, and that depending on if we perceive ourselves to be in conditions of PLENTY or a situation of WANT one or the other of our moral outlooks takes hold of our psyches.
Our inherent dual-morality makes itself known in politics as our liberal or conservative outlooks
In economics as our socialistic or capitalistic outlooks.
As an economist, the problem is not really demonstrating that socialism/communism does not work.
The most interesting thing is discovery why, in spite of all the historic evidence against such schemes, we humans continue to yearn for them...
The yearning is innate somehow.
There is no nation so "capitalistic" that it does not produce a Bernie Sanders
No nation made so rich by capitalism that it does not produce an Elizabeth Warren or a Karl Mark.
Fascinating!
This is where economic theory meshes with political philosophy and human psychology.
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1 Recommendation
21st Feb, 2020
Emmanuel V Murray
National Bank for Agriculture and Rural Development
It is Growth.
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1 Recommendation
21st Feb, 2020
Sule Akkoyunlu
Rimini Centre for Economic Analysis
Economics growth
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4 Recommendations
26th Feb, 2020
Martha Pantoja
Universidad Nacional Autónoma de México
Its supposed that government intervention is to correct market failures and promote welfare people. Government intervention can be aimed economic objectives: economic growh an development, Successful cases in the world have as main driver of government.
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1 Recommendation
27th Mar, 2020
Dariusz Prokopowicz
Cardinal Stefan Wyszynski University in Warsaw
Dear Colleagues and Friends from RG, Thank you very much for participating in the discussion, for valuable tips and new insights given to the above issues regarding the answer to the question: Does Keynesian state interventionism mainly activate growth or economic development?
Joint discussions are very encouraging, new concepts are created, exchange of ideas and different approaches to specific issues are created. Joint discussion significantly contribute to improving the concepts of scientific research, new theses, new formulas and directions of conducted research and new research. In line with the above, I suggest continuing the discussion on the following topic: anti-crisis, interventionist monetary policies of central banking and Keynesian budget policies currently developed in many countries, referring to the postmonetaristic concept of "Helicopter Money" by Milton Friedman, are adequate to the situation of a potential recession of the global economy in 2020.
Economists agree that the impact of the Coronavirus causing Covid-19 disease on the global economy in 2020 will be very large. Therefore, the recession of the global economy is very likely in 2020. It is estimated that in 2-3 months the global economic crisis may appear the largest since the 1980s and in some countries the largest since World War II. Due to the fact that many internationally operating companies are now recording sharp falls in sales revenues and profits, so the impact of Covid-19-causing Coronavirus on economic globalization can be large. Economic problems already affect many companies in the tourism, transport, hotel, catering and many other sectors. Economic globalization in 2020 can significantly change its scale and its specificity. According to optimistic scenarios, a significant improvement in the development of the global economy may occur not earlier than in the third quarter of 2020. It is therefore necessary to urgently improve and introduce anti-crisis socio-economic policy programs, implemented through coordinated interventionist actions of selected instruments of the central banking monetary policy and Keynesian budget policy.
In view of the above, I formulated the following research thesis: Currently, in connection with the development of the Covid-19 Coronavirus pandemic and the forecasted recession of the global economy in 2020, the implementation of the anti-crisis, interventionist monetary policy of central banking and Keynesian budget policy in reference to Milton Friedman's post-monetary concept of Helicopter Money.
The above discussion inspired me to formulate the following question: Do you think that the anti-crisis, interventionist monetary policies of central banking and Keynesian budget policies currently developed in many countries, referring to the postmonetaristic concept of "Helicopter Money" by Milton Friedman, are adequate to the situation of a potential recession of the global economy in 2020?
Please reply.
Best wishes and I invite you to continue cooperation.
Thank you very much.
Best wishes.
Dariusz Prokopowicz
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2 Recommendations
27th Mar, 2020
Martha Pantoja
Universidad Nacional Autónoma de México
Dear Dariusz;
Check this
The White House is promoting a stimulus similar to that applied to reverse the 2009 recession, while the Federal Reserve announces the purchase of private securities to guarantee company financing. Wall Street indices react with increase
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1 Recommendation
27th Mar, 2020
Neil H Garston
California State University, Los Angeles
The current stimulus measures, both fiscal and monetary, can to some extent alleviate hardships for significant parts of the population. However in Keynesian framework all policies implemented and proposed can only cause an outward shift in aggregate demand.
The current crisis involves both a downward shift in aggregate demand, which such policies can address, and a reduction (shift) in aggregate supply -- to some extent caused by anti pandemic policies---and Keynesian policies have no effect on that. If in addition to a simple shift in AS it seems likely that supply has become almost completely inelastic with respect to price level changes--in effect has become vertical at a level of output below previous full employment levels since resources (especially labor) cannot be used given restrictions on movement of and interactions between persons.
As a result few if any nations will avoid substantial recessions (or worse) and Keynesian theories and practices will not be useful in dealing with such recession in the short to medium term.
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1 Recommendation
30th Mar, 2020
Martha Pantoja
Universidad Nacional Autónoma de México
Brilliant economist John Maynard Keynes, recommended aftermath slowdown in the economy increase government expenditures and low taxes can stimulate demand and pull the global economy out of a downturn.
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2 Recommendations
7th May, 2020
Dariusz Prokopowicz
Cardinal Stefan Wyszynski University in Warsaw
John Maynard Keynes said many years ago: "Cheap money means that the risk-free or supposedly risk-free interest rate will be low. But a real venture always involves some level of risk. It may be that the lender, whose experience has shaken confidence, will still demand interest rates on loans for enterprises that the borrower will not be able to earn ... If this is the case, there is no other way of escape from the prolonged, and perhaps indefinite , crisis than state intervention and subsidizing new investments. " John Maynard Keynes
In these words he contained the essence of anti-crisis state interventionism, which is currently used on record-breaking historically scale as part of socio-economic anti-crisis policy, including budgetary, fiscal, etc. Since the words were spoken, almost a century has passed, but they are still valid and now probably more current than in the past. However, with a fairly significant difference. Currently, as part of the state interventionism of financing new investments from public funds to create jobs, at the same time interest rates are reduced by central banks to also stimulate the private sector to undertake new ventures implemented, among others, with money borrowed from commercial banks, using cheaper loans. Whether this is a small difference or not is now a matter of debate. Whether the current record-breaking largest scale will prove successful and will quickly restore economic growth, accelerate the recovery of the economy from the current recession caused by the SARS-CoV-2 Coronavirus pandemic (causing Covid-19 disease), it will turn out at the earliest in a few months.
What is your opinion on this topic?
Please reply,
I invite you to discuss
Thank you so much for participating in the discussion,
Regards,
Dariusz Prokopowicz
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7th May, 2020
طالب حسين فارس الكريطي Talib Hussin Faris
University of Kerbala
According to the Keynesian models, the state is directed to stimulating economic growth and development, and it is a matter worthy of discussion, a wonderful question.
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1 Recommendation
8th May, 2020
Neil H Garston
California State University, Los Angeles
The usual problem for Keynesian tools of all sorts is to offset shifts in aggregate demand, some of which may involve changes in risk perception (valid or not). In the current situation such a demand shift has occurred (owner surely are not expecting the same level of profit on investment spending that they were a year ago, households can hardly fail to consider the likelihood of lower future income ----changes in current income aside).
However between government imposed restrictions and changes in worker willingness to go back to work the current situation features a major shift in aggregate supply of unknown duration. No Keynesian tool is designed to affect that and if that is the major source of the current economic impact (as seems reasonable to believe) such tools can have only a limited impact. Indeed the best government may be able to do (for a given degree of health risk) is to spread the cost by higher unemployment benefits, more "welfare" of all types including business subsidies to prevent long term supply issues.
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1 Recommendation
10th May, 2020
Martha Pantoja
Universidad Nacional Autónoma de México
It was considered by some economists like Simon Kuznets, that countries first had to grow, generate wealth, with some negative elements such as a higher concentration of income among the most privileged groups. However, in a second stage the benefits of economic growth were going to be reflected in a larger segment of the population. In practice, the government had to promote economic growth and education and health (development indicators). Likewise, through social programs, granting resources in economic or in-kind form to segments of the population living in extreme poverty, mainly in many of the developing countries.
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1 Recommendation
24th Jun, 2020
Dariusz Prokopowicz
Cardinal Stefan Wyszynski University in Warsaw
Dear Colleagues and Friends from RG, Thank you very much for participating in this discussion, for valuable tips, supplements, inspiring theses and new insights on the above issues. I would like to add a few words to the above discussion on this interesting topic. In the context of the current strong decline in economic growth in many countries, the key economic problem is the issue of improving socio-economic development policies. We know from economic theory that economic development over a longer period is made up of certain interacting quantitative (measurable) factors in the economic description of the economy and qualitative determinants that are usually described as long-term processes. In the situation of an effectively developing economy and in the situation of the growth phase of the business cycle, almost every economic development contains certain elements of economic growth. Therefore, in order for economic development to take place in the long run, economic growth is also necessary. Economic growth can also be precisely measured in relatively short periods, because the measurement is based on a set of selected measurable (quantitative) economic determinants. On the other hand, in addition to quantitative determinants, economic development also includes certain qualitative factors, whose changes may be noticeable only in the medium or longer period. In addition to quality factors, economic development includes key components of economic growth. Therefore, in the situation of an effectively developing economy and in the situation of the growth phase of the business cycle, almost every economic development contains certain elements of economic growth. however, in the opposite situation these relations are completely different. It is rare that in a short period, in which changes in the macroeconomic state of the economy are described exclusively or almost exclusively by economic quantitative (measurable) determinants, it is possible to diagnose and precisely describe the qualitative changes in specific long-term processes taking place in the economy, i.e. classified as significant factors used to describe qualitative changes in the economy of a particular enterprise (in microeconomic terms), a specific branch, sector of the national economy (in mesoeconomic terms) or the economy of a given country, economic region, continent or global economy (in macroeconomic terms). Currently, many current economic data indicate that due to the development of the SARS-CoV-2 coronavirus pandemic causing Covid-19 disease, many companies, enterprises suspend operations or entrepreneurs are closing their companies and service facilities in an increasing number of sectors and industries. Therefore, currently (March - June 2020) economic growth in many countries is strongly slowing down. Current estimates show that in 2020, the global economy will probably slow down its growth by several percent. compared to the previous year. Therefore, it is necessary to permanently improve and increase the scale of anti-crisis socio-economic policy planned, developed and implemented both on the scale of individual countries as well as within coordinated international activities. In some countries, pro-development, interventionist, anti-crisis programs have already been launched to save business entities from mass bankruptcy by introducing additional temporary tax breaks or exemptions, subsidies to employees' remuneration under fiscal policy. On the other hand, as part of monetary policy, central banks reduce interest rates, launch loans for commercial banks on preferential terms, buy lost loans from commercial banks and / or implement sovereign bond buy-back programs to maintain liquidity in the commercial and public financial system of the state. However, the question arises how many months of this type of high budget aid programs can be implemented? To what level can the budget deficit and public debt be increased as part of the implementation of this type of anti-crisis programs helping the economy, enterprises and citizens? To what level can the government allow inflation to increase as a result of this type of economic assistance programs? Can the current economic crisis in many countries turn into a crisis of public finances? If it is possible, what anti-crisis economic reform program should be currently planned and implemented in these countries to avoid a significant increase in the risk of potential loss of liquidity in the state's financial system? The issue of the impact of the development of the SARS-CoV-2 Coronavirus pandemic on national economies discussed above is developmental, it develops dynamically, every day there are more important data that may affect the specificity, nature and scale of the correlations analyzed. In individual countries, the financial scale of anti-crisis programs and instruments of socio-economic policy is different, the state of state finances is different, the level of public debt is different, the level of profitability of specific types of economic activities is different, the structure of the national economy is different, so in each country the effects of the anti-crisis applied Socio-economic policies can vary widely.
What do you think about it?
What is your opinion on this topic?
I am asking for an answer and invite you to a discussion,
Thank you very much and best regards,
Dariusz Prokopowicz
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1 Recommendation
24th Jun, 2020
Swati Mehta
Guru Nanak Dev University
Keynes revolutionary theory revive the economies from the Great Depression of 1930s. Covid 19 is dragging the economies across nations into something not apprehended. These are those times when the role of the government are most warranted. Therefore, carefully drafted policies for boosting morale of the entrepreneurs across sectors, creating employment opportunities and keeping a close check on inflation is much needed.
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2 Recommendations
25th Jun, 2020
Martha Pantoja
Universidad Nacional Autónoma de México
Jared Bernstein, chief economist to former vice president Joe Biden, is a senior fellow at the Center on Budget and Policy Priorities.
He recommended the brilliant British economist John Maynard Keynes in this crisis, because his economic theories propose a more inclusive and society.
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2 Recommendations
28th Jun, 2020
Erol Türker Tümer
Dokuz Eylul University
I believe that Keynesian policy tools can stimulate economic growth and development only if the institutional framework of a country is solid and inclusive. Otherwise, implemented policies can generate only transitory impacts on economic growth, and will not create much difference in the long-run development path of countries.
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4 Recommendations
29th Jun, 2020
Martha Pantoja
Universidad Nacional Autónoma de México
Keynesian economics is a theory that says the government should increase demand to boost growth. Keynesians believe consumer demand is the primary driving force in an economy. As a result, the theory supports the expansionary fiscal policy That meant an increase in spending would increase demand and monetary policy lowing interest rates would drive investment.
Keynes's books do not mention the aspect of economic development. His work and excellent analysis of the economy of his time were the macroeconomic variables and how to boost the depression economy.
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2 Recommendations
13th Jul, 2020
Rober Alexis Núñez Barrero
Superintendencia de Industria y Comercio
According to Keynes, the state (government) plays a fundamental role in the economy of a country, an example of this were the policies applied, suggested by him, after the economic crisis of 1929. These economic policies were based on promoting demand goods and services through the increase in public spending, which was achieved through, mainly, the expansive fiscal policy, which consisted of reducing taxes and increasing the aforementioned public spending. Now, although this economic policy can be effective (and efficient) to achieve an economic reactivation, other economic policies must be taken into account, such as monetary policy, to avoid possible future drawbacks that could lead to a subsequent crisis (such as are, the high levels of inflation).
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1 Recommendation
15th Jul, 2020
Martha Pantoja
Universidad Nacional Autónoma de México
In this crisis, most goverments in the world, They are applying a expansionary economic policy through fiscal and monetary policy. fiscal and monetary policies, interact to modify the trend of the economy. In a situation of deceleration and or crisis like the current one, the combination of a fiscal policy favorable to the expansion of spending and / or reduction of taxes combined with lower interest rates stimulate demand and, with it, economic recovery.
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3 Recommendations
19th Jul, 2020
Dariusz Prokopowicz
Cardinal Stefan Wyszynski University in Warsaw
Hello everyone, Thank you for your answer. I fully agree with your opinions and observations. In many countries, as part of the interventionist, anti-crisis, Keynsian socio-economic policy, a demand-stimulating fiscal policy and a pro-investment, lenient monetary policy were applied. However, the application of this type of active socio-economic policy is associated with high costs for the state finance system, with large expenses from the state budget. This type of active, high-budget socio-economic policy can be applied only temporarily, within a specified period of time, so as not to lead to excessive indebtedness of the state's public finance system. In some countries, high-budget anti-crisis programs of socio-economic policies, usually referred to as the so-called The Anti-Crisis Shields absorbed large financial resources, significantly increasing the level of public debt. In some countries, the level of public debt increased to the level of financial security, i.e. to approx. 60%. the total debt of state finances to GDP. It is necessary to control both the system of granting subsidies to enterprises, granted exemptions from paying certain taxes and / or para-taxes, as well as controlling the activities of economic entities that benefited from the granted state aid. It is necessary to improve the control of institutions supervising the system of granting state aid in order to verify whether the granted funds granted as, for example, subsidies, subsidies to employee salaries are properly used, i.e. whether the funds obtained are actually allocated by a given company to subsidies to remuneration in accordance with the declarations given. employees and does not dismiss employees from work despite the fact that there is a small demand for products and / or services produced in a specific economic entity.
In the context of the current SARS-CoV-2 coronavirus pandemic, the following important question arises: Does the anti-crisis system of state aid granted to enterprises in your countries have effectively operating institutions that control the system of financial subsidies awarded to companies and that the companies that receive this aid?
Please reply,
What's your opinion on this topic?
Thank you very much and best regards, Have a nice day,
Dariusz Prokopowicz
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20th Jul, 2020
Sunil B. Kapadia
K L University
Thanks Dariusz Prokopowicz for your another relevant discussion. We need to pause, ponder, collect some relevant data and then take the discussion forward.
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3 Recommendations
21st Jul, 2020
Martha Pantoja
Universidad Nacional Autónoma de México
Does the anti-crisis system of state aid granted to enterprises in your countries have effectively operating institutions that control the system of financial subsidies awarded to companies and that the companies that receive this aid?
Dear Dariuz, in my country government is supporting small and medium-sized companies, but the amount of the credits is small, and therefore the businessmen that the aid is not enough. Economic crisis is so depth.
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2 Recommendations
8th Oct, 2020
Dariusz Prokopowicz
Cardinal Stefan Wyszynski University in Warsaw
Dear Sunil B. Kapadia,
Yes, thank you for your reply. I am glad that we look at this issue in a similar way.
Best wishes,
Dariusz Prokopowicz
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8th Oct, 2020
Dariusz Prokopowicz
Cardinal Stefan Wyszynski University in Warsaw
Dear Martha Pantoja,
You asked about an important point. The system of control of granting financial subsidies to employee salaries, tax reliefs and temporary exemptions from payments to the social insurance fund is in place. But due to the large scale of state aid, large amount of funds allocated to state aid, simplified procedures for applying for subsidies, etc., the control system is not perfect and there are many cases of extortion of these subsidies. Moreover, the large scale of financial resources allocated to this state aid resulted in a large increase in the indebtedness of the state finance system. Best wishes,
Dariusz Prokopowicz
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1 Recommendation
9th Oct, 2020
Liviu Catalin Andrei
National University of Political Studies and Public Administration
Hi, Dariusz,
Nice to hear from you again and I appreciate and always enjoy your debate initiatives. Unfortunately, whether you ask me about my Government…etc. I can tell you that this is rather for poetry, than for scholar debates or examples to be given. Besides, I believe I miss experience in (macro-)economic policies. Hence, on the best of mu knowledge let me have a couple of aspects to be here considered:
(1) The liberal, vs. interventionism debate is a much long-way and still vivid one, in which lots of arguments could still be brought in on each of the ‘two columns’.
(2) Since it had been thought that the ‘1929-1933 Big Crisis’ was (possibly) an ‘accident’, the one of ‘2008-… Lehman Br.’ came up ‘like lightning’ and then all thoughts got changed about crisis, recession, business cycle and international economy. But the issue here is – just in my view – that economic crises not only couldn’t be denied and might be categorized into yes or not cyclical, but each of such episodes might be ‘greater’ or on the contrary according to things and lessons it teach us about. For instance, the 1929-33 one gave us the idea of, finally, considering interventionism (Keynes would be just ‘nothing’ for economic thinking in the imaginable absence of the previous Big Crisis), as alternative to the ‘old’ liberalism, and the more recent 2008 one’s ‘lesson’s’, after a significant historical interval, is still in way. So, I believe that ‘no lesson from a crisis, no crisis, as really’. But, yes, the current Corona is high probability to engender a new crisis – question is: will this be able to fight with ‘classical’ interventionism tools, as of principle first?
(3) As for what is here around called ‘anti-crisis’, let me keep another reservation: at list sometimes, anti-crisis policy measures finish by stopping (general) strategies in way. Strategies try to see into the future, while anti-crisis, sometimes called ‘economic cures’ measures are likely to push the economy back to its past picture.
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2 Recommendations
11th Oct, 2020
Dariusz Prokopowicz
Cardinal Stefan Wyszynski University in Warsaw
Dear Liviu Catalin Andrei, Dear colleague, I am happy with our joint discussions. Thank you very much for the kind words and vice versa. Thank you very much for the rich, substantive information and explanations on the topic Keynesian state interventionism mainly activate growth or economic development. Very interesting considerations. An interesting discussion ensued. A very good answer on this topic. I learned a lot from the discussions. Thanks for sharing your information. Your statements confirm that the above-mentioned issues are current and developing. I agree with your opinion that the debate between liberal and interventionism is very long and still alive, in which many arguments could still be made in either of these two different economic policy strategies. Your reflection on learning lessons from previous global financial and economic crises and the application of specific anti-crisis socio-economic policy instruments is very inspiring. the problem is multifaceted and still very topical in relation to the development of the SARS-CoV-2 (Covid-19) coronavirus pandemic and the specific instruments of public aid applied to economic entities in order to reduce the scale of the current economic crisis. I am glad that the discussion is taking place and developing on this topic.
Thank you very much and best regards, Best wishes, All the best, Stay healthy!
Dariusz Prokopowicz
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15th Oct, 2020
Shamrez Ali
University of Sahiwal
Does Keynesian state interventionism mainly activate growth or economic development?
According to one of the survey conducted by state Bank of Pakistan in Pakistan prices are flexible but wages are rigid . These resultst advocates the theory of Keynesian school of thoughts that because of wage rigidity economy can deviate from its potential level of output, which may either a high inflation or high unemployment rate.
Similarly according to one of the study of IMF after COVID-19 , those economies who have large population belong to 60 plus age group face difficulty to recover after imposition of expansionary fiscal policy. But those developed economies who have less portion of old age persons recovered quickly because of fiscal expansion . These results once again confirms that fiscal policy multiplier does matter a lot.
In conclusion, according to my theoretical and impirical knowledge, Keynesian school environment help out the authorities to control irregularity in the behaviour of vital macroeconomic variables and economy as well.
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1 Recommendation
16th Oct, 2020
Martha Pantoja
Universidad Nacional Autónoma de México
The State always intervenes in the economy, there are theories that support a greater degree of intervention, there is an important discussion to determine how much it should intervene in the market, and if so, to what extent and with what tools it should do so. The balance of state intervention is essential to be able to aspire to an economy that is productive but that is under a normative and regulatory framework where the State watches over and is a promoter of development, justice and well-being, since we cannot always trust in that markets may be able to resolve and correct distortions and imbalances.
A fundamental factor for the correct exercise of public spending, which in turn leads to an efficient and effective intervention of the State in the economy, is planning.
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1 Recommendation
27th Oct, 2020
Dariusz Prokopowicz
Cardinal Stefan Wyszynski University in Warsaw
Dear Shamrez Ali, Thank you very much for your answer and confirmation of my theses about the high importance of Keynesian anti-crisis socio-economic policy, including budget policy, fiscal policy in the context of introducing and implementing the so-called Anti-crisis shields to reduce the scale of the economic crisis caused by the SARS-CoV-2 (Covid-19) coronavirus pandemic. I am glad that we have a similar view of the importance of anti-crisis Keynsian economic policy instruments. Best wishes, All the best, Stay healthy!
Dariusz Prokopowicz
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1 Recommendation
27th Oct, 2020
Dariusz Prokopowicz
Cardinal Stefan Wyszynski University in Warsaw
Dear Martha Pantoja, Yes, you paid attention to important issues of the discussed issues. You added important points to our discussion. Yes, I agree with you that a balance of state intervention is essential for an economy to grow efficiently and be productive. The economy is subject to a normative and regulatory framework in which the state watches over and is an important promoter of development, justice and prosperity. The state, through effective, efficient and correctly implemented state interventionism, supports economic processes primarily in the period of economic downturn, in a situation of economic crisis, when the equilibrium automatically does not return quickly on individual markets, when a high level of unemployment and low income persist for a longer period. This is particularly important in the context of the current economic crisis caused by the SARS-CoV-2 (Covid-19) coronavirus pandemic.
Best regards,
Dariusz Prokopowicz
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27th Oct, 2020
Dariusz Prokopowicz
Cardinal Stefan Wyszynski University in Warsaw
Dear Martha Pantoja, I also agree with your statement that the basic factor of the correct execution of public expenditure, which in turn leads to efficient and effective state intervention in the economy, is the correct and reliable planning and control of the state of public finances, including, inter alia, maintaining a low level of debt of the state finance system and leading to a budget surplus in a good economic situation. Best wishes, All the best, Stay healthy!
Dariusz Prokopowicz
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1 Recommendation
27th Oct, 2020
Martha Pantoja
Universidad Nacional Autónoma de México
Dear Dariuz:
First, thanks for your feedback. I believe for the economic experience in the world that economy not automatically regulated, It needs a driver (government intervention), a primary responsibility of governments is to use public spending as an instrument to improve the conditions of their citizens.
I agree with you that The resources available to the State must be used efficiently and effectively, in order to maximize the impact of public policies on these problems.
Best regards
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1 Recommendation
28th Oct, 2020
Dariusz Prokopowicz
Cardinal Stefan Wyszynski University in Warsaw
Dear Martha Pantoja, I am glad that we have similar views on the issue of state intervention in economic processes, including the use of state aid and the design and implementation of anti-crisis social and economic policies. Thank you very much for your valuable contribution to our discussions and I invite you to continue our deliberations on this important and interesting issue. Greetings,
Dariusz Prokopowicz
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1 Recommendation
28th Oct, 2020
Dariusz Prokopowicz
Cardinal Stefan Wyszynski University in Warsaw
The topic is up to date. Socio-economic policies, public aid systems, applied instruments of state intervention, etc. are never perfect and should be constantly improved, improved and adapted to the changing economic situation.
What do you think about it? Best wishes,
Dariusz Prokopowicz
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