Keynesian Absurd Optimism

From Modeled Behavior

The desire of the expanders to expand is always exponential. In the end you only need one of them and they will attempt to take over the entire economy. What’s stops them is competition, scarce real resources and financing.

Thus if you are in a world where no one else is looking to expand, and real resources are slack, financing is all that’s holding one of these folks back.

Practically speaking the price of slack resources also matters because if they actually collapsed in price then at some point you could simply self-finance your empire.

But, there is never a shortage of empire builders. There is only a shortage of people willing to lend to empire builders.

Well, first lets understand that it is entirely possible to saturate all opportunity within any economy unless there is some sort of asymmetry of either resources, information, or technology. The typical keynesian assumption is that we will continue to discover opportunities by the application of technology. And that we can keep doing so forever.

I’ll have to answer that obviously historical falsehood in a later posting.

But the choice sentence elsewhere in the article was this one:

“If people genuinely couldn’t find good ways to employ resources then everyone would get poorer but as long as financing is available there need be no recession.”

That’s the whole point now, isn’t it? Are you sure you understand the implications of that sentence?

I don’t think so.

Whenever one group of people (a) flocks to an opportunity in significant numbers that they deny access to another group of people (b), the group (b) will work against the interests of group (a) in order to gain their own opportunity.

If you view society as a collective consisting of a community of common interests, then perhaps you might favor your progressive bias. However, if you see society as consisting of groups engaged in perpetual and unrelenting class and cultural warfare over the distribution and means of obtaining status and opportunity — where each group uses the state to apply coercion against other sects, then one would develop an entirely different conclusion. Furthermore, if you view yourself as a minority competing with foreign groups, then you would increase your bias in favor group persistence. And from that position, you would see people who ally with the state as your competitors, not members of your community.

You (Keynesians) assume the state is a benefit, and apply a methodology that confirms that the state is a benefit, because it serves to confirm your bias. But that benefit is working AGAINST as many preferences as it is in FAVOR of it. Because we have no community of common interest.

There is no community of common interest in an empire. The meaning of empire is precisely that people do not share common interests. Small homogenous states are egalitarian because of the status economy – which determines access to mates, people, and opportunity. The status economy is also the natural accounting system of many.

People value money and culture, morals,ethics and manners, (that set of forgone opportunity costs we all pay in each moment of our day) as well as different

I don’t think you grasp the importance of the fact that almost all decisions consist of far more than prices. In fact, at any given point, market prices are only one factor in any transaction. People actively seek circumstances where they can avoid price consideration – either to demonstrate their status, or to gain human attention, or to simply avoid existing in the monetary economy. In complex decisions, all sorts of different biases are ‘funded’ by choices between one provider of goods and another whenever prices are not marginally different. Assuming all prices are equal for a particular good or service, people generally do business with those people with whom they can exchange status signals, or options on future discounts due to loyalty.

It’s not that you’re mistaken in your understanding of the monetary models, or the benefit of monetary policy. It’s that you’re not accounting for the friction in that model that is determined by the signaling economy.

And that friction can approach the infinite whenever you do not have a homogenous society. And if you have a homogenous society, you then need a common currency. Because a currency is the means of shared investment, risk and reward among a people with a set of common interests.

(Homogenous: meaning the shared mythology, the shared methods of signaling within the methodology, the shared definitions of property, the shared methods of paying for the informal institutions that perpetuate those property definitions: manners, ethics, and morals, the shared institutions for resolving conflicts over the transfer of property, and the shared institutions for concentrating and applying capital toward shared ends. All of which is bounded by the complexity of the division of labor in in turn which is determined by the percentage of the population with an of IQ over 105.)



Leave a Reply