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View Diary: The Story of the Monkey King: A Macroeconomic Fairytale (7 comments)

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  •  The point in the ridiculous story is to illustrate (0+ / 0-)

    that at the level of the national economy there is a tradeoff between labor and capital and choosing a satisfactory rate of substitution between the two is a difficult problem. If I convinced someone of that then I accomplished what I set out to accomplish when I wrote the story.

    Real existent economies have much more complicated political histories and are far more complex. This story is not about infrastructure, regulation, or the legal framework of viable systems of private property-based exchange. This problem has been solved many times over, although you will have to share some examples of when it was solved in the US because I cannot think of any examples from US economic history.

    Sweden solved the problem in the 1990s with radical austerity measures (radical for Sweden but mild for the Anglo-American states). The measures still left a fairly robust social welfare state with some contingent problems in the complicated details, but ultimately a successful solution to the problem. Sweden now enjoys miraculous economic growth that is virtually without parallel in the west and that is accompanied by generous social welfare benefits. The standard answer from mainstream Anglo-American economists is that Sweden is a homogenous society with a small, close-knit population that trusts an uncontroversial and responsive government. I'm not convinced of the relationship between this kind of homogeneity and social welfare.  

    I agree that the Reagan Revolution was regressive. The benefits of organized working class movements in the 60s were rolled back in the 1980s. But that process of regression actual began during the liberal administration's of the 1970s. Ralph Nader gives a pretty convincing account of this.

    There will always be plenty of things to compute in the detailed affairs of millions of people doing complicated things. -Vannevar Bush 1945

    by Nathan Jaco on Thu Oct 17, 2013 at 06:56:38 PM PDT

    [ Parent ]

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