Is more debt worth Keynesian policy?

Because people with a profit motive are good at finding uses for things that people with no profit motive have no idea what to do with other than blow things up.

 

The point was straight forward: if the private sector is capable of delivering technical progress then we should not see significant technical progress delivered by the public sector (indeed, given crowding out effects where scientists and engineers are employed in less efficient public endeavour, we should see a negative effect)

 

We would all like to live in that Shangra-La where market forces are responsible for all achievements and we can just sit back and purchase our way to a bright future. Realistically other nations are subsidizing this industry because the prize is so altering that the the first major power to attain self-sustaining energy will write it's own ticket for generations. Edison had 1000's of failed experiments to go with his few but wonderful innovations. This is the truth today we have to wrap our minds around, there will be failures and accomplishments, some not immediately obvious. We need to look past short term political gain an understand that it doesn't matter who is President, failure in this endeavor is unacceptable and catastrophic. We need bold leadership with plans for a future, none of which I see in the GOP candidates, all I see there is a string of politically motivated blocking actions with no viable alternative plans. You want to impress me? Show me a plan that includes rebuilding the infrastructure, grid, creates jobs and sustainable energy. Dollar says if the GOP ever comes up with one it will look just like Obama's.

 

This ignores the fundamental difference in the two organizations and those impacted by their corruption. There's no dancing around thta.

The amount we spend (waste?) on our military has sucked trillions of dollars and hordes of potential laborers out of the private sector.

We both know they've fallen off dramatically as of late, specifically from the military. I'm all for subsidizing green technologies, or whatever technology we're talking about, but it'd be wishful thinking that that (r)evolution would come from the public sector, and it's not really a knock, they just lack the incentives to innovate.

 

That's nonsense , this isn't zero sum.

 

You show your innocence and ignore the crowding out hypothesis.

 

Innocent or not, the notion that one group innovating prevents another group (potentially in another sector) from doing the same is ridiculous.

Pharma has innovated a great deal on the backs of subsidy, while communication protocols have evolved with basically zero public sector (or even private firm) involvement. You're trying to say that innovation is zero sum, and as much as I hate adding fuel to most of these peoples fire, no one here should accept that.

 

Bobbins! Influence costs only require the existence of asymmetric information. There is no need to make a distinction across private-public sectors. We can refer to distinctions in organisational constraints (such as the impact of 'divide & conquer' on private sector hierarchy), but that doesn't provide anything that we can't embed within influence cost analysis.

Despite that we see economic growth generated through spin-off technologies, making a mockery of your original argument

The changes in military spin-off outcome only describes the need for changes in public r&d involvement. You of course know the important trait within innovation: its inflicted by various market failures

 

Given opportunity costs is the backbone of economics, you're just repeating your error

Bogus comment! I'm saying that it proves the importance of interventionism

 

Never claimed otherwise, my point is that comparing the two serves no real purpose. Does corruption exist in both? Certainly. Do the consequences of said corruption have radically different impacts on those affected? Without a doubt.

That statement is too broad and you know it. You can't possibly say this without mentioning what is being measured and why. Moreover, corruption isn't limited to influence costs, not sure why you're attempting to suggest it is?

Despite that, not as a result of. We don't know what innovation would have occurred in it's absence.

Which is precisely why I'm not opposed to subsidies. Of course, we continue to have mountains of innovation generated from a non-subsidized private sector, that fact pretty much undermines your argument, and that this innovations occur simultaneously and in various sectors underscores that silliness of the claim that it's a zero sum game.

 

...and yet, despite that innovation occurs simultaneously in various sectors even in those with mixed levels of public involvement.

Tell that to java... or the minds behind compression technologies (crowd sourced). You're just bogged down in the 20th century ideas of innovation.

 

Given they both fall under the same umbrella, the comparison is useful. It helps, for example, in finetuning our understanding of firm organisation theory. It also helps us reject the usual 'private efficient, public inefficient' fairytales.

I have never said the private sector doesn't innovate. I've merely referred to how market failure ensures that the public sector plays an integral role.

 

Its quite simple: if interventionism wasn't integral we'd have crowding out effects generating negative effects. Instead we see substantial positive effects.

 

For those purposes, comparing the two is fine and in that sort of dialog you wouldn't have to jump the same hurdles you do here, in what is mostly casual conversation amongst lay people. The comparison only remains useful so long as certain things are held constant, once we remove those constraints, much less so.

Also, expectations play a role (like I keep saying) -- we aren't surprised when CEO's behave badly or when firms collude for lower prices, we are surprised (probably shouldn't be) and disgusted when our elected officials do the same. Government behaves badly on someone else's dime taken from them without the illusion of choice and because it is representative we should expect better.

You can't fix stupid... or is it indoctrination? Hard to say, this is certainly the rally cry of American talk radio.

To me, the remarkable thing is when the private sector innovates despite the numerous reasons not to. The greatest technological advancements have been products we didn't even know we wanted, something that government can't help to deliver.

 

Its useful as long as a valid economic approach is followed. The 'apples & oranges' notion can be rejected as its all influence cost analysis. Its also interesting how, through the blurring of the private-public distinction that economic understanding has advanced. That goes in both directions (e.g. the attempted attack on socialist planning led to a more hearty dismissal of the orthodox theory of the firm)

Its the 'you gits' attitude that skews influence cost analysis further towards private sector consideration. The investigative actions encouraged by the desire to minimise government corruption reduces asymmetric information problems and therefore reduces temptation.

We can use the importance of tacit knowledge (with innovation necessarily going hand in hand with the creation of opportunity through the elimination of ignorance) to reject the long term potential of a Stalinist economy. But we're still left with the vital importance of interventionism

 

Certainly, perfectly acceptable and even essential to academia, but that's hardly what we have here.

Let's get literal! We can compare the sweetness of apples vs. oranges, but we're still comparing apples and oranges. In this scenario, yes we're looking at influence costs, but the objects we're measuring have some very significant differences. I do understand what you're saying, just clarifying my point for anyone else reading along.

It is extremely interesting and certainly contrary to the usual lines of thinking on this topic, particularly on the internet. Austrians turned out to be marvelous marketeers!

Not familiar with the phrase.

Reduced from and to what, that's what is important. Transparency really ought to be an expectation, not a desire from the public sector, if there were more of it we likely wouldn't be having this conversation.

That we're reliant upon it is merely a statement of fact. That it also happens to result in spin-off technologies is icing on the cake.

 

If we were in a conspiracy forum or one based on right wing grunt then you'd have a point. Its an economics forum and you've simply made a mistake.

Within most economic analysis there are 'significant differences' between economic agents that fall under the associated umbrella. That's typically a 'so what' moment as comparing and contrasting subsequently adds to our overall understanding.

Nope, we're not referring to a marginal improvement. We're referring to an attempt to remove a substantial market failure

 

That the public and private sectors are unique and the ramifications of their influence costs are different is just a statement of fact, that was my only point and wasn't a mistake.

If the underlying nature of the agents being analyzed is so summarily dismissed it sounds like analysis with very little practical application. I'm curious was this "umbrella" is anyway that encompasses this two radically different institutions.

We are and have to be. It occurs in it's absence, it occurs well in it's absences to then insist that intervention isn't a marginal improvement is dishonest.

 

Its certainly a mistake. The days where we make a clear distinction between private and public have long gone. Blurring of the boundaries has been part of economic analysis for some time.

You're not making any valuable noises. We've seen how hierarchy will differ in the private sector compared to the public. We know that impacts on influence costs. Appreciating the effects, however, requires comparison between the two sectors. 'Apples n oranges' is but a cliché

Nonsense again! A marginal improvement wouldn't, for example, allow for empirical analysis into significant and substantial growth effects. Given the magnitude of public R&D, we'd also expect negative long term effects (from those crowding out effects) if there was but a marginal public sector contribution. The market failure is substantial and the public sector plays a key role in the solution.

 

Very well said!

The only addition the accountability is much lower for government "investment" than corporate investment. In both cases the researchers may lose their job if they don't perform, but in business the manager(s) that approved that expenditure also lose their job.

 

Thats where the money is. The US military spends a lot of money (more than the 26 next higher countries military budget). Much of that on technically sophisticated hardware.

Much of the free market R&D hides below the radar, to keep their competitors in the dark as much as possible.

 

You haven't said anything. Put that right.

 

Particularly for the socialist I assume, after all, it is a heterodox school with very little acknowledgement outside of it's own circles. I do suppose it'd be a case you'd have to make, albeit one I wholly disagree with.

Jumbled some words there no doubt, the consequences of multi-tasking.

No kidding the hierarchies differ, that goes back to the fundamentals of the two entities. Government of course isn't as afflicted by influence costs, they're willing to change at the whim of the electorate, an electorate that frankly gives them a pass on things no private entity would get by with, at least not without a few heads rolling.

Unfortunately for you, my corruption vs. sweetness comparison was spot on. It's but a single metric, that fails to encompass the crux of the matter.

It's still changes at the margin, private sector growth and innovation occur in the absence of intervention, that's no to say it can't be helpful. It's still just a change along the marginal given this particular variable.

What's always going to play out in my favor is that the private sector has a plethora of examples of innovations and new products in market segments totally unfunded by the public, whilst we also have a heavily funded sector (the military) that now fails to deliver few (if any) spin off technologies.

 

Nothing to do with socialism.

Every time you compare and contrast you're attacking your own argument.

Sorry but you haven't made any relevant counter. We still know that the public/private boundaries are blurred and that influence cost analysis provides a means to understand all forms of organisation.

Eliminating a market failure cannot be seen as a marginal influence. Its not cunning to suggest that it can

Again you're only referring to how technological spin-offs can dry up in one sector. That the military sector has played a crucial role in US technical progress destroys your original argument

 

Gross mischaracterization, I'm not saying it should never be done, but that it's a comparison between two radically different things and that the differences are obvious and apparent and to dismiss them is foolish and pointless.

I'm anxious to see the influence cost investigation into the Girl Scouts and local militias, I'm sure it'll be nearly as interesting and informative.

Whether this is a genuine market failure or not is debatable, that intervention eliminates it's existent isn't.

Private firms will always be risk and change averse because of the profit motive, public sectors dollars may reduce the avoidance but they never eliminate it so longs as there is competition.

In other words, intervention and subsidy are marvelous until they aren't anymore, golly that's brilliant. Just goes back to my point that the public sector will never supply that innovation we never knew we needed and is only capable of dumping money into yesterdays innovation.

You seem to want to make up what my original argument was as we go, but just to be clear, it was that public and private sector organization are both subject to corruption (influence costs) but that levels of accountability and expectations are not equivalent between the two and that comparisons between them cannot be taken ceterus paribus.