Thanks for this. It is appreciated. You are right that we read the
macroeconomic evidence differently and that it is a disagreement we
will not resolve here.

Roger

On 11 November 2011 06:11, Steve Kates <[log in to unmask]> wrote:
> I am truly sorry if Brad Bateman thinks I have been rude about his
> ideas. He should try blogging for a while in these here parts and he
> will find out what rude really looks like. And he should not take it
> personally that I described Keynesian ideas as rancid. My comment was
> not directed at either he or Roger Backhouse. Keynesian policies to all
> appearances have been a disaster and so my use of the term is for all
> applications of modern macroeconomic versions of Keynesian ideas, and
> especially in the period since 2009. Until then, there may have been
> some justification for thinking these ideas had merit. But since then,
> at the very least they should have been moved into some kind of
> quarantine pen for intense examination before further use. At a minimum,
> they are well past their use by date. I might also note that Roger
> Backhouse has had the benefit of hearing my views in person at the
> recent UK HET Conference. I therefore am perfectly aware that we are not
> in agreement on these matters, but that is the nature of the line of
> work we are in. Let me also say that I have been very grateful to him
> for his comments on what I have written which have been extremely
> helpful.
>
> As to whether I know “the truth”, I must confess that I do not. But
> do we now have container loads of evidence that Keynesian theory may be
> deeply and fatally flawed? Yes, we do. And that was the point of my
> original and subsequent posting under this thread and in relation to the
> thread headed “I=S”. Economic theory ought to be in crisis mode. The
> application of C+I+G in real world settings has in my eyes created a
> debt and deficit disaster whose five and even ten year outlook has an
> open ended downwards potential that is truly terrifying.
>
> Keynesian economics may be as good as so many continue to tell me. As a
> base framework for analysing economies and framing policies, it may be
> the best there is. But I don’t think so and I can no longer understand
> why anyone else still thinks so, or at least still thinks so with such
> great conviction. My aim in writing was to express my own belief that
> economic theory ought to be in crisis mode. We should now be thinking
> long and hard in a profession-wide attempt to find out what has gone
> wrong. The kind of complacency about the Keynesian C+I+G framework does
> not sit well with the surrounding economic circumstances that are
> inescapable every time you turn on the news.
>
> Since the GFC and specially since the introduction of the various
> stimulus packages which came after, the bookshops around where I live
> have seen a succession of publications on Keynes. When I see them, I buy
> them and I even read them. I hope to do the same with your book as well.
>
>
> Since all I have read thus far is your posting and the article from the
> NYT, I really cannot say in advance what I will think. But if it is one
> more work on what a genius Keynes was and how wonderful it was that he
> saved capitalism in the 1930s – speaking as we are of a book that was
> published in 1936 when the Great Depression was all but over – then I
> predict I will not respond to it well, but I love surprises so who
> knows.
>
> We on this site at this time are not going to come to any kind of
> conclusion on the future direction of economic theory. But what I do
> hope to do is suggest that, firstly, we as economists should now be
> thinking very carefully about the macro models we have so regularly been
> teaching and applying. And secondly, that when we are weighing up
> possible alternatives, we ought to very carefully re-examine the
> theories of the business cycle which were the common possession of the
> economics community prior to 1936.
>
> With these theories of the cycle, the way to hasten recovery was to
> find some means to generate increases in value adding supply. Since the
> publication of _The General Theory_, we have attempted to generate
> recovery through raising aggregate demand, and to do so by spending on
> just about anything at all, with no apparent consideration whether what
> was produced was value adding or not.
>
> Keynesian solutions, in my opinion, do not work. I am not alone in
> holding this opinion and more are coming to this conclusion every day.
> We should therefore be thinking about what might work instead. In my
> view, in thinking about these alternatives, we should look at what
> classical economists had once said about the causes and cures for
> recession in their now discarded theories of the cycle. That is all that
> I have been trying to say in my posts but I find it is a message that is
> very difficult to get across.
>
>
>
> Dr Steven Kates
> School of Economics, Finance
>    and Marketing
> RMIT University
> Level 12 / 239 Bourke Street
> Melbourne Vic 3000
>
> Phone: (03) 9925 5878
> Mobile: 042 7297 529
>