Re: "Is Macroeconomics Believable?"

["Bruce R. McFarling" <ecbm@xxxxxxxxxxxxxxxxxxx>]

At 22:46 20/08/98 -0700, you wrote:
>
>
>In the paradox of thrift, Keynesians confuse saving in the form of money
>with saving in the form of a new financial asset.

	I don't see how you are making any contact with Keynes argument
here.  If you use income to purchase a new financial asset, the income
not spent on acquisition of newly produced goods changes hands, and the
financial asset changes hands.  Where does the amount of income not spent
on acquisition of newly produced goods change?

>It works in the classroom because students aren't sophisticated enough to
>know the difference between hoarding and the purchasing of a new financial
>asset. Remember, all textbooks are built on the two margin principle so
>students are always given the trade-off between consuming and saving with
>no discussion of the various forms of saving. Basically, most economic
>students are so confused by the time they graduate they can hardly make
>sense out of their degree.

	What relevance does this have for post keynesian economics? What
is presented as keynesian economics in all mainstream texts bears only
a passing resemblence to Keynes, Kalecki, etc.  Its closer to Samuelson's
"keynesian" economics.  You will find many post keynesians agreeing, at
least privately, with the proposition that you do students a disservice
by teaching them Samuelsonian macroeconomics.  Any support for this
type of macroeconomic theory is on the grounds that it is the lesser of
two evils: students would clearly be misinformed to an even greater extent
if they are taught one of the neoclassically inspired macroeconomics.

>I just finished teaching a graduating class of econ majors with high
>grade averages who, having studied as a group, turned in finals with
>particular areas under the IS-LM and AD/AS curves shaded and labeled
>dead-weight loss. Four years, totally wasted.

	That's what comes from not confronting the difference between
macroeconomic analysis and microeconomic analysis head on from the
beginning and sticking to it.  Students think macro is just bigger
demand and supply curves.


Virtually,

Bruce McFarling, Newcastle, NSW
ecbm@xxxxxxxxxxxxxxxxxxx