Re: US Trade Deficit As 'World Engine Of Growth'?

[pdavidso <pdavidso@xxxxxxx>]

Sorry but I can not read your emasil because it runs off the screen on the
right side!!  You will hsave to set proper margins of you want a response

Paul


>===== Original Message From Robert Williams <vic93@xxxxxxxxxxxx> =====
>Paul
>
>>>As I explain in my book FINANCIAL MARKETS, MONEY AND THE REAL WORLD
>>>
>>>Keynes deflated all nominal values by the money wage unit in order to use
>>>
>>Marshall's
>>
>>
>>>scissor analogue of supply and demand -- where demand is one blade of a
scissor and supply is the other blade.  Marshall then noted thast if we keep
one bladeof the scissor constant (by construction) then we can say that the
other blade did all the cutting.
>>>
>>>I'm not clear on what you are saying here or its implications.  I am aware
that Marshal reversed the dependent asnd independent variables[I find changing
them back more useful] in order to develop his "Scissor"
>>>analogy and Keyenes followed in his footsteps.  I've never learned why he
(Marshal) did this or why Keynes and everyone else followed suit and still use
the analogy to this day.
>>>
>
>The scissor analogy has nothing to do with reversing P and Q as
>idependent and
>
>>>dependent variables-- The reversible thing you mention merely im plies that
the Marshallian cross should have Q on the vertical axis and P on the
horizontal axis.
>>>
>>>I also wonder at the validity of the "scissor" analogy as a fair
representation of "the economy as a whole" it may address to some degree
Keynes' concern for full employment [though I tend to think it doesn't]
>>>
>>>
>>
>>Please "quote" from your book on FINANCIAL MARKETS, MONEY AND THE REAL WORLD
--
>>
>Whether or not you convincingly show what you purport to show is
>something your reader must decide especially in a dialogue such as this
>as opposed to a monologue such as a book..
>
>>ESPECIALLY CHAPTER 2 -- where I show how Keynes aggregated Marshallian
microsupply and demand curves for every firm in the economy to an aggregate
demand and supply functions.
>>
>Now if I am understanding you correctly these two aggregate curves are
>represented in macroeconomics as the Y=C+I+G+(X-M) and 45 degree
>line.(the fixed by construction you refer to below?)
>If so, then Marshall's aggregation of the aggregate demand always ends
>up with the same solution which may be but is curious if so and wouldn't
>need aggregating to determine..
>
>> It was these functions that underlay his principle of effective demand".
Then, as Keynes wrote to Dennis Robertson, Keynes was willing to accept the
classical analysis of supply functions in Marshall---
>>
>I  wonder how this would relate to the aggregate in that all economic
>activity doesn't fit smoothly into a supply or demand function.  What
>would your take be on this I wonder.
>
>>but nevertheless, by deflating these two aggregate functions by the
money-wage unit --
>>
>This is a curious activity.  Dividing both sides of an equation doesn't
>effectively do much of anything other than rephrase the equation.
>
>> demonstrate
>>
>You may have concluded without being convincing in your  "demonstration".
>
>>that any exogeneous change in aggregate demand
>>
>That would be represented in the (X-M) of the aggregate demand function,
>n'est pas?  Or could this be some form of monetary policy injection.
>
>>that moved the economy away from full employment
>>
>Less than full employment I  would think resulting in (in theory) an
>"inflationary gap" of sorts?
>
>>could NOT be automatically offset by freely fluctuating money wages (the
classical solution underlying Say's Law);
>>
>One would think that the freely functioning would mean downward which is
>not compatible with "sticky downward" ressitence in money or nominal
>wages but not real wages,  according to Keynes.
>
>
>
>>Instead Keynes's Marshallian micro to macro economics  required showing that
a return to full employment must show how a mechanism that shifts the
aggregate demand function (scissor blade) back to intersecting the aggregate
supply
>>(fixed, by construction, scissor blade) function at the point of full
employment.
>>
>
>>>ut it can in no way that I can envisage his concern for the fair and
equitable distribution of the output of the economy.
>>>
>>>
>>If you read the first sentences of the last chapter of the GT, you will note
>>that Keynes indicated that the two major faults of the entrepreneurial
>>economics system was its inability to maintain full employment and its
>>inequitgable and arbitrary distribution of income and wealth.  The GT was
>>aimed at directly fixing the first fault -- and only indirectly toward
>>ameliorating fault two.
>>
>>
>>
>>
>>
>>>I have a number of thoughts on this matter. 1)  it may not be AG that
>>>needs managing at all if higher levels  of employment are the target.
>>>
>>>
>>
>>What is AG?
>>
>>
>>
>>>2) the use of the DD-SS analogy (scissors) returns a solution that is a
>>>point of intersection [the result of the reversal of the dependent and
>>>independent variables]  when a broader vista is needed [ that would
>>>return a solution of areas under the curve.]
>>>
>>>
>>
>>Not if you are interested in curing involun tary unemployment -- as Keynes
was
>>-- and with doubler digit uneployment in Euroland and significant
unemployment
>>in most of the rest of the world (e.g., Japan) including most LDCs  -- I do
>>not think  a "broader vista" is needed.  Lets get to global full employment
>>first -- then we will have enugh goods and services available to worry about
>>"broader vistas".
>>
>>
>>Paul
>>
>>Paul Davidson
>>Editor, Journal of Post Keynesian Economics
>>University of Tennessee
>>SMC 503
>>Knoxville, Tennessee 37996-0550
>>office phone #;(865)974-4221; office fax# (865)974-1686 or (865)974-4601
>>home phone and fax # (865)692-0802
>>email pdavidson@xxxxxxx
>>http://econ.bus.utk.edu/davidsonextra/Davidson.html
>>
>>
>>
>>

Paul Davidson
Editor, Journal of Post Keynesian Economics
University of Tennessee
SMC 503
Knoxville, Tennessee 37996-0550
office phone #;(865)974-4221; office fax# (865)974-1686 or (865)974-4601
home phone and fax # (865)692-0802
email pdavidson@xxxxxxx
http://econ.bus.utk.edu/davidsonextra/Davidson.html