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

[John Vertegaal <vertegaa@xxxxxxxxx>]

Paul Davidson wrote:

>I'm sorry but if you would only read mu chapter on Investment
>expenditures you would see hw one can get an aggregate from micro--
>withour any indeterminancy -- given , as Keynes puts it "the state of
>expectations".

Let's see.  An endogenous "state of expectations" werein "animal spirits"
move investors to allocate funds in an attempt to initiate growth.  How
is this fundamentally different from the spirit moving "saint" Alan to
influence growth by setting interest rates exogenously?
It looks to me that there is a bit of a problem establishing the boundary
of a Keynesian economy.


>Accounting identities explain the past position

No.  They attempt to explain the _present_ position.  And if the present
consists of overlapping activities, whose outcomes cannot be captured in
a single time frame, these values are uncertain.  They are furthermore
indeterminate because the impetus, originating [exogenously] from "animal
spirits" as Keynes puts it, requires endogenous reactions to determine
the value of its extent.  Being determinate implies a solid footing from
which to proceed.  But an imposition from outside, (especially a powerful
one like the setting of interest rates, which you apparently consider
"determined" by saint Alan too) may just as well be the straw that broke
the camel's back.

It seems to me that the student has the master beat when it comes to the
teachings of "consistency", "logics", "precise taxonomy" and "generality"
seeking.  And that if you insist on claiming that pv's are determinate;
axiomatically setting an endogenous "state of expectations" isn't going
to win you any points on generality.


>-- they have nothing to say about the future position

That's no bone of contention.  Our disagreement concerns the present.


>I'm sorry but it would appear that we are not communicating -- a
>necessary6 condition for a discussion. I think part of the problem is
>that you conflat ex post accounting records with behavioral spending
>relationships.

Remember this all started with me asking how you explain pv's to be
greater than their cost of production, from clearly stated premises.
This was not a rhetorical question but an attempt to get at how you
consider the source of profit to be determined.
  Your "answer" was throwing in an ad hoc "state of expectations" axiom;
which as such is no more than an article of faith, subject to internal
contradiction with your other axioms and no explanation at all.  Then you
deride my conclusion of how profits are determined as "lame"; and again
you're unable to show why.  So I think it's more a problem of trying to
have a discussion across two different paradigms.  Perhaps time will tell
whose' is more pertinent to the real world.


As to the question you put to me off-list:
>How is Peter being robbed?

After working on it for a while I realized it will take a considerable
amount of work to set the stage for an answer in terms of my paradigm;
and that it's not quite as straightforward as I first thought.
It certainly is a fair enough question though and I do intend to answer
it.

John V