Aidan

You have said "Right now the economy needs stimulus so the government should be borrowing more." Okay? Fair enough?

Then you have said "If you want me to derive those rates [i.e. the rates proving that governmental intervention is justified] from theoretical principles, forget it; I can't and AFAIK nor can anyone else."

So you're contradicting yourself, and you *have* conceded what is in issue.

By saying:
"For instance, we don't need to know what the optimal tax rate is to know that the rates of zero and 100% are not optimal."
you're begging the question *again*.

You need to demonstrate that the advantages of a given intervention outweigh the disadvantages, which is what's in issue, and which you've just admitted you can't do. Generalising the problem from particular interventions, to all of them, doesn't help you.

You then try to solve that problem by reversing the onus of proof onto me: basic logical error on your part. I would only have to demonstrate an understanding of sectoral balances if you had first been able to demonstrate that you have the knowledge necessary to justify government interventions aimed at sectoral balances. By agreement between us, you don’t know, even in theory, whether the advantages of a particular government intervention outweigh its disadvantages.

You have wrongly assumed that the difference between a barter economy and a money economy is not "minor", and that that the economic calculation problem is only significant where "central planning completely replaces markets".

This is not correct. The significance of the economic calculation problem is that it explains why you say "I can't and AFAIK nor can anyone else."

You are left with merely assuming that government intervention MUST be justified, even though you yourself admit that it isn't in all cases, so not even you agree with your basal assumption.

The only difference between your methodology and runner's, is that he imputes intelligent design by a value-creating superbeing to biological order, and you do it to economic order. The intellectual process is the same.

(cont.)

I'm not going to explain to you the economic calculation problem any more than I'm going to explain the theory of evolution to runner. You need to develop critical and independent thinking.

In any event we are both agreed that you have no objective way of knowing, and cannot prove, that more stimulus and government borrowing are appropriate now.

Merely saying "inflation rates" only begs the question *which* inflation rates. Merely citing authorities, and assuming they must know somehow, only proves what I am claiming: that you have failed to understand the economic issues.

Think of it this way: not even you are claiming that stimulus and borrowing are appropriate all the time. Even you acknowledge that central planning can be wrong. Well?

Let's cut to the chase. How do you know whether the government intervention you advocate would be beneficial in terms of the subjective evaluations of all the different people affected positively and negatively, and how do you figure that out? (A simple “I don’t know” will suffice.)

Jardine,

I base my conclusion that the economy needs stimulus on the facts that:
• a lot of people are out of work.
• with inflation rates very low (whether compared to the RBA's target rate or past rates) there is no sensible reason not to stimulate the economy.
• fears of a house price bubble have deterred the RBA board from cutting interest rates as much as they otherwise would have.

So while I am incapable of giving you a definitive, theoretically derived, optimal amount of stimulus this country's economy needs, I can be very confident that it's more than we're getting at the moment.

So I have not contradicted myself, and not conceded what's in issue.

Regarding my example of optimal tax rates, I thought you accepted the concept of the Laffer Curve. If you don't, I'm certainly willing to discuss it. But if you do accept it, I'm not going to waste time explaining to you what you already know. This is a debate, not an exam!

My generalisation of the problem was merely an attempt to get you to comprehend the absurdity of your own generalisation of the problem (where you won't accept that any intervention is needed without a theoretically derived formula for the optimal amount of intervention needed).

You are extremely arrogant, you think your understanding is perfect when it's actually grossly deficient, and you wrongly assume me to be the ignorant ideologue you are, as demonstrated by your frequent preposterous claims about what my position is. You need to develop critical and independent thinking, as I have done.

But despite your arrogance and poor thinking skills, I don't believe that you're such an imbecile that if you understood sectoral balances you'd continue to believe the Commonwealth Government should try to run budget surpluses when the private sector's still weak. Nor that it should run budget surpluses each year until it regains a neutral balance sheet.

And your "don't know even in theory" comment is revealing. If the theory doesn't match the facts, what you "know in theory" you actually don't know at all...

Jardine,
Further to my previous post:

You have wrongly accused me of assuming that the difference between a barter economy and a money economy is not "minor". I made no such assumption, and nor did I make the opposite assumption (which I suspect you meant to accuse me of). My understanding is that the economic calculation problem DOES extend to barter economies, where it is still solved by the market, albeit in a far less efficient way than if money were used. But since barter economies are very rare nowadays, so I can accurately describe that discrepancy between our understandings of it as minor.

However I now see there are some major discrepancies as well, and a quick Google search fro "economic calculation problem" appears to indicate that your understanding of it is the one that's out of step with the rest of the world. The ECP is indeed "only significant where central planning completely replaces markets" because otherwise it is solved by markets. But you seem to be extrapolating it far beyond its original purpose. You seem to assume it shows ANY government intervention to produce an inferior result. And you seem to think it extends to things other than the means of production. You're wrong on both counts. Which leaves you (by your own standards) not qualified to express an opinion on the topic!

The ECP is not the reason why I say "I can't and AFAIK nor can anyone else." The complexity of the problem is. Admittedly the complexity of the problem was also the reason for the ECP, but it doesn't mean the answer's the same.

I am not left merely assuming that government intervention MUST be justified. I am left concluding that there are circumstances where government action is advantageous (and therefore justified). Sometimes it's clear that fiscal and/or monetary policy should be tightened, and sometimes it's clear that it should be loosened. The fact that there are times when it's not clear what (if anything) should be done is merely an acknowledgement of the complexity of the problem.

(TBC)

All I have to do to prove, to your own standard, that you are, to quote you, "100% wrong" to advocate stimulus, is say I prove so by saying "inflation rates".

That, according to you, is an entire and self-sufficient argument.

Then when that absurd piece of flummery is rejected and challenged for specifics, all I need to do to prove you 100% wrong, is assert a few arbitrary opinions about "a lot" of this, "very low" of that, and "fears" of the other.

So either you accept this method of proof against you, since you yourself have used it against me, and therefore you must accept that I have just proved you 100% wrong; or you don't accept it in which case it is not good for you either, and you've proved nothing.

All you're doing is begging the question again, you fool.

At no stage have you established whether, and how you know, that the advantages of further governmental inflating, borrowing and spending would outweigh the disadvantages, so you've got nothing

"If the theory doesn't match the facts, what you "know in theory" you actually don't know at all..."

That assumes you know all the factual variables, you fool.

You're guessing, and simply assuming that everyone else shares the same mental method as you.

Your entire method is nothing but merely asserting the arbitary political opinion, based on nothing but your *wish* for cost-free benefits, that central planning works economic wonders, denying that's what you're asserting when confronted with it, and then denying that you're contradicting yourself.