Thus the Keynes think-tank could say "for every 2% decrease in expected national health costs, wage-based consumption will increase XYZ revenue by 1%." Intelligent sound bites are what think-tank's produce. To resonate memorably, though, the statement's assumptions must be intuitive and sensible. Audiences applaud XYZ's candidate when he says regulation is always burdensome, because they've seen regulation interfere at home. But employees also know their paychecks are less than what they wish, yet may not see how business regulation can increase them, certainly not the way they see tax cuts work.
This is where the Keynes think-tank's research and position on wages will have an effect. It's no accident that Keynes starts with wages, because nothing captures and influences attention as much. The current ideological structure lets wage debates propagate as extremes, bracketed by CEO bonuses and minimum wage burger flippers. The missing middle can be provided by the Keynes think-tank. Again, the first issue is not disparity, though important. It's to burn into public consciousness how much wages matter, how huge their aggregate impact, and how regulation can protect this vast pool.
A return to a wage focus would be a sea change for labor, management, and public debate. Labor unions steadily fringed their demands with non-wage issues over the past half century. Management spent more and more effort cutting costs for equity gains, often through layoffs, not wage reduction. Political media emphasized that high wages caused outsourcing, and ignored wage stagnation.
The sum of these developments displaced wages from center stage. Reagan campaigned on "do you feel better off than four years ago?". A Keynes think-tank message could ask "do you feel your wages are better, safer, stronger than four years ago? What wage do want in ten years? What will get it?" This can disarm right-wing economic weaponry, which is backward looking.
Business Cycles
The "business cycle" is a prosaic term ill suited to express Keynes's insights, for whom macroeconomic booms and busts reflect "animal spirits" as well as monetary policy. Though behavioral economists use "animal spirits" mostly to explain the busts, Keynes' "animal spirits" were not pathological. As evolutionary adaptations to risk, they kick in when it's easier to calculate costs than future profit. Behavioral economists use "animal spirits" to explain speculation; Keynes applied them to much more. When people consider college, have a child, or raise a hand to volunteer, they often identify the price they'll pay more clearly than the benefits. But people go to college, have kids, change careers, start a business, because "animal spirits" energize optimism to overcome cold calculus. As these decisions accumulate through the population, they run the economy through an obstacle course, to generate ups and downs, booms and busts, cycles and hiccups.
The Keynes think-tank should not apply today's behavioral economic approach to business cycles; it too often lacks logical gravitas and counterfactual diligence, and treats rationality in ways impolitic for mass media. Instead the Keynes tank examines "animal spirits" which impact productivity, human capital, and entrepreneurship, rephrased as optimism values refined and measurable.
Keynes appreciated how free market acolytes stumbled to embrace the bust side of cycles. Its the soft underbelly of right-wing economics, a proscription of pain. Keynes was developing an economic science to steady expansion on a generally positive slope. Keynesians took this to mean deficit spending forever, like saying Hamlet is a story about ghosts. Keynes actually showed that human potential fuels an economy, so fiscal and other policy should support citizen's optimism.
Deep recessionary unemployment may sink citizens in pessimism, as well as reduce aggregate wages and consumption, and stimulate savings and hoarding. Government investment in human capital, via education, apprenticeships, or such novelties as exercise and the arts, can change personal attitudes, as well as stimulate demand. That may be necessary for economic growth, but if mass attention is pushed onto deficit dangers, pessimism can still flourish.
FDR, who seemed to intuit macroeconomic patterns somewhat like Keynes, expressed the "animal spirit" function profoundly, when he said "the only thing to fear is fear itself." Indeed nothing could be more important in debating the right-wing, then demonstrating how optimism and pessimism operate in the economy.
Consumption
The right-wing likes to talk about consumption, right? George W. Bush told people to spend, spend, spend, after 9/11. But the right-wing is afraid to look at consumption's chief component, demography. Keynes, of course, traced consumption's demand impact. The Keynes think-tank can bring people up to speed, prioritize consumption factors, catalogued for political dialogue.
The right scares people about social security and Medicare, because they focus on how long people live post-retirement. A Keynes think-tank can talk more realistically, and more hopefully, by showing how consumption produces the resource base for those programs. People buy things, money pays people, profits grow business, and tax flows increase to pay for programs. But people who buy things are a finite group, dominated by working-age adults. Consumption needs more of them.
The Keynes think-tank needs to master this subject, because it cuts across vital political divides, such as international trade, immigration, birth policy, environmentalism, and personal debt. A think-tank's authority in this area will help abrogate a lot of political mischief, and will generate media influence.
Old Age
This demographic component is a category of its own. If consumption and its government tribute will in the future flow from different ethnicities, savings and interest rates still devolve to the senior age cohort. Much political entertainment already directs at older people; as we age, future horizons afford less hope, thus can be exploited by fear mongering.
This is where the Keynes think-tank's research and position on wages will have an effect. It's no accident that Keynes starts with wages, because nothing captures and influences attention as much. The current ideological structure lets wage debates propagate as extremes, bracketed by CEO bonuses and minimum wage burger flippers. The missing middle can be provided by the Keynes think-tank. Again, the first issue is not disparity, though important. It's to burn into public consciousness how much wages matter, how huge their aggregate impact, and how regulation can protect this vast pool.
A return to a wage focus would be a sea change for labor, management, and public debate. Labor unions steadily fringed their demands with non-wage issues over the past half century. Management spent more and more effort cutting costs for equity gains, often through layoffs, not wage reduction. Political media emphasized that high wages caused outsourcing, and ignored wage stagnation.
The sum of these developments displaced wages from center stage. Reagan campaigned on "do you feel better off than four years ago?". A Keynes think-tank message could ask "do you feel your wages are better, safer, stronger than four years ago? What wage do want in ten years? What will get it?" This can disarm right-wing economic weaponry, which is backward looking.
Business Cycles
The "business cycle" is a prosaic term ill suited to express Keynes's insights, for whom macroeconomic booms and busts reflect "animal spirits" as well as monetary policy. Though behavioral economists use "animal spirits" mostly to explain the busts, Keynes' "animal spirits" were not pathological. As evolutionary adaptations to risk, they kick in when it's easier to calculate costs than future profit. Behavioral economists use "animal spirits" to explain speculation; Keynes applied them to much more. When people consider college, have a child, or raise a hand to volunteer, they often identify the price they'll pay more clearly than the benefits. But people go to college, have kids, change careers, start a business, because "animal spirits" energize optimism to overcome cold calculus. As these decisions accumulate through the population, they run the economy through an obstacle course, to generate ups and downs, booms and busts, cycles and hiccups.
The Keynes think-tank should not apply today's behavioral economic approach to business cycles; it too often lacks logical gravitas and counterfactual diligence, and treats rationality in ways impolitic for mass media. Instead the Keynes tank examines "animal spirits" which impact productivity, human capital, and entrepreneurship, rephrased as optimism values refined and measurable.
Keynes appreciated how free market acolytes stumbled to embrace the bust side of cycles. Its the soft underbelly of right-wing economics, a proscription of pain. Keynes was developing an economic science to steady expansion on a generally positive slope. Keynesians took this to mean deficit spending forever, like saying Hamlet is a story about ghosts. Keynes actually showed that human potential fuels an economy, so fiscal and other policy should support citizen's optimism.
Deep recessionary unemployment may sink citizens in pessimism, as well as reduce aggregate wages and consumption, and stimulate savings and hoarding. Government investment in human capital, via education, apprenticeships, or such novelties as exercise and the arts, can change personal attitudes, as well as stimulate demand. That may be necessary for economic growth, but if mass attention is pushed onto deficit dangers, pessimism can still flourish.
FDR, who seemed to intuit macroeconomic patterns somewhat like Keynes, expressed the "animal spirit" function profoundly, when he said "the only thing to fear is fear itself." Indeed nothing could be more important in debating the right-wing, then demonstrating how optimism and pessimism operate in the economy.
Consumption
The right-wing likes to talk about consumption, right? George W. Bush told people to spend, spend, spend, after 9/11. But the right-wing is afraid to look at consumption's chief component, demography. Keynes, of course, traced consumption's demand impact. The Keynes think-tank can bring people up to speed, prioritize consumption factors, catalogued for political dialogue.
The right scares people about social security and Medicare, because they focus on how long people live post-retirement. A Keynes think-tank can talk more realistically, and more hopefully, by showing how consumption produces the resource base for those programs. People buy things, money pays people, profits grow business, and tax flows increase to pay for programs. But people who buy things are a finite group, dominated by working-age adults. Consumption needs more of them.
The Keynes think-tank needs to master this subject, because it cuts across vital political divides, such as international trade, immigration, birth policy, environmentalism, and personal debt. A think-tank's authority in this area will help abrogate a lot of political mischief, and will generate media influence.
Old Age
This demographic component is a category of its own. If consumption and its government tribute will in the future flow from different ethnicities, savings and interest rates still devolve to the senior age cohort. Much political entertainment already directs at older people; as we age, future horizons afford less hope, thus can be exploited by fear mongering.
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