New Keynesian
From iGeek
When the 1970s Stagflation broke Keynesian models, the far left just created new models (New Keynesian) instead of rethinking the premise.
~ Aristotle Sabouni
Created: 2022-03-12 |
Facts
- Hayek won the nobel prize in economics for showing why Keynesianism (Command Economies) don't work in the 1940's (Dispersed Knowledge).
- Keynes' macro-economic theories broke completely in the 1970's with Stagflation: a concept which couldn't exist according to Keynes's original models
- if you're proven wrong, but have a career being a specialist based on those wrong theories, or you're too egocentric to grow, what do you do? Rather than admitting their prophet was wrong, Keynesians just reworked the models (to allow an exception for stagflation) and called those new theories/models, "New Keynesianism".
- Their religion of Keynesianism was way too important to face contradicting reality, so they forked history. Thus pre-1970s and post 1980s Keynesianism is based on different models... but has the same flawed beliefs. We know that the new models have also never been accurate in any major prediction of trajectory in a recession or a recovery (by tracking it backward), so while they're not as glaringly wrong in the edge case of stagflation, the models still don't fit reality or actually work.
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