I recently encountered a series of youtube videos which claimed to find errors in the logic and algebra underpinning Keynesian economics.
Excuse me for being sceptical, but I think its strange that it has taken 75 yrs to find these flaws. Surely if they existed, it would be well known by now? Below is a link to one of these videos. Has the author found a previously unknown flaw? Or is this well-known? Or has the author, in fact, got it completely wrong?
Pt. 2: Fiscal Multiplier Destroyed: Keynes' Deception http://www.youtube.com/watch?v=encPMexUm8w
If you are interested, here is the full list of videos:
The Maynard Keyneshttp://www.youtube.com/watch?v=pA67E8jMq84&NR=1
Pt. 1: Fiscal Multiplier Debunked and Destroyed http://www.youtube.com/watch?v=4Vnus-Kw5Is&NR=1
Pt. 3: Fiscal Multiplier Destroyed: The Other Multiplier http://www.youtube.com/watch?v=sZDIZ1U7gEk
Pt. 4: Fiscal Multiplier Destroyed: The Chain Reaction http://www.youtube.com/watch?v=y1AVThNZuR4
Pt. 5: Consumption Function & Keynesian Cross Destroyed http://www.youtube.com/watch?v=2bmsYNnS2MA
Pt. 6: Government Spending Multiplier Destroyed http://www.youtube.com/watch?v=hHa-HE7Olq0
Pt 7: Tax Cut Multiplier Destroyed http://www.youtube.com/watch?v=1oUMjJKQkkQ
Pt 8: Balanced Budget Multiplier Swindle - Keynesian Asymmetries http://www.youtube.com/watch?v=VZL_1L9r-T4
Pt 9: Keynesian Logic - Apples, Oranges, Asses http://www.youtube.com/watch?v=XErrpJHaExA
Pt 10: Keynesian Asymmetry and "Other Multiplier" Revisited http://www.youtube.com/watch?v=684WIoQP6XQ
I suggest you read this explanation of the fiscal multiplier:
http://www.wellesley.edu/Economics/weerapana/econ202/econ202pdf/lecture%20202-13.pdf#page=3
You are doing what Keynesians do. They are impervious to logic because they claim to have math. Then they show bits and pieces of algebra, and make up stories. And then you see the equations, which don’t back up their stories, and contradict their stories. And some of their equations are complete nonsense, and include crap like C = mpc(Y-T).
1) If that's supposed to be the consumption function, where is autonomous consumption, "a"?
2) What is Y?
Leave the T in, and show me the equations of how you get Keynes' multiplier. The equations aren't that hard.
Are you blind or just stubborn?:
C¯ is exogenous consumption
I have already read it. So what?
The equations are right there! I even underlined them for you. Plug in the consumption function into GDP and solve for GDP. Done.
1) He didn't include autonomous consumption in his consumption function.
2) He didn't label Y as to whether it was disposable or total.
3) You still can't add anything to any of the variables in the equation you circled, because of the order of operations.
4) b does not apply to tax, only to disposable income.
Yes the equations are there. So what?
1) Again, autonomous consumption is the same as exogeneous consumption, which is Cbar
2) Y is always Y total
3) You can add a value to any of the variables. Like C, for example. Or G.
4) He distributed b to (Y-T), because b only applies to disposable Y, which is Y-T
Your problem is with arithmetic, not with Keynesianism.
1) So autonomous and exogenous are the same. So what?
2) Y is not always total income. Look around and you will find some Keynesians using it for disposable income, and doing this:
Y = bY + a+I+NX +G
Y - bY = a+I+NX +G
Y(1-b) = a+I+NX +G
where they factor out Y, even though one Y is Yt and the other is Yd.
3) If you look at the entire set of equations, you will find that you can't add to any of the variables, without violating the order of operations.
4) You cannot retroactively apply b to T, it only applies to Yd.
My problem is that Keynesians are impervious to logic because they claim to have math. But they don't show all their math, tell stories that are contradicted by their own equations, use algebra tricks, and nonsense math like substituting an equation back into itself.
My other problem, is that mises.org seems to be a hotbed of Keynesianism :D
Maybe Tugwit is getting to my head, but there might be a slight problem in the equations presented. They say C = Cbar + b(Y-T). However, disposable income isn't Y-T, it's Y-T-Cbar.
So autonomous and exogenous are the same. So what?
You just said they don't take autonomous consumption into account.
Y is not always total income. Look around and you will find some Keynesians using it for disposable income, and doing this:
However it may be, this guy didn't do that.
I don't think you understand the concept of plugging numbers in. Do you want me to write out an example for you?
You cannot retroactively apply b to T, it only applies to Yd.
Yd is Y-T. So if you apply b to Yd then you do b(Yd) = b(Y-T) = bY-bT
I looked at the Tugwit blog, I dont find ti credible.
There was this stuff >
Keynesians now say that if we add $1 to the $10 part, and “multiply”, the result is as follows: 2) 100 = (10/1) x 10 (10/1) x 10 + 1 = 110
Unbelievable! Three Stooges math.
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but this criticism is itself false.
consider a simple equation.
Force = Acceletarion * Mass (thanks Newton)
lets say
Force = 10m/s^2 *10kg = 100kgm/s^2
lets 'add' a kilo to the weight and find out what the force is now given the condition that the acceleration is the same
Force = 10m/s^2 *(10+1) kg = 110kgm/s^2 (i.e. not 101)
Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid
Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring
I tried using that exact logic:
http://mises.org/community/forums/p/25406/486972.aspx#486972