Facilitating dialogue to promote open and multi-faceted discussion and awareness

So, I picked up a few books recently that I hope to finish while I’m on a glorious vacation over the next few weeks. Interestingly enough, I’m visiting the land of the man this book is based upon, John Maynard Keynes. The book, Keynes: The Return of the Master, was written by Robert Skidelsky, Emeritus Professor of Political Economy at the University of Warwick. I’m excited to study Keynes a little deeper, a man who I seem to identify with, at least when it comes to a deep passion for both economics and the arts. Money quotes from the introduction so far:

-”Nor was Keynes a tax-and-spend fanatic. At the end of his life he wondered whether a government take more than 25% of the national income was a good thing. Nor did Keynes believe that all unemployment was  caused by failure of aggregate demand. He was close to Milton Friedman in viewing a lot of it as due to inflexible wages and prices…”

-”Keynes was not an inflationist. He believed in stable prices, and for much of his career he thought that central governments could achieve price stability…”

-”I believe, though, that the recent crisis confirms the validity of the Keynesian ‘spending’ thesis. That is why the return of the Master is such an urgent necessity.”

And if you’re wondering who the heck is John Maynard Keynes, check this video out of Keynes and Hayek in the midst of a serious rap battle:

Political Economy for Beginners by Millicent Garrett Fawcett

I was reviewing an old book, “,” by Millicent Garret Fawcett, an incredible woman of history and wife of Henry Fawcett, first professor of Political Economics at Cambridge in the 1860′s. As I perused through the pages, one example she gives seems eerily familiar:

“…six persons, A., B., C., D., and F., desire to purchase a house; the price, therefore, of the house is raised to such a point as to oblige B., C., D., E., and F. to withdraw their demand; the only demand which remains is that of A.; the demand is therefore made equal to the supply.

It is however evident that in such a case as that just described, the price which the house fetches may be such as to provide a greater reward for the capital and labor engaged in building the house, than is current in the trade. If this is so the supply of houses will be increased as quickly as the circumstances of the case permit. But this increased supply will tend to reduce the price of houses to such a point that the reward obtained by the labor and capital engaged in the trade returns to its ordinary level. In a similar way if the price which the house fetches, yields less than the ordinary reward to capital and labor, the master builders and laborers will employ their capital and labor in other industries: the supply of houses will fall off, until prices return to such a point as to pay the capitalist and laborer the current profits and wages of the trade. This continual variation of market price, on either side of the normal price, or that regulated by cost of production, has been compared by Mr. [John Stuart] Mill to the perpetual fluctuation of the waves of the sea. ‘The sea everywhere tends to la level, its surface is always ruffled by waves, and often agitated by storms. It is enough that no point, at least in the open sea, is permanently higher than another. Each place is alternately elevated and depressed; but the ocean preserves its level’…”

Fawcett Political Economy for Beginners Sec. 2 Ch. 3

Now, this is pretty basic. Actually, about chapter 4 in a Macro 101 course. But tied to our current situation, things seem a little more complicated, despite the basic tenets of economics just rehearsed. I will get into more of the aspects of demand and supply and the housing crisis within the next few articles, if not to help organize conflicting ideas on the recession than to organize my thoughts on the issue. Many places where blame has been dealt have not been totally accurate, but for starters, Fawcett lays down the fundamental aspects of how the crisis looked. I’ll report more soon!