| Quote (supposedly "explaining" why unemployment happens): It used to be, Keynes says, that wealthy men just thought investing was the manly thing to do. They weren’t going to sit around and calculate what kind of bonds yielded the greatest expected return. Bonds are for wusses. They were real men. They were going to take their money and build a railroad. But they don’t make rich people like that anymore. Nowadays, they put their money in the stock market. Instead of boldly picking one great enterprise to invest in, they shift their money around from week to week (or hire someone else to do it for them). So these days, it’s the stock market that stimulates most new investment.
Even accepting this explanation, it is worth asking why they don't make rich people who invest in building real stuff rather than chasing paper anymore. What happened to the innate human drive, curiosity and so on? Why is it that downturns in 19th century corrected themselves, but now we need more and more government intervention, progressively more every cycle? In Economics cause and effect are often difficult to separate, but one reasonable hypothesis is that the widespread adoption of Keynesian policies themselves caused rich people to chase paper, leaving it to government/Federal Reserve to manipulate the stock market to try to stimulate investment indirectly. In other words, Keynesian policies beget more Keynesian policies, in the process generating a whole bunch of Keynesian economists who can "correctly" claim "We told you"; we reach the point where the government runs most of the economy, robbing people of initiative ("we don't make real men anymore"). If you travel to socialist countries, you will observe this in effect. The population displays a curious passivity ("that is the government's problem"). No one thinks about taking the initiative because the incentives systems are all wrong. |
That is so true. There are countries in which government jobs are the most prized jobs (high salary, flexible working hours and extremely high job security).
This for me at least is a sad phenomenon.