Keynes

I think I may be becoming a Post Keynesian, or rather a Keynesian, as I've been won over by his own writings rather than those of his followers. I've never previously had much of an interest in macroeconomics. I think this may be because the macroeconomics I was taught tended to be tosh. It would be an insult to the intelligence of a small child to try to get them to buy the idea that the economy is always efficient and all unemployment is voluntary, so trying to convince Cambridge undergraduates of such things is ridiculous. Of course we need to know of such theories so that we can accurately mock critique them.* One of the thing which annoys me is how badly the few ideas of Keynes we were allowed to hear were distorted in the retelling. I clearly remember a lecturer claiming that Keynesian economics were silly because it claimed that people always saved a fixed proportion of their income. This is completely false. Having just finished reading The General Theory of Employment, Interest and Money I can tell you that he doesn't claim that. He makes the quite reasonable claims that a) people tend to consume more when their income is higher and b) richer people tend to save a larger proportion of their income than poorer people. He also includes a complex of analysis of what factors, economic, cultural, social, influence people's decisions to consume and save. I'm not sure whether they just simplify everything because all economics has to be in terms of equations to be allowed in an undergraduate lecture course or they are purposely misrepresenting Keynesian economics to provide a straw man.

*One of the most amusing things about these models is the ways they try to find 'empirical evidence' for their theories. Not put off by the argument "but there is such a thing as involuntary unemployment", a fact which is felt particularly pertinently by my third year undergraduates, they tend to do this thing where they set up a stochastic mathematical model, run it a shit load of times, and then proudly declare that, once they calibrate their variable correctly, that the mean and standard deviation of various economic variables is the same as that for the real economy. If I were a journal editor I would publish their paper next to one in which a stochastic mathematical model of how the flying spaghetti monster controls the economy manages to come up with the same mean and standard deviation for pertinent economic variables.