Abstract
Chapter 12 was devoted to the study of how government manages short-term economic fluctuations. This policy is not difficult to justify, at least on the surface. Economic downturns cause some people, often seemingly randomly and unfairly, to bear the costs of losing jobs. Sometimes downturns pass with little pain, sometimes (the 1930s, the years after 2008) they endure. Assuming the flow of technological innovation doesn’t come to a permanent halt, which it never has before in human history (and especially since 1780), the economy will eventually right itself. But how long must we wait? Keynes himself famously dismissed the preoccupation with the tendency of the economy to eventually recover with a famous quote:
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John Maynard Keynes, A Tract on Monetary Reform (1923).
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Robert Higgs, “Recession and Recovery: Six Fundamental Errors of the Current Orthodoxy,” The Independent Review 14 (3) (2010): 466–467.
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This story is sometimes attributed to the economist Milton Friedman, who is said to have made the remarks to a government official while Friedman was visiting India. He may have said it, but the history of this story suggests that Aberhart was the original maker of the argument. For a history of this quote, see http://quoteinvestigator.com/2011/10/10/spoons-shovels/.
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Ireland actually led at 67.0 percent, but this figure was inflated by a gigantic bailout of failed banks. Source: http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-SF-11-042/EN/KS-SF-11-042-EN.PDF.
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One can solve for this interest rate by noting that $1(1 + i)20 = $2, with i being the interest rate in question. Solving for it yields a rate of approximately 3.53%. (I am assuming no inflation, so this is a real interest rate.)
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If the gold-plated bathroom allowed the company to get much better CEOs, then this would be an investment, and perhaps a justifiable one.
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© 2013 Evan Osborne
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Osborne, E. (2013). Macroeconomics. In: Reasonably Simple Economics. Apress, Berkeley, CA. https://doi.org/10.1007/978-1-4302-5942-8_13
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DOI: https://doi.org/10.1007/978-1-4302-5942-8_13
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