Keynes is not a collectivist or a Socialist.

I have not yet become aware of any valid criticism of Keynes. The fact (which Hayek criticized) that government pretend to follow Keynes but don't really follow Keynes is not a flaw in Keynesianism but rather is a flaw in government.

Central planning fails in communism for the same reason that it fails in corporations.

What criticism of Keynesian theory by Hayek is the exact problem we're experiencing today?

I'm too tired to respond tonight; but this looks like a reasonably reputable source for his theories. That is, the Austrian school.

http://mises.org/daily/2950

I am not completely following you here, but it seems you do not understand that the Tobin tax is imposed on ALL currency transaction. (For example, dollars buying Brazilian Real or Yuan buying dollars, etc. will directly reduce the speculative “carry trade.”)
Thus MS would NOT be as you said: "at significant disadvantage to foreign companies"

I have already noted that Brazil's less than month old new UNILATERAL 2% tax on foreign funds buying Real (or later to take "carry trade" profits back home, Selling Real to buy dollars, Euros, etc.) has hurt the Brazilian stock exchange because it is unilateral. (IPOs now will issue on the NY stock exchange in dollars, etc. not via Brazil's stock exchange in Real as foreigners typically buy more than 50% of Brazilian company's large IPOs.)

If a Tobin tax of say 0.2% were imposed on funds buying any new IPO anywhere in the world then there would not be any advantage to any country’s stock exchange. Then real economic considerations (such as where there is large capital pool at low cost) would determine where the company listed it new IPO.

BTW, until about a year ago, Brazil had a "local Tobin tax" call ICMP (if I remember name correctly). It was 0.03% (again by memory) on any money that moved via a bank from one account to another. For example when you paid your electric bill of 100R$, your bank account was reduced by 100.03R$. (The government got the extra 0.03R$, I think at the end of each week, that had accumulated in the bank's ICMP account.) If move was from your account to your account in another bank, there were special transfer checks that were not subject to the ICMP tax.

This tiny percent tax raised a lot of money, but was not popular with the Brazilian voters,* so when Brazil's economy was booming with high prices for commodities, the ICMP was ended. The Tobin tax would be like that - very easy to implement and go to some yet to be established international fund for commonly agreed improvements to the human condition, if Tobin's ideas were accepted. (They may not be - See my last post, 10, where the idea now is to use the Tobin funds, instead of public taxes, to bailout "banks to big to fail.") See http://www.sciforums.com/showpost.ph...0&postcount=10

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* While I too did not like paying it, I thought it was a fair and useful tax, very much like a state's sales tax, because in Brazil there is huge loss of tax revenue due to cheating (except those on a salary cannot cheat). I.e. owners of businesses probably pay less than 50% of what they should. Their business does, however, need to buy it supplies, pay its employees, etc. and this is via a bank (although as in the USA there is also an "underground" cash economy but the very rich cannot pay a large amount in "hidden cash.")** so the ICMP caught them too.

** In your annual income tax you must declare all of you goods (wealth). If it increases more than is reasonable for your income, then you are very likely to be investigated. If you were to get a large amount of cash, there is not much you can do with it. For example if you were to buy a farm or fancy yacht, you would need to show where the money came from. This has two main reasons: (1) make life more difficult for drug dealers and (2) make less tax evasion.

I expect that the US will need to require annual declaration of total wealth to the IRS also soon, as the US needs to make sure all pay their fair share of taxes. It will not be popular and be called an "invasion of privacy" etc. but the US can not much longer let the rich cheat as much as they now do on their taxes.

Perhaps Austrailia should follow Brazil's lead - put a 2% tax on all foreign funds buying AUDs (and conversely when selling AUDs to take their "carry trade" hot money profits back home.) A net 4% "gate fee" on hot money can greatly reduce it, yet have little effect on the long term FDI I assume Austrailia desires.

Certainly not true in China for the last three decades. More than the entire population of the USA has been freed from economic serdom and is now part of the urban middle class. China was smart enought to learn for the USSR's mistakes. I.e. let the market place determine what goods and services are produced.

But China also learned for the US's mistakes and lets the government invest in the long term, slow pay back, projects like hydroelectic dams, railroads, modern ports, etc. The US failed to do this (hell cannot even keep its bridges in repair) because the politicians do not think past the next election. China operates on a 50 year plan (10 five years plans). No wonder China has been growing about 4 times faster than the US for the last 30 years.

The Chinese hybird system is better (produces greater rate of increase in goods, services and salaries) than either the pure state (~USSR) or pure market (~USA) systems can.

There is just one small problem with the so called Austrian School, their claims are not supported by fact nor history, nor reputable scholars.

The AUD is sometimes *extremely* volatile, as evidenced by its headlong plunge from .985 US to .6122 US in three months and is now back up to ~.93 US, so a decrease in volatility might be a good idea, but I'm not convinced that it's necessary.

China has leapfrogged forward economically as a result of their liberalisation of the market, they are growing at such a rapid pace because they are still developed, they are nowhere near full utilisation of the available labour.
Whereas in the case of the extremely developed US, its largely a question a question of diminishing returns; that is as the infrastructure is developed the same amount of investment will result in lower benefits.

Also, the US is not a pure market economy, it is a mixed economy although it is arguably much closer to a market economy than China.

That's not strictly true, the Austrian School has made a number of contributions to economics in general.
Second, how are they the "so called Austrian School", what else would you call them?

The Austrian School is pre-Keynesian and rejects the use of statistics and mathematical modeling in economic.s. My issues with those the Austrian School is too frequently used by right wing whackos to justify their extreme and insane positions.

Perhaps not "necessary" but currency instability greatly reduces trade. Would you order some import if when it arrives the prices is 50% higher than when you ordered? If you contract for a fixed price, do you think the exporter will be willing to receive 50% less than when he paid his workers to make the item? Someone has to eat the currency volatility or buy a certain cost hedge against it. Anyway you slice it currency volatility reduces trade. I will agree that Chinese labor on average is not as productive as US workers, in part for reasons you name - Each US Worker has at least 10 times more capital helping him (or her) produce. However, the effective unemployment or under employment rate in US is now 17.5%. I do not think it has been even 10% in China, but again the Chinese pig farmer may be fully employed (working > 50hours/week) but not producing nearly as many pigs as a US pig farmer. That does not make much sense. The US worker with >10 times the capital can product produce at least 10 times more. - The problem is to whom can he sell it? I.e. just the opposite of what you suggest, it is lack of competitive sales price, not US's highly developed production facilities that explains why China has higher growth rates than the US. I.e. China has the markets.

It is true that the US customer already has many of the things the Chinese customer has yet to buy (For example, by memory, 6 cars /1000 Chinese vs. 800 /1000 Americans.) Again it is not that it is hard to make more with better production equipment* - that is nonsense. It is that China is a huge market hungry for goods and services as its urban population grows ~5% richer annually in purchasing power. (Joe American's real purchasing power has been dropping for at least a decade.) China does not yet need Madison Ave. to tell it people what is the latest and greatest "keep up with the Jones", "necessity" its population must buy. I never said USSR or USA were "pure" examples - in fact I used "~" to show they were not, but only approximations of the state and market extremes.
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*In some areas it is China that has the better production equipment - why they are making more cars than the US. Warren Buffett has made more than 10 billion profits already on his 10% "trickle down" investment in BYD. He was not stupid enough to invest in a new US factory, but did just take ownership of an existing US railroad, which will greatly benefit as US coal, and food stuffs are shipped to China. He understands that China is where the economic future is. (In part because their "hybrid economic" system is the best yet invented. - More on that in post 25.)

Rothbard is willfully self deluded about the cause of the Great depression. He is choosing ideological purity over seeing the obvious.

His critic of Keynesian Economics is weak and easy to pick apart. I am only interested in defending the most basic Keynesian Economics. I don't know anything about Professor Hansen of Harvard.

Related to post 24:

"... On November 10, 2009, Taiwan's Financial Supervisory Commission barred foreign investors from parking money in time deposits after bringing funds into the country. Plus, foreign investors will not be allowed to extend the deposit maturity beyond three months. The move follows large capital inflows into Taiwan's dollar accounts recently which is putting upward pressure on the Taiwan Dollar and hurting export competitiveness. ..." (via Reuters and Citigroup)

Taiwan is feeling the economic war of the dollar trade too (Brazil acted with 2% tax instead of prohibition).

While it is the intent of the US's FED to stimulate a recovery, in this global economy with > 1 trillion of hot money circulating daily these low US rates make it profitable to borrow in US and invest in countries that are growing, the so called "carry trade", but the flood of dollars into those countries make their local currency more valuable as foreign investror must buy it to invest there.

That is the US policy is destroying the growing countires ability to export.

Many think the great depression was caused mainly by exactly this sort of thing - stopping other's exports so your domestic manufactures would have your market. - Not really believing what Adam Smith showed years ago. I.e. that trade makes all wealther - and contracting it can lead to depression (as did in the 1930s, as it is probably doing today).

I am aware of what the Austrian School is and their position on mathematical modelling in economics.
So you issue isn't really with the Austrian School but rather with people who use them to further their agenda?

The common practice seem to be to contract at a fixed price for a given period of time, say a year, for large quantities of goods, such as commodities.
It is my opinion that the volatility of the dollar acts as a "cushion" against sudden changes in the terms of trade.
For example, if exports increase relative to imports then the demand for the dollar is rising faster than supply so the dollar will rise which will drive down exports and encourage imports.
I'm not sure whether this is beneficial and what effect, if any, the Tobin Tax would have on this mechanism, assuming it exists, but assuming it is so and assuming it is beneficial I'm not certain we would want to be tinkering with it without all the data.

I see. This would seem to suggest that the U.S. *needs* China to further develop, in order to 'have someone to sell to'.

My apologies, I wasn't entirely sure what you meant by prefacing the country names with a tilde (~).