Re: Keynesianism etc.

To Dr. Barendse

In my opinion, you are using clever arguments to defend doubtful positions;
e.g.
on KEYNESIANISM you said:
"Schools and hospitals won't fund or block campaigns - armament or
pharmaceutical industries will (witness e.g. Clinton's totally failed
attempt to reform the US health system, which was basically broken by the
medical and pharmaceutical lobby). I don't think, say, Al Gore is corrupt
(the Republican media would otherwise long have found out) but the present
electoral process in the USA is such that: 
A.) You need massive financial support from consolidated big industry to
get elected."

My answer:
You make it appear, that in times of recessions, governments intent to
address rising unemployment must reduce spending on armaments in order to
finance policies, that can effectively create more jobs.  True Keynesianism
recommends saving in boom-times  for this purpose; furthermore many other
means of financing are available.
Spending on armaments on the prior level or on an only slightly reduced
level will certainly go on and the military-industrial complex will have to
maintain or even increase their campaign contributions to make such
spending politically defensible.
Furthermore the construction industry and teachers', nurses' and doctors'
unions should also be able to contribute campaign funds, besides providing
massive numbers of voters and do some quite effective personal campaigning;
something politicians must also consider. 

You further said:
B.)You can under no circumstance alienate `single issue voter' lobbies
since they can make you and break you in a district system - thus e.g. take
the USA's `gun lobby' or the southern fundamentalist lobby in the
Republican Party (which - as the Republicans are perfectly aware - makes
them ineligible at the moment, yet what are they to do about it?). But not
only in a district system: outside of the USA you might think about the
`fundamentalist' Jewish lobby in Israel which has been  systematically
obstructing the peace-process, although I'm convinced 90% of the Israelis
want peace.

My answer:
I cannot see the connection of this point to the problems discussed.

Re UNEMPLOYMENT you said:
"I doubt the unemployment thing - for what's the whole point of automation?
Precisely - to make more products and sell them cheaper - that is to push
down `transaction-costs' (that's where computers are for). So, if consumers
have to spend less money on products - what do they buy? More products? No:
they buy services which can not be produced by machines and which can not
be moved to low wage countries. If you don't believe me take a look at
employment-trends in the USA where the really big gains of the economy in
employment are not in the 'high tech' sector like in computers (which is a
very small employer indeed) but in services like retailing or tourism. If
the present trend continues tourism is going to be one of the major - if
not THE main industry of the world."

My answer:
In your optimistic vision or the economic future there are several things
missing:
1. The people who lost their jobs in manufacturing, wont be able to buy a
lot of services.
2. People in most service jobs are low paid and have little money for
buying either goods or services.
3. Many if not most retailing jobs might be lost through Internet buying.
4. Buying power is being more and more concentrated in fewer and fewer
hands and whether these people, who already seem to have everything, can
buy many more services is rather doubtful.

Furthermore, though unemployment does not seem to be a problem in the US at
present, it certainly is already very worrisome in Europe and might get
worse, if no well planned Keynesian policies are going to be implemented. 

On Magentogorsk, you said:
"World War II aircraft were not that terribly sophisticated - the point of
World War II production was not to build sophisticated products but to
build them quickly and in mass and in that both US and Stalinist `economics
of scale' production were highly successful"

My answer:
The argument was not about economies of scale in general, but about
Magnitogorsk in particular and it is still a fact, that freight rates are
all-important for a steel-smelter, while insignificant for an airplane
factory, even if it was not yet producing to-day's sophisticated stealth
bombers.

On special economic zones for Russia you said:
"And Petersburg certainly tried to do that, as did Nishni Novgorod. The
problem was (and is) that there is little incentive to invest - for the
simple reason that Russia has to compete in today's `global market place'
with a whole series of other countries which also have (similar 
advantages)."

My answer:
Since I do not know, what conditions these zones really offered, I should
appreciate your letting me know how they addressed the problems I mentioned
"clear property rights and other necessary legislation, eliminate
bureaucratic corruption and inefficiency and provide manpower skilled in
private banking etc.

As to investment opportunities in India, the socialistic tendencies of
their past governments might have been an obstacle and as to raw materials,
India cannot compare with Russia. Finally Russia´s internal market might
not be as vast as India's, but it is still immense and certainly hungry for
more and better consumer goods.

Do you think the monologue should go on further?

Regards         Paul Riesz