Thursday, January 12, 2012

A Keynesian Space Alien Scheme

It has been suggested by some Keynesians that space aliens would solve economic problems because that would allow this world to run an aggregate current account surplus, something that is impossible without life on other planets. The problem is that (intelligent) space aliens might not exist, and even if they do exist they may not know of us, and even if they exist and know of us they seem to think (if they exist and know of us, given the fact that we're not being contacted) that it would be impossible or inappropriate to openly contact us.

However, the undeniable problem of unavailability (whether due to non-existence, ignorance, inability or unwillingness of the aliens) of space aliens can be solved using this scheme where we simply sell a lot of goods to an entity called "Space Alien" , goods that can then be shipped to say somewhere in the Pacific or Atlantic Oceans, where we then sink the ships (after having evacuated all human crew members, of course). The "Space Alien" entity will "pay us" with IOU's or something similar, providing us with whatever demand needed to prop up the economy according to Keynesian analysis.

Obviously, this entity will never ever pay back the money, but neither will for example war spending against perceived terrestrial or extraterrestrial threats, so there is really nothing that a Keynesian could object to this scheme.


Blogger Ralph Musgrave said...

Re the final paragraph above, I’m not sure whether this is trying to say that Keynsians can’t see anything wrong with debt issued by a non-existent Pacific island or whether they can’t see anything wrong with the Space Alien idea.

As to the former, my guess is that it is blindingly obvious to everyone (ten year olds included) that debt issued by a non-existent country isn’t worth the paper it’s printed on.

Re the Space Alien idea, that idea was originally put by Krugman as a JOKE!!! He was making exactly the same point as Keynes made when Keynes said (joking again) that unemployment could be reduced by having the unemployed dig holes in the ground and fill them up all day.

However “there’s many a true word spoken in jest”, as the saying goes, and the two “Ks” were also making a serious point, namely that even if government spending is pointless, there is probably a real benefit in that there is a multiplier effect from the pointless spending.

12:56 PM  

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