Wednesday, August 3, 2022

Reading 7

Brendan Sheehan, Understanding Keynes' General Theory, Chapter 3: "Aggregate Effective Demand" (redux)

Taking another stab at understanding this primer on Keynes. I can understand now in general what differentiates his theory of employment and interest from the classical theory, thanks to my wife.

In classical macroeconomics, the assumption was that there would be a natural equilibrium between supply and demand, but Keynes argued that the relationship between workers and businesses was not adequately represented and therefore could not explain why we would have conditions of unemployment.

Basically, whereas the labor supply could increase indefinitely (imagine a rising line at 45 degrees), the amount of investment and expenditure will not willingly keep up with the rising rate of the labor market, because rationally businesses will only be willing to invest and spend so much before they calculate they will lose on their investment (imagine here a rising line that will eventually plateau; the intersection between labor supply and business demand will be the point of aggregate effective demand).

This is why Keynes' suggestion would be government inducement toward investment and spending, a way to kickstart the very natural way that labor supplies outpace businesses' willingness to employ from that labor supply. It's really all sort of commonsensical when you think about it.

Alice Munro, "Winter Wind," Something I've Been To Tell You: Thirteen Stories

Apologies to Alice Munro, I read these story sort of attentively. But from what I immediately recall, it centers around the narrator when she was a high-schooler and her relationship with her grandmother, who she came to see as a woman who had her own private life with its own rich stories that people knew and alluded to but which would never be told in full. Like the grandmother's once-engagement to a man who left her for another woman. Like her mourning for some friends in town who long ago froze to death in winter. The story ends on a sour note, with the narrator as a young woman observing her grandmother as someone who in her old age is taken for granted, not taken seriously, and only humored. We'll get there some day if we're lucky.

Ted Hughes, "A Pink Wool Knitted Dress," Birthday Letters: Poems

Recounting Ted's wedding day to Sylvia Plath. It can be read HERE but be forewarned: this is one of those sites that are filled with ads on the page.

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