> So if people decide to spend less on investment goods, doesn't that mean that they must be deciding to spend more on consumption goods—implying that an investment slump should always be accompanied by a corresponding consumption boom? And if so why should there be a rise in unemployment?
Does he have a good reason not to mention the elephant in the room here? (I'm thinking of monetary policy and trade partners such as China)
Under the gold standard, there is a feedback loop allowing the market to control inflation (that is, people can invest more or less in mining technologies/companies).
To some extent, this feedback loop also exists in a central banking system; it's far from being as efficient.
Like most of us, I discovered programming using proprietary software (namely MS-DOS and QBASIC), and if an intolerant idiot tried to prevent me from using those tools, he would have been hit by a (then) heavy keyboard.
(by the way, the case against using BASIC is certainly stronger than the case against using proprietary software.)
Stallman declared he'd rather see computer clubs closed than using Windows. He wants to convert (I'm quoting the article) the "important resource" (read: people 'unspoiled' by Windows) to free software (just like Che Guevara who went to Africa to convert people unspoiled by capitalism to the ideal of communism).
So I rest my case: as far as software is concerned, he is a totalitarian.
So, if (let's say) you raise a group of boys isolated from the rest of the world until they are 15 and then, all of a sudden, tell them: "oh, by the way, there's this thing called 'girls', have a look, you'll probably like it", you've created an artificial want?
It's true that before seeing the ad for a MegaBananaChoco cereal bar, I didn't want to eat one. Yet I've always wanted to eat nice things. That's what's so great about ads: they provide information about good stuff.
Malinvestment also applies to labor. Workers need to retrain before they can start new productive jobs, and they need capital as well (not easy, since the US are borrowing instead of saving).
Companies doing risky stuff shouldn't be too surprised when they suddenly run out of good luck.
On the other hand, if I were running a company and I knew that my buddies in Washington would end up bailing me out with other people's money because I'm "too big to fail", I would be a fool not to take as much risk as I can. With state capitalism, you can have your cake and eat it.
The system doesn't self-correct everywhere at the same time (unless there is a central bank point of failure, if you see where I'm going...), so if your company is bankrupt you can find a job elsewhere.
Mind you, people who were careful with their money and didn't believe in the pipe dream of ever increasing home equity need not worry about what's going on (well, they need to worry about what the government is doing, but that's another matter).
Do you know what your neighbours want? What they like and dislike, what they want for their children, and so on?
Now, do you think a genius would know? And if he knew, would he know better than them?
You can "run the economy" (that is, rule other people) to achieve your goals (e.g. if you are a pharaoh and want your own pyramid) but you just can't go against people's will to help them achieve their own goals.