There once was an island with a population of 100 dogs. Every day a plane flew overhead and dropped 95 bones onto the island. It was a dog paradise, except for the fact that every day 5 dogs went hungry. Hearing about the problem, a group of social scientists was sent to assess the situation and recommend remedies.
The social scientists ran a series of regressions and determined that bonelessness in the dog population was associated with lower levels of bone- seeking effort and that boneless dogs also lacked important skills in fighting for bones. As a remedy for the problem, some of the social scientists proposed that boneless dogs needed a good kick in the side, while others proposed that boneless dogs be provided special training in bone-fighting skills.
A bitter controversy ensued over which of these two strategies ought to be pursued. Over time, both strategies were tried, and both reported limited success in helping individual dogs overcome their bonelessness -- but despite this success, the bonelessness problem on the island never lessened in the aggregate. Every day, there were still five dogs who went hungry.
The thing about arguing about real-world economic problems based on incredibly loose analogies with completely made-up situations is that you can use it to argue for almost anything. But a made-up situation like this rarely bears any resemblance to the real world.
Production is not a measure of aggregate demand and no-one doing econometrics that I know takes Say's law seriously. Keynes pointed out some of the problems with it oddly enough, but to my knowledge he did NOT propose a "Calc 1 model", although I agree it would be worth looking at if he did.
If aggregate demand were anywhere near the point of full employment, we would see evidence of inflation. We do not. Some prices are rising in nominal terms as the dollar depreciates, but that is quite different.
There once was an island with a population of 100 dogs. Every day a plane flew overhead and dropped 95 bones onto the island. It was a dog paradise, except for the fact that every day 5 dogs went hungry. Hearing about the problem, a group of social scientists was sent to assess the situation and recommend remedies.
The social scientists ran a series of regressions and determined that bonelessness in the dog population was associated with lower levels of bone- seeking effort and that boneless dogs also lacked important skills in fighting for bones. As a remedy for the problem, some of the social scientists proposed that boneless dogs needed a good kick in the side, while others proposed that boneless dogs be provided special training in bone-fighting skills.
A bitter controversy ensued over which of these two strategies ought to be pursued. Over time, both strategies were tried, and both reported limited success in helping individual dogs overcome their bonelessness -- but despite this success, the bonelessness problem on the island never lessened in the aggregate. Every day, there were still five dogs who went hungry.