LSE Events | Keynes v Hayek
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- čas přidán 9. 09. 2024
- Speaker(s): Professor George Selgin, Professor Lord Skidelsky, Duncan Weldon, Dr Jamie Whyte
Chair: Paul Mason
Recorded on 26 July 2011.
How do we get out of the financial mess we're in? Two of the great economic thinkers of the 20th century had sharply contrasting views: John Maynard Keynes believed that governments could create sustainable employment and growth. His contemporary and rival Friedrich Hayek believed that investments have to be based on real savings rather than fiscal stimulus or artificially low interest rates. BBC Radio 4 will be recording a debate between modern day followers of Keynes and Hayek.
George Selgin is Professor of Economics at The Terry College of Business, University of Georgia. Selgin is one of the founders of the Modern Free Banking School, which draws its inspiration from the writings of Hayek on the denationalization of money and choice in currency. He has written extensively on free banking, the private supply of money and deflation. George Selgin is the author of The Theory of Free Banking: Money Supply under Competitive Note Issue (1988), Less Than Zero: The Case for a Falling Price Level in a Growing Economy (1997), and Good Money: Birmingham Button Makers, the Royal Mint, and the Beginnings of Modern Coinage (2008).
Robert Skidelsky is Emeritus Professor of Political Economy at the University of Warwick. His three-volume biography of the economist John Maynard Keynes (1983, 1992, 2000) received numerous prizes, including the Lionel Gelber Prize for International Relations and the Council on Foreign Relations Prize for International Relations. He is the author of The World After Communism (1995) (American edition called The Road from Serfdom). He was made a life peer in 1991, and was elected Fellow of the British Academy in 1994. His latest book is Keynes: The Return of the Master.
Duncan Weldon is a former Bank of England economist and currently works as an economics adviser to an international trade union federation. He has a long standing interest in and admiration for Keynes but also a respect for Hayek. He blogs at Duncan's Economic Blog.
Jamie Whyte was born in New Zealand and educated at the University of Auckland and then the University of Cambridge in England, where he gained a Ph.D. in philosophy. Jamie remained at Cambridge for a further three years, as a fellow of Corpus Christi College and a lecturer in the Philosophy Faculty. During this time he published a number of academic articles on the nature of truth, belief and desire, and won the Analysis Essay Competition for the best article by a philosopher under the age of 30. Jamie then joined Oliver Wyman & Company, a London-based strategy consulting firm specialising in the financial services industry, for which he still works, as the Head of Research and Publications. Jamie has published two books: Crimes Against Logic (McGraw Hill, Chicago, 2004) and A Load of Blair (Corvo, London, 2005). Jamie is a regular contributor of opinion articles to The Times (of London), the Financial Times and Standpoint magazine. In 2006 he won the Bastiat Prize for journalism.He is on the advisory board of The Cobden Centre.
The debate will be chaired by Paul Mason, economics editor of BBC 2's Newsnight and author of Meltdown: The End of the Age of Greed.
My left ear loved this.
Chrome Eq. Hit mono.
Me too
Why is this only in one ear
Well the Leftist also loved this
Well, my right ear loved it more.
No economist disputes Hayek. No politician disputes Keynes.
The first thing is false, no one takes Hayek seriously. Macroeconomics is something you see in any economics career and you need the State in order to implement those macroeconomic policies. Hayek is anti state, so you know the rest.
@@dieterbohm9700You literally don't! 😂
"No economists dispute Hayek." This is true, because Keynesians aren't economists; they're wannabe physicists.
@@Si_Mondobut what about the animal spirits? Don't you care about animals, you evil carnivore?
George Selgin was one of my Econ professors at UGA. I should have spent less time getting hammered and more time actually attending his class.
I have to say , the English have political discourse down packed. Definitely more fun than typical American presentations of discourse. From the LSE, to the Parliament so much more fascinating and fun than American. Keep it up chaps!
The 2 rap battles by emergent order are really a great starting point for this debate
Starts at 10:53
+Pablo123456x tnx
+Pablo123456x people like you deserve awards
Pablo123456x you deserve a beer
thank you
Really enjoyed the debate, but was completely distracted by the host..
To anyone considering watching this, let me save you some time.
Keynesian 1: Hayek changed his mind once and nobody listens to him anymore lawl.
Hayekian 1: without ma freedom how am I gonna stop ma boomz an ma bustss
Keynesian 2:
Hayekian 2: let me give you an account of what happened and tell you why, but not give you any reason to believe why even though that's probably why your here
Keynesian 2: ooo actually let me do that too but with a rhetorically effective one liner
Hayekian 2: we hayekians too, posses empty, but effective one liners
Hayekian 1- ma boomz-
Keynesian 1: NOBODY LISTENS TO YOU, HAAA
If you're even vaguely familiar with the theories of either of these thinkers, you're not gonna learn anything here
Yh the Keynesians should have mentioned why China was successful which is what Keynes saw as necessary. The wage increase in line with national productivity growth. Which was not the case in the west.
Could have saved us a lot of time
Tbf you can’t fault George Selgin. He offered pretty consistent accounts of Hayeks views which was the front on which the Keynesian side attacked.
I'm glad watching this debate on CZcams. I have downloaded the audio format from Analysis podcast of BBC & always hearing it out of my phone.
Cheers & mabuhay, from my end--the Philippines!
bravo to george selgin...very nice job!
It's good to go back to a time when political conversations were about concrete matter of political economy
I'm definitely going to have to watch this eventually, but I was actually looking for the rap battle...
"I've taken strong notice of the genitals of these people and I dont like that so many men are asking questions, even though no women WANT to ask questions can we make them so I can feel better about my male guilt?"
BigJL5288 no women I can see in the audience
"Keynesian model not only got the magnitude of the effect wrong, but the direction of the effect of the stimulus too" How is Keynes not called the greatest wrongdoer in every economic textbook boggles the mind.
Tenebrousable Would you like to have a discussion with a Keynesian on my facebook page? Are you a follower of Austrian or the Chicago school of economics? facebook.com/Austrian-Economic-Discussion-Page-1777767159139233/
It makes a lot of sense once you read Hoppe.
He was willing to change his mind based on facts, it's people who cite him that are problematic
@@dhvanitdesai1044 Nah, empty works from him. We have evidence of inflation all around us, even during his time. They solve it with more deficit spending.
Because they didn’t done another necessary thing to Recover. While doing Deficit Spending you also had to increase wages in line with productivity growth plus the inflation target (as unit labor cost is setting inflation).
China did it in 2008, the US, Japan, EU all did in the 30’s and kept it until the 70’s. Isn’t it strange that since the 70’s we got more and more bubbles, low investments, the not as effective deficit spending, the increasing and higher state debts and the amount of recessions and crisis that keep coming as long as wages stagnate while productivity grows.
Both Keynes and Hayek shared a theoretical and policy blind spot that characterizes a large percentage of economists, generally. Neither Keynes nor Hayek recognized (as revealed by their writings) the central importance of land markets as a driving force of modern economies. Keynes dismissed the importance of land rents because, it seems, he could not get beyond Ricardo's limited analysis of agricultural land markets and agricultural land rents. He somehow missed the fact that the highest land rents occurred in the central business districts of cities. And, even more consequential, he ignored Smith's argument that rents are unearned by individuals and private entities, they rents are the legitimate source of public revenue.
The best analysis I have found of Hayek's views on land markets and the importance of rents (or the lack of importance thereof) is a paper by Robert V. Andelson ("On Separating the Landowners's Earned and Unearned Increment: A Georgist Rejoinder to F.A. Hayek," American Journal
of Economics and Sociology. 59(1), January 2000).
The essential issue is a moral issue: What is community or societal property, and what is individual property? Nature is not produced by human labor. As Henry George argued (consistent with Cantillon, Turgot, Smith and even Marx) nature (or, land, if one prefers) is the commons from which wealth is produced. The commons is the birthright of all persons equally. How, then, to ensure equality of access to nature while respecting the rights in tangible goods appropriate to individual property? The answer is side-stepped by Keynes and Hayek for reasons conflicting with moral principles as well as optimum economic efficiency.
Edward J. Dodson, Director
School of Cooperative Individualism
www.cooperative-individualism.org
Anyone else feel uncomfortable that the person (1:11:48) who just learned the difference between debt and deficit is working at the Institute of Economic Affairs? I understand that she might be very young but it just surprised me a little.
On the debate itself, I think both Hayek and Keynes have strong cases, I just feel that they have been applied inappropriately. What we have had is a stimulus package for the bank and austerity cuts on government spending. Could it have been a stimulus package on government spending (focusing on re-investment and re-distribution of wealth resulting in increased consumerism), and austerity for the financial sector? We should have switched it up. for the heck of it.
I accept this is a complete oversimplification but my question to economists is could there by other ways of applied the works of both Keynes and Hayek?
Sorry to say,to be blunt, its typical british arrogance, actually keynes himself was considered arrogant because of his actual lack of knowledge of economic history.
he gained fame because of "right place. right time" politicians needed a theory to base their desire for spending and he provided it...hayek was too german to be political correct, though he might have been more economically correct.
So, I think the issue is that austerity is the opposite of the keynsian type of simulators. Keynes says cut taxes, and increase government spending. Think of his formula for GDP. GDP= Consumerspending + Investment (meaning business spending + Government spending - Net Exports. And really taxes are a function derived from government spending in the kensian equations or something like that. Probably visa-versa. I dont perfectly recall.
But the point is that Austerity is actually INCREASING taxes and DECREASING government spending. They are each specific courses of action that are exact opposite.
But so Increasing taxes while increasing government spending, really doesnt do anything positive in either theory, the same way that decreasing taxes while decreasing government spending according to the logic of economics is really trying to move the economy in two opposite directions simultaneously.
I'm not well versed enough in Austrian economics yet, but some interesting branches of Keynsian eonomics can be found under the post-keynsians (who are different from the neo-keynsians).
THIS IS THE IMPORTANT PART --------->The labor guy made some mention of Hyman Minsky. Minsky was really the next big theorist on business cycles (the main focus of the austrians, here) and stabilizing an unstable economy (the main focus of the keynsians, here); he definitely made original contributions. He was influenced by both Keynes and Hayek in a very notable way. Actually a good point that the american kept making here is that booms do cause busts, and from that he was criticizing that keynes only looks at the bust. In that regard, Minksy is kind of like Keynes from the understanding of Hayek, but he also goes far beyond either of them. No one ever talks about Minsky. Most dont know of him. Kind of like Pierro Sraffa, a generally ignored genius who changes everything.
You also could read up on steady state economics... thats more of an environmental thing, but it would be an interesting read from the perspective that booms cause busts.
Like with everything the answer is in the middle; neither austerity nor excess govt spending. The challenge is not the path but the excesses of government.
Keynes was dismayed when he saw to what extent Govt had used it his logic (not entirely original per Hayek) to justify their excessive spending.
Some countries, however, cannot afford Keynes based govt intervention e.g. Greece because they have been overspending for so long - have huge deficits.
These are left with no alternative but austerity.
Hayek is too extreme for democracy. While it might make economic sense, and possibly, logically correct, democratic governments cannot withstand such strong measures - for any length of time.
Even in non democratic countries like China, the favored approach is stimulus and increased spending - not Hayek like measures to weed out all sick firms and restart.
Benjamin Fonseka I would just like to add that the countries that cannot afford certain levels of spending have a qualitative difference in their type of currency, that actually erodes the capacity to deal with debt. The U.S., The U.K. and Japan, for instance have the capacity to consistently run deficits, and can have debt that extremely high relative to GDP, and be okay. Verses countries like Greece, and Ireland, which do not have their own sovereign currency which they are the monopoly issuer of their own currency (and thus debt) and therefore suffer even with debt as a comparatively low percentage of GDP.
So it is not just a question of how long have they been exhibiting "excessive" spending.
Going into debt in a currency which is not your own, is typically the type of debt that people think of. Going to debt in your own currency, to your self, really doesn't behave the same way at all.
Further, austerity is formulaically the opposite of economic growth (this is why it works against inflation), so when we are looking at that approach, the solution is really this round-about thing that we need to think of in context of time. Years. Because clearly any plan for economic growth doesn't end at economic contraction, so what happens next? The process of creative destruction, which is the heart of the austrian proposal. Creative Destruction is akin to societal collapse.
Thats how it works, hence the name: creative destruction. Its proscribed societal collapse. That is a major ethical issue. *cough* The IMF *cough*
This is why economic theory should never be divorced from social theory. Because then we come to conclusions which in effect look like, "Okay, well we will let massive human suffering and loss of life occur, along with definite cultural and technological regression, during this dark age, we will just hope that another country doesnt decide to invade us or something like that, and then this one particular institution of society can hit the reset button and we can continue to allocate resources in this one specific way despite any qualitative differences between all these goods and services."
yes sure, the currency depreciation (more than just inability to print currency) makes it impossible to cure deficits.
good example is the poor recovery of the asian tiger economies post the 98 crisis because not only have they had to deal with deficit funding, but also the added problem of weaker currencies, and higher dependence on imports.
Keynes had very weak appreciation for economic principles actually, yet he had very grand imaginings of how he could alter the field. Hayek is one of the greatest and instructive economists of all time.
13:30 - Opening Statements
23:28 - Debate begins
24:50 - Selgin's first comments
Weldon gives Hayek policies 1 year to work... His policies have had 80 years to work and they have failed... Why the hypocrisy?
Notice that Duncan Weldon (remarks start at) at 57:35 time and time again refers to "Britain." He is talking about government policy and instead talks about the country; I'm not making a semantic point. What I'm saying is that when he imagines his country, he thinks about its government first.
A county is the aggregate of its people; the government is the janitorial service we hire to keep it orderly. Please keep that separate.
phynestein that’s so silly. In history we don’t need to say “the German government invaded Belgium”, we say “Germany invaded Belgium”. It saves time and people know what you are talking about.
A great read for anyone who has an interest in all of the factors that combined to bring about the Great Depression of the 1930s is the 1932 book by Frederick Lewis Allen, "Only Yesterday." Allen's explanation of the connection between bank lending and land speculation is particularly instructive.
Search Tom Woods "Meltdown" and you'll find a lecture by him. His book is excellent at explaining the financial crisis.
Hayek is a much better economist. He may not be right about everything but his words are worth reading. Keynes will be lucky if anyone is citing him in 50 years.
Joe Ruf Why?
Matthew Patterson I believe the empirical evidence has shown that his theories don't hold up. Which makes sense he didn't read much econ. His insights are more experimental than methodological. I personally would like to keep him on the shelf but I'm assuming Keynesians will react by coming up with a "new" theory with the same creativity (Keynes great gifts are foresight and creativity. Would've made for a beter CEO than economist) as Maynard but not reliant on it whereas Hayek's critiques are, I believe, connected to the very nature of markets and are therefore always going to be in the forefront or the background.
I think the proof is in the pudding. Austerity is a failure, meanwhile government stimulus fills the need for demand until private sector demand can recover. I just don't see how savings and investment by the 1% translate to jobs when there is no demand for those goods and services due to low wages.
One doesn't necessitate the other. Indeed the proof is in the pudding however contingency must be respected. Greece is a perfect example of what "stimulus plans" can do to a country. Inequality, tho bad, isn't a necessary effect of austerity. It is just people being assholes where as government stimulus risks messing with the "natural market" thus giving investors less confidence and foresite tho bailouts, however much we may hate them, are needed sometimes.
Joe Ruf ?? what? what stimulus plans have greece had? Are we talking about before the crash or after? If its after, then greece have had nothing but harsh austerity and some neoliberal reforms (in some cases warranted like increasing the pension age, better practice in collecting tax, etc.) and before that, well, everyone was borrowing when there was no need to since the economy was doing fine on its own to feet. So stimulus plans in a boom accumulate unnecessary debt, while stimulus plans in a recession, accumulate necessary debt! Austerity, is being done in a regressive manne, hitting the poorest and most vulnerable while tax breaks to the rich. Of course that widens inequality. And as you said, some state intervention, like in the bailouts, is necessary. So where is the line drawn?
I just typed the first thing that came into my head without thinking about it
Keynesians should come to Brazil. There is no moment in the history of this country where we had anything near pure capitalism. The closest we got to liberalization of the economy was in the 90's when the social democrat president sold some state enterprize and defined inflation and public spending limit.
PS: our most pro-capitalism party is the social democrat. See how fckd we are.
I'm not sure where it is you got the idea that Keynesians are capitalists.
In what strange world is state intervention in the free market Capitalism?
Im sorry, i think i wasn't very clear.
My point was to show that here in Brazil we are aways shifting betwen socialist and keynesian economics, and that this is pure shit.
That is why i'm calling keynesians to come over, to see how """""great"""" their interventions are.
By the way, if you declare yourself as capitalist here, you automatically become a monster who wants to kill everyone. And the hero of our university professors is Fidel Castro lmao.
As i said, we are very fcked.
excellent!!!!
***** Keynesians are Capitalist.
The current, real world is the strange world you are referring to. Your error is conflating capitalism (the social system) with neoclassical economics or something like that, meaning a system of analysis of economics which favors free market capitalism... a very specific ideal of capitalism. It's actually a bit of a disservice to claim that any system of analysis which prescribes deviations from your ideal form of a specific system is NECESSARILY not compatible with that system in the abstract, or in general.
also... Doesn't Brazil have the largest economy in latin america? Further, it had about as successful a recovery as any country did following 2009. Rather remarkable, really.
That's all.
***** Yeah ryan, but most of the harm that's been done has been by way of the government allowing it to happen... what's the point of regulation if it does the exact opposite? Let supply and demand run its course!
Just started watching this clip . . . This moderator is awesome!!! Sounds like he stumbled right out of a Monty Python sketch!!
A one legged man owned
"Let's not bicker and argue about 'oo killed 'oo..."
Great debate ruined by terrible sound. I was undecided but I’ve come around to Hayek.
The best part was Selgin defending the idea of an interventionist Hoover administration. He smashed that one out of the park.
Keynesianism in a nutshell: "We just have to keep pulling the economic levers. If the economy goes sideways, then either we didn't pull enough or we pulled the wrong ones but either way, it's never our fault."
Not really you have to keep in check that at least one of the Market actors (Companies or the State) has to go into debts for the economy to run.
In the Keynesian era from 1938 (Government first time using Deficit Spending) to 1978 we forced companies to go into debts with high taxation. What did they do with the loans? They invested! Massively.
The Keynesian era saw the highest Productivity growth, Highest Wealth growth and the highest Investing growth rate in the entire human history. All this, in just this era.
Deficit spending is just one tool of Keynesianism and was paid back in the Keynesian era in less then 10 years
@@sharann3482 Thank you! so many of the comments here regarding Keynes prove to me that these people have NO idea what they are talking about. Keynes certainly never advocated for the sort of unending Federal spending that we have seen in the last 40 years.
omfug if more people would be educated better in Keynesianism, people would really start to make working progressive changes
@@sharann3482 Keynesianism: "We'll get it right next time for sure!"
Bill Melater wrong again Keynesianism:“just follow the market rules (includes companys and Unions to negotiate about higher wages, without government), and you get the best working form of capitalism in every regard“
I can't believe that, in 2011, they spent 10 minutes adjusting the mikes and volumes. What's more striking is that intro speeches were read out.
Keynes goes in detail explaining how economics probabilities and so forth are not computable, unlike the ones in a lottery or even in physics. He wrote an entire book on this topic; A Treatise on Probability.
If you take a look at something like the Heisenberg uncertainty principle, you can't know both momentum and velocity, but you do know the degree of uncertainty. In economics, you can't do that--that was one of Keynes' central ideas(that's central to Keynesian probability theory).
digging holes and putting money in them is somehow real growth to this guy. Hayek's ideas just make sense to me.
Well would you say that the World War Spending ended the depression? Because we only produced garbage during that time that would get destroyed in minutes. Similar to digging holes.
25nov2020 - no audio ???
13:30 - Opening Statements
23:28 - Debate begins
24:50 - Selgin's first comments
.
(corrected)
the U.S. had no income tax in the 1800s and that was also its most prosperous years by far....
First of all the fact that a problem can't be totally eradicated doesn't mean that we should try to tackle it. If a house is on fire but we're unable to extinguish the flames should we therefore not try to at least rescue some of its occupants. America's war on drugs has been so unsuccessful that it hasn't even made a dent and therefore they should quit (or at least change tactics) but child labour has been almost eradicated in the western world which is a huge and worthy accomplishment.
By being a citizen of a country we sign a social contract in order to live by the nations rules. If you do not like the idea of taxation, move to a country that doesn't tax. Since moving to such a place seems impractical, play an active role of a citizen, and fight for taxation that represents your ideal nation.
Professor Lord Skidelsky holds so much animosity toward Hayekians because they essentially put great skepticism on his idol Keynes. Selgin and Whyte explained the extreme bias of Keynesian economist and their models. Like it or not economics is not an objective science as is something like physics where you have set material laws that guide your equation. The Keynesian models are all based on belief that it is true.
MY LEFT EAR
The term "false analogy" comes from the philosopher John Stuart Mill, who was one of the first individuals to engage in a detailed examination of analogical reasoning.[2] One of Mill's examples involved an inference that some person is lazy from the observation that his or her sibling is lazy. According to Mill, sharing parents is not all that relevant to the property of laziness.
Keynesianism reminds me of a kid getting a present for his birthday, but his younger brother has to get one too because we don't want him upset. Wait for you own goddamn birthday!
Also, price and wage controls act counter-cyclically in a debt deflation. The reason for unemployment is not sticky prices and wages; it comes from a lack of demand. Private sector balance sheets are underwater when the assets are less than the liabilities. The wrong way to fix this problem is through debt deflation because then the value of the assets falls and the income streams from the assets fall and both fall faster than the level of debts. The correct way is to run counter-cyclical policy
very very good point ! agreed...it IS intrinsically.
13:10
starts
Do you reckon you could synthesis Hayek and Keynes together as an economic model?
No, though they share some common ground, they represent extremely opposing views on how economics as a science should work, on what economics actually is and should be.
@@vulgoalias4050 what common ground do they share?
@@kayedal-haddad That's slightly beyond what a YT comment can explain and not be crude oversimplification bordering on misinformation. However an evening of reading on both schools of economic thought should give you a good enough idea.
This is like the worst debate I've ever seen. All the different speakers makes it confusing. There are 2 theories, so there should only be 2 speakers. Plus, audience participation came ridiculously early. There is also no real structure to the debate.
Medhue if you want a more in depth look at the theories, you can find tonnes of content for that. But this is more of a discussion with a heavy emphasis on the Q&A rather than a deep look at their ideas.
Nobody looks at the asset side of the government's balance sheet? Okay, then let's take a peek...
The United States has $3.9 trillion in total assets (nearly 1/3 of which is student loans). Yet, it has nearly $28 trillion in liabilities! ($220 trillion if you take into account unfunded liabilities)
None of that would be possible if it wasn't for gay boy's interventionist ideas.
But we have to cut spending. Thats the most important thing. Ron Paul seemed to me to be the only candidate thats serious about it. We are spending way to much and can't afford it. I'm not saying the rich should get tax cuts for now but we really need to reduce spending.
A note on what should have been done after the 2008 crash. One important change in bank regulation would have been to prohibit and financial institution that accepts government-insured deposits from extending credit for the purchase of land or acceptance of land value as collateral for borrowing. This would have gone a long way to protect the bankers from themselves, protect individuals from becoming excessively leveraged in property markets, and protect taxpayers from having bail out the banks and individuals who find themselves with mortgage debt in excess of the current market value of property owned.
Hayek
Complex paradigm creatures who are biased, have preferences, and stem from different upbringings. You may have some presumptions on consumer spending and you may add statistical aggregation to when you are trying to figure out the multiplier effect but don't try to pass off that yes the multiplier effect is measurable on an objective empirical sense. That is why there was a debate before the American Stimulus bill between economist over will the stimulus have the desired effect.
@16:00 I disagree. I find it admirable that someone can change their mind….
It doesn't matter what kind of living your practice on your land, even the fact that you have legal ownership of land is an opportunity provided for you by the government, which includes courts paid for by your taxes if someone disputes your ownership, police and fire to protect your home, and roads that would take you to the store which you did not build. People don't live in bubbles, we can only exist in a society.
FYI: Doesn't really start until 7:29 . I haven't watched it all yet, but so far just been audio testing and preparation to start.
According to OECD figures, Ireland beat out Norway, Denmark and Sweden in some living standards. Ireland had embraced some sectors of economic freedom.
Keynes vs. Hayek continues! When someone says that the Meltdown exposed the failure of Keynesian economics, they ignore that the markets imploded during a free market Congress and Administration, and that it wasn't the failure of planning, but the lack of economic planning as the root cause. The Fed, Congress, the Administration, all were asleep on watch while speculation ran wild and jobs moved offshore. Everybody was too busy getting paid to notice.
Yes, I advocate ending commercial regs.1)If BP pollutes they will be sued in court & pay. 2)Brokers cant rig the market, market is bigger than any govt/bank/broker etc. 3) They do & will make safe products. If they dont they'll go bankrupt. You dont get rich by killing customers. Ending regs doesnt put the control in the corporations favor - it puts it in the peoples' favor by ensuring that markets exist. Corporations benefit from regs because it raises barriers to entry & stifles competition
To say that Keynes was "asymmetrical" because he focused only on expansionary policy is wrong. Keynes focused on expansionary policy *under conditions of equilibrium involuntary unemployment* . Expansion is anti-cyclical by definition, therefore not to be performed at any time. As soon as private sector investment recovers - and Keynes thought it to be more responsive than argued by some later Keynesian scholars - fiscal consolidation was prescribed by him too.
You're riding a bike on the hillside. When uphill, you shift down gears and pedal harder. When downhill, you shift up gears and pedal softly. Your gear represents interest rates, pedaling is fiscal policy. Without countercyclical policies you get trouble. That's Keynes' genius.
I agree with a lot of that. But why did the jobs leave? Most businesses that outsource blame regulations for why jobs are sent overseas. In my view fiscal and monetary policy (both coming from govt) have undermined much of what free enterprise has produced. That said, I think the average person lives a better life than they did in the 80s thanks to scientific and technological innovations.
I'm not an Austrian economist, though I do have some leanings toward them about the importance of interest rates in market allocation. We're debating keynesian theory and stimulus as is evident by this video are we not? You don't need to be an economist to do pollution analysis. The debate in these forums is not the use of empirical measurement as a study of behavioral consensus, the debate is whether you can objectively measure the affect of fiscal policy on the economy.
Peter Schiff is an internet rock star. Of course I've listened to him, and I agree with most of what he says. The difference is in the details. He hasn't been right lately. You're right about many of the causes. Keynes never abandoned the free market; rather he was abandoned during the boom. That's when he would have put the brakes on by paying down debt. The Fed was politicized and didn't have the will. Remember that when Greenspan retired he was something of a god. Not much bad said about him.
Media is annoying, why it should be involved in academic debates?
Khalil Humam because media can help grow interest in the wider public.
@BeholdZeus
Just about every example I hear about involves government created barriers to entry, which favors already-established businesses. So paradoxically, regulated markets can (and often do) lead to price fixing and cartel-like behavior.
If for example a company provides you with services (which you've requested) and then coercively extracts payment from you (e.g. through a debt collecting agency) is it stealing your money? In the same sense the government isn't stealing when it collects taxes to pay for services which the public has democratically commisioned it to do.
The problem with Duncan Weldon's dentist is he doesn't pull out your rotten teeth, he just gives you a shot of Novocaine and a bill so you have to come see him again and again and again.
we do, we just think government should not do anything beyond essentials.
Do the agree with the words 'eight' and 'the' or do you wanna quibble with them, too?
Bruce, When Enron, Silver or any business falls, it takes many people down. That sucks. When the governement falls, everyone falls. I'd rather put faith in people = less control, more baskets. Yes, some eggs will break. This is better then putting faith in a few to control the economy with the ultimate authority of goverment.
we'll then clearly it's not settled. Education funds are being reduced constantly over time. So either the government really just doesn't want that smart of a population or they are consciously steering it towards privatization.
This might sound reductive but i do consider the debate between these two to be one of free markets and government intervention. Typically i find myself to be more in favour of government regulated economies in order to monitor investment activities and increase transparency of financial operations. However I also feel as though hayek supports a more free market ideology, yet I find myself agreeing with his thoughts here? Am i being too reductive or just completely wrong? any discussion welcome.
I believe Hayek’s philosophy is a comfortable one. Meaning the faith in the markets is a faith (my opinion) in the individuals and we feel better in believing we have some control in our own future. Does anyone anywhere believe the government ( UK or US ) really has the interest of anyone but their own special interests or agenda. I’ll bet on the people every time.
Selgin makes a good point on QE about the banks shoring up their balance sheets but we are taking Keynesian fiscal policy here aren't we? Keynes would not have gone for QE, he wanted fiscal policy. Build infrastructure etc
Austrian school of economics all the way :)
How exactly would the austrian school deal with modern crises in the economy such as our inability to stimulate the economy despite ultra-low interest rates?
RDO 123 Lol, let private banks set their own interest rates. No need to artificially stimulate the economy, just give people incentives and the economy will thrive.
If there's no need to artificially stimulate the economy, are you suggesting that the economy in its current state is desirable?
Of course not. No Austrian (that I know of) asserts that. The Austrians have a multitude of prescriptions to improve the economy, not the least of which is to eliminate central banking (or for that matter any government credit expansion), which would dramatically reduce the risk of major economic catastrophes like in the great recession. Rothbard provides a detailed account of the follies of central banking and especially how they create banking crises in his "History of Money and Banking in the United States: The Colonial Era to World War II".
Andrew Mackenzie No central Bank and no government deficits. That doesn't sound sustainable. When the government runs a budget surplus, it's taking money out of the economy, it could only be done permanently if you were to be constantly running a current account surplus (which you can't otherwise every other nation in the world would inevitable have a financial crisis) or you were running up a private debt bubble which would inevitably lead to a financial crisis. You would be setting up the economy for terminal decline. Both the elimination of the central bank and forced government surplus would cause a deflationary spiral, and honestly, it's the twentieth first century, we don't have to worry about inflation like we did several decades ago.
If you look at it that way, all taxation is theft. Thus minimal state is ethically equally wrong as "big govornment". In a society which opted for govornment instead of anarchy this argument is missplaced since taxation is not necessarily theft the same way prisons are not enslavement or death penalty is not "blood vengeance"
I still haven't heard anyone explain the 2008 financial crisis and subsequent recession economics as well as jamie galbraith. Having a discussion about Keynes Hayek in relation to recent events without his sort of insight is a bit back and forth. Two great economists however
The Nordic model (or Nordic capitalism[1] or Nordic social democracy[2][3]) refers to the economic and social models of the Nordic countries (Denmark, Iceland, Norway, Sweden and Finland). Although there are significant differences among the Nordic countries, they all share some common traits
Im surprised that Robert didn’t mention about the necessity of wage growth in line with productivity growth even during recession.
As this the stagnation of it was the cause of low demand in the market, causing lower investments and higher savings. As the real economy didn’t use those savings to invest, that money flooded the financial market.
Same thing happened in the Roaring 20’s btw BEFORE the CENTRAL BANK reacted which ended in higher speculation by building a bubble.
Low interest nor government spending won’t work if wages don’t increase in line with national productivity. China has increased its wages in with their productivity growth plus their inflationrate (as inflation is set by unit labor cost), making it possible recover from government spending, allowing it companies to invest again, pushing the government out.
As we also saw in the 30’s,40’s,50’s
The US government funds roughly 8 % of the economy through deficit spending. Which economy is growing faster - the one with 0.2% GDP growth and no deficit spending or 1% GDP growth and 3%,4 % or 5% deficit spending?
J.M. Keynes did not merely advocate government spending. He advocated government spending that would promote growth. Simply to spend to produce goods without economic utility was not in Keynes's thinking. The spending that my governments occasioned during its war in southeast Asia produced napalm, mines, military helicopters. It promoted not growth but destruction. Money spent for armaments, for the military, has a small multiplier in the nation's economy. It employs people, but it does not produce permanent employment unless wars become continuous, as they are today. That employment does not add to the wealth of the nation. It does not improve the housing, education, health, transportation, infrastructure of the entire nation. It improves the wealth of those who own and invest in the armaments' industries.
Keynes would not have advocated this sort of spending. He advocated spending that benefits the entire nation so that the rising national incomes can afford to pay back the debts created to bring the economy out of stagnation. Keynes wrote about repaying the deficits when the stagnation ended. Military spending does not end the stagnation. It postpones it.
My right ear loved this
Malinvestment surely occurred, beginning with Reagan. We over consumed for 25 years. We could see the bust coming but no one cared. The Fed under Greenspan became politicized, pursuing policies the Administration preferred without regard to speculation and market acceleration. The Fed isn't a bad idea. On the contrary, it's vital. They just didn't do their job.
"Who would you like to be in charge of our economic life today?" - No one.
Reuben Thomasson under Keynesianism its both
As Sidelsky says, the government should create an investment bank. It does not "take people's money," it credits bank accounts with cash. Poof. Like magic. If you make some good investments, then the growth will more than pay for any inflationary costs. But, as Selgin emphasized, if you have a central bank whose only function (let alone conspiracies!) is to be a lender of last resort and give, give, give to private finance who sit on the cash that everyone wants to pay off debts and live.
Just wondering: What's to become of the next generation, saddled with credit card debt and student loans, when they find there's no jobs for them? It's a big question, and how we handle it will determine our survival. Jobs are becoming so scarce that we're finding a growing population that will never find enough work to support themselves. They won't sit by idly and starve. We need to address that now. Tax cuts for the rich are not the answer there.
But you can still observe human action and have a sense of statistical proportion. Even science has outliers. I think it is more objective than you give it credit for, it's just that the objectivity is so incredibly complex that it's hard for us to fully understand or control it. Which is why the Austrian model works so well because it says you don't NEED to control it, just let it act.
Defining the Welfare State is where it gets sticky. Is public education welfare? There are those who say yes. My elderly neighbor thinks so. He's mad because his taxes pay for schools he doesn't use. Wealth redistribution? Surely. But he forgets he went to public schools himself. My point is that there are some thing gov't does that advances the general good, things that capitalism can't and shouldn't address. As a nation we find ourselves debating issues settled decades ago. It's troubling.
Why is this so quiet?!
@ 39:42 "future generations (I'm taking that as a referral to my Gen Y generation) are going to be richer than us anyway, so why not make them pay for us.. it's redistributed justice.."
Is that a bloody joke???? where does he get off saying that? the real fact is that future generations in the Collective west are completely screwed on the current path we're trotting. For one measure, Realestate to income ratio is has increased 10 fold in the last 3 decades, so if anything, we'll be living in shared accommodation for reminder of our lives. Living conditions have gradually become worst this century, it's a slow revolution. With each passing year, we are seeing people afford less and less living space for higher and higher amounts their income. Will this change in the future? I don't think so.. it will only get worse, so, no, future generations will not be richer. The Western Golden age has ended.
+Brent C That's exactly what he was referring to. If you listen carefully, he follows your quote of him by saying, "the real argument isn't for anything like that".
When the economy recovers, politicans do not reduce gov spending or increase taxes to honestly pay for what they are buying.
Interesting debate, however, the charing was not as strong.
Not true. Economics is broadly defined as the study of scarcity, something that is in fact material.
Question: Keynes says that during economic problems people save and do not spent. He assumes they save out of fear/uncertainty. Keynes solution is to take the people’s money and spend/spend/spend. Does he consider that when the people see the gov’t wasting money it will cause more fear? I am trying to spend less in part because of what I see our gov’t doing.
Keynes sees the problem is caused by fear, but his solution causes more fear. This will prolong the problem, which history shows.
dre das, you state, "In USA healty food is more expensive than fast food, Limited freedom of choice." Economics explains why. If instead of dissing economics you were to study it, many of your questions would be answered and you wouldn't need to waste energy and ruin your blood pressure on foolishly misplaced outrage. As for your comment on limitations: life is full of limitations; moreover, limitations (scarcity) is precisely what economics studies.
I'm confused with what the Hayekian position is on monetary policy. He says he wants monetary 'stabilisation' to prop up spending, which is the current state of things, but then says he wants to dispense with central banks for some reason.
His position on monetary policy is this: Monetary policy hasn't done us any good at all. He vouches for a denationalization of money, so it can be managed by private enterprises. That way people would be able to choose the most trustworthy currency makers. Currency makers would always be in check, because people would be able to exchange currency if they started inflating.
I don't see how anybody with a shred of decency or brain function can think for a second, that endless game of catch me if you can with inflation is a valid economic model.
You have it the wrong way around. Without shared recognition of property titles which can't exist without a government sanctioned legal system, property doesn't exist (there would just be a state of nature). If property doesn't exist, theft can't exist. A government sanctioned legal system needs funds to exist therefore taxes need to be levied in order for it to be sensible to speak of theft.
Both are looking at things in to short of time frames. I recommend looking at ray dalio's changing world order. Haynes is always done because it fixes the problem in the short run but comes to a horrible crash that destroys the nation. It may survive but only throw peaceful revolution.
If you have 20% unemployment, you're not producing as much as you could be.
"There is no economic justification for the assumption that we should intervene when unemployment is high"
Massive unemployment leads to civil unrest and war. I think that's probably one of the best reasons and the only one I need. It's the same reason why unsustainable credit growth is bad.
Just as there are warning signs of a bubble, there are also warning signs of money contraction.
How on earth is taxation "stealing"?
and he says we need a world war to get out of this crisis...my goodness!