The Dim-Post

April 29, 2011

Keynes vs Hayek: the ultimate smackdown

Filed under: economics — danylmc @ 9:43 am
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32 Comments »

  1. That guy playing Ben Bernanke is a dead ringer – had me thinking it was actually him for a moment.

    Comment by DT — April 29, 2011 @ 10:13 am

  2. Cornermen are classic

    Comment by nadis — April 29, 2011 @ 10:24 am

  3. Hayek is often vilified by the left based on lazy analysis of what he actually argued for. For instance he never argued the state has no place in making economic decisions nor that it should not provide a social safety net.

    I guess what we often end up is a Hayek type approach in the good times and a Keynesian approach in the bad times. Thats not an issue of economics, rather its a political problem.

    Comment by nadis — April 29, 2011 @ 10:35 am

  4. Love the way Hip Hop is used in this – how far it’s come from NWA …

    Comment by Michael Stevens — April 29, 2011 @ 11:07 am

  5. Thank you. I’m quite speechless tbh.

    Comment by Chris Bull — April 29, 2011 @ 11:20 am

  6. Hayek is often vilified by the left based on lazy analysis of what he actually argued for.

    I think the lazy analysis comes from both sides. I actually read ‘The Road to Serfdom’ a few years ago. It’s very different from what I expected, based on its endorsement by right-wing politicians.

    Comment by danylmc — April 29, 2011 @ 11:28 am

  7. This one came out a couple of years ago:

    “Fear the Boom and Bust” a Hayek vs. Keynes Rap Anthem

    Comment by Dotty — April 29, 2011 @ 11:28 am

  8. They’re by the same people.

    They need some new ideas so I have more rap videos to show students…

    Comment by Dotty — April 29, 2011 @ 11:31 am

  9. On the subject of econ-rap battles…

    Comment by terence — April 29, 2011 @ 11:46 am

  10. Fair point Danyl. Most right wing politicians will also also focus on the bits that serve their own agenda. The “too big to fail” mentality and public bail out of the private sector are the obvious counterpoints. In a truly Hayek like economy, organisations would never get to be too big too fail as their artificially embedded advantages would be competed away. What we saw in 2008 was just a different form of collectivism.

    Comment by nadis — April 29, 2011 @ 12:04 pm

  11. Hayek type approach in the good times and a Keynesian approach in the bad times

    Hayeks famous argument in “The Road to Serfdom” is that political control of economic production causes the bad times, as well as increasing political control and corruption of all things and increasing suppression of individual liberties.

    Keynes is famous for arguing that public economic action can be manipulated to smooth supply and demand mismatches caused by private action or random chance.

    The two thjings although intersecting aren’t simply two sides of one argument and our choices in governance and economic policy aren’t between just the two (or any addtional options).

    Comment by Fentex — April 29, 2011 @ 12:08 pm

  12. Excellent! I loved the Bernanke lookalike, and Malthus and Mises as sidemen. More education in this than most people realise.

    Comment by nzlemming — April 29, 2011 @ 12:09 pm

  13. The biggest lesson I got out of this was that economists should never take their tops off.

    Comment by Zo Zhou — April 29, 2011 @ 1:49 pm

  14. @13 what if the Hayek was Selma?

    Comment by amc32 — April 29, 2011 @ 1:55 pm

  15. No – I wasnt suggesting that is how economies should be run, I was suggesting in good times politicians cherry pick the easy bits of freshwater economics, and in the bad times they cherry pick the seductive bits of saltwater economics.

    Comment by nadis — April 29, 2011 @ 2:06 pm

  16. stylish production values. Funny, no “film Canada”, “BBC Coproduction”, “NZ on Air” or “PBS” in the credits.

    Comment by Clunking Fist — April 29, 2011 @ 2:38 pm

  17. Watching this again at lunch, I find myself mostly agreeing with Hayak.

    Comment by danylmc — April 29, 2011 @ 2:59 pm

  18. “in good times politicians cherry pick the easy bits of freshwater economics, and in the bad times they cherry pick the seductive bits of saltwater economics”

    While this has happened in some countries, I wouldn’t say it’s true about NZ.

    Bolger 1st term: bad economy, very freshwater
    Bolger 2nd term: good economy, freshwater
    Bolger 3rd term: declining economy, don’t know how you categorise Winstonomics
    Clark 1st term: variable but mostly good economy, as Keynesian as NZ has been in a while
    Clark 2nd term: good economy, somewhat Keynesian
    Clark 3rd term: declining economy, somewhat Keynesian
    Key: bad economy, freshwater

    Comment by bradluen — April 29, 2011 @ 3:02 pm

  19. “Most right wing politicians will also also focus on the bits that serve their own agenda.”

    I know. The Adam Smith Institute never mention Smith’s advocacy of vegetarianism.

    Comment by Kahikatea — April 29, 2011 @ 3:07 pm

  20. Speaking of deadringers. And royal weddings.

    Comment by Clunking Fist — April 29, 2011 @ 3:23 pm

  21. 19.“Most right wing politicians will also also focus on the bits that serve their own agenda.”

    Thankfully, no left wing poli has ever had an agenda, so their focus is on serious pragmatic policies like pay equity/equivalence and compulsory unionism.

    Comment by Clunking Fist — April 29, 2011 @ 3:28 pm

  22. Key: bad economy, freshwater

    What?

    Winstonomics = bribes to pensioners

    Comment by nadis — April 29, 2011 @ 3:29 pm

  23. The biggest lesson I got out of this was that economists should never take their tops off.

    Look past the mustache. Keynes is pretty buff.

    Comment by danylmc — April 29, 2011 @ 3:45 pm

  24. “17.Watching this again at lunch, I find myself mostly agreeing with Hayak.
    Comment by danylmc — April 29, 2011 @ 2:59 pm”

    So how’s Iceland doing these days? They didn’t rescue failed companies; they changed their politicians and jailed a bunch of people… wonder if they will recover from the financial crisis/credit crunch faster than the US and the UK?

    Comment by Dotty — April 29, 2011 @ 4:09 pm

  25. You’re only looking at the aftermath, not at the the policies, subsidies and incentives that got kaupthang and the other banks to where they were in 2008

    Comment by nadis — April 29, 2011 @ 6:20 pm

  26. Fair to say they have a perspective?

    I assume what we actually have is a muddling consensus semi-equilibrium. Or pure something-else.

    Comment by lyndonhood — April 29, 2011 @ 6:23 pm

  27. I would have awarded the fight to Hayek too.

    I think where they both fall down is the assumption that the playing field will ever be level. It might just be a choice of whether the corruption/profiteering is largely private sector or largely public sector…

    Comment by Repton — April 29, 2011 @ 11:01 pm

  28. Brilliant. How much did you pay for this video?

    Comment by ZenTiger — April 30, 2011 @ 1:04 am

  29. They are both valid. One just leads to about 40% of people being really, really rich, and the other to 80% of people being moderately ok. One has about 15% of people not being able to feed themselves, while the other ends with about 5% in the same situation. The focus really needs to shift to what actually happens to people during the recession and how they survive.

    The problem with too many economists is that they seem to be from a strong pure maths background where they look at choices/decisions as manipulating numbers and not actually the narrative that sits beneath the numbers. A la Don Brash and the other Actoid freaks.

    Comment by Tim — May 1, 2011 @ 11:16 am

  30. “The focus really needs to shift to what actually happens to people during the recession and how they survive.”
    That would be the welfare safety net, one would think? As opposed to the middle-class entitlement that we have these days: our masters giving with credits what they then take away in gst.

    Do you have a source for your 40/15 and 80/5 stats? (I’m not saying they are wrong, I’m just interested in the measures of “poor” and “rich” and what real-world examples there are of this. Bearing in mind no country is following Hayeks prescription, witness the corporate welfare rampent in the US: defence spending, deposit and mortgage guarantees, non-recourse home lending, bank bail-outs, General Motors, farming subsidies and barriers, etc, the foundations of which predate Obama.

    Comment by Clunking Fist — May 1, 2011 @ 12:48 pm

  31. Keynes once said, in response to a critic who accused him of inconsistency (that hobgoblin of small minds), “When the facts change, I change my mind. What do you do?” I can’t imagine the likes of Brash or Douglas saying that.. rather, they’d say something like “It is not the theory that is at fault but reality that must be adjusted”… if they were to go so far as to imagine that there was such a thing as reality, that it was distinct from theory and that it mattered. As for Hayek, I’d say that he was right, in the sense that one of the blind men was right about the elephant.

    Comment by Rhinocrates — May 1, 2011 @ 6:06 pm

  32. “When the facts change, I change my mind. What do you do?”

    Hence:
    Just before his death Keynes told Henry Clay, a professor of Social Economics and Advisor to the Bank of England [38] of his hopes that Adam Smith’s ‘invisible hand’ can help Britain out of the economic hole it is in: “I find myself more and more relying for a solution of our problems on the invisible hand which I tried to eject from economic thinking twenty years ago.”

    So if Keynes realises he’s wrong, why can’t his followers, eh? :^)

    Comment by Clunking Fist — May 2, 2011 @ 12:11 am


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