A hip hop version of the Keynes vs Hayek debate
Here’s a new take on bringing economic theory to the masses — a rap battle between Keynes and Hayek.
What’s amazing about it is the amount of solid (if not plain nerdy) content this video packs into such a short time. It’s fun to watch for sure (very high production values), but you get that much more out of it if you’re well-versed in the theories they cover. Which is why I’m sharing it here on the PEF blog.
This may not be the future of economic theory debates, but it sure is catchy. I want to steer markets. ‘Nuff said.
It is certainly a fantastic video, but not new by Internet standards. I saw it eight months ago.
This video doesn’t seem accurate to me. Keynes put an end to free-market boom-to-bust economic cycles. The Keynesian era (1950-1973) saw very mild business cycles. It wasn’t until free-market economics came back in favor in the 1980s that we began to experience massive recessions again (of which there have been three so far; of course the central banks created the first two with “inflation targeting”.)
The 2000s housing boom-to-bust was a repeat of the 1920s, both were caused by a lack of good regulations (or deregulation) and unrealistic credit. (People were buying stocks on too easy credit which caused the stock market meltown; people were signing onto mortgages they couldn’t afford which caused the financial market meltdown.) That wasn’t Keynes, that was a return to free-market capitalism repeating the exact same history.
Keynes certainly isn’t all about spending, either. It’s about saving as well. In the Keynesian era, government debt was paid down from about 100% debt/GDP to 17% in 1973 (mostly by GDP growth.) Back then governments ran small surpluses in good times and small deficits in bad ones.
In that era people saved far more than they do today. What’s probably going on today, is that after the last 30-year free-market conservative era people’s living standards are declining and they are trying to cling onto them by overspending and not saving. Again that has nothing to do with Keynes.
I think macroeconomics all boils down to a game of Texas Hold’em: a few card sharks end up eating all the card guppies. So Keynes just levels the playing field and ensures workers are given their rightful wages and benefits. Under the free-market system the worker gets the short end of the stick and their nominal wages are less than their real wages with a few rich people pocketing the difference. This ends up killing off an enormous amount of real economic growth and creates booms of delusional properity that eventually bust.
I agree with Ron Waller…Keynesian theory is much closer to what he describes than the video does…