Keynes Vs Hayek, Without the Rap

[Sukerkin]

http://www.bbc.co.uk/news/business-14366054

Not as much fun as the videos (parts one and two) of this debate, that was thought to have been over in the 1930's, but still an interesting read ... well it is for those with a professional (or ex-professional) background in economics at least :lol:.

 

[Makalakumu]

Interesting debate. For me, it all boils down to the Knowledge Problem. How can any one (or small group) person(s) know how to apply stimulus in such a complex system? They can't and the results show.

 

[Empty Hands]

Interesting debate. For me, it all boils down to the Knowledge Problem. How can any one (or small group) person(s) know how to apply stimulus in such a complex system? They can't and the results show.

Does it truly matter? Perfectly targeted money may improve the efficiency of a stimulus, but money added to the system is money added to the system, with well known multiplier effects.

FWIW, I have seen economic research that has calculated the multiplier effect of various forms of stimulus (tax cuts, direct money transfers, works projects, etc.) so someone at least thinks they know what's going on. I'm not qualified to comment on the validity of the research, I don't have the training.

 

[Sukerkin]

Well, without wanting to sound all full of myself, I do have the training ... and I'm a Keynesian - conclusions drawn from that do not constitute financial advice :lol:.

Hayek's views are flawed and fail to take into account certain key features of supposedly free markets (they never are).

 

[elder999]

Well, without wanting to sound all full of myself, I do have the training ... and I'm a Keynesian - conclusions drawn from that do not constitute financial advice :lol:.

Hayek's views are flawed and fail to take into account certain key features of supposedly free markets (they never are).

It's partly because of "free" markets that we are speeding towards Malthusian times.........

 

[Makalakumu]

Does it truly matter? Perfectly targeted money may improve the efficiency of a stimulus, but money added to the system is money added to the system, with well known multiplier effects.

FWIW, I have seen economic research that has calculated the multiplier effect of various forms of stimulus (tax cuts, direct money transfers, works projects, etc.) so someone at least thinks they know what's going on. I'm not qualified to comment on the validity of the research, I don't have the training.

This isn't rocket science. Those economists are full of ****. "Perfect stimulus" and "targeted bailouts" are euphemisms for stealing. Who knows where the money went?

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=apx7XNLnZZlc

 

[Makalakumu]

It's partly because of "free" markets that we are speeding towards Malthusian times.........

The "free" market is a fiction. We aren't free. We have 100,000 pages of laws that attest to this fact.

 

[Makalakumu]

Well, without wanting to sound all full of myself, I do have the training ... and I'm a Keynesian - conclusions drawn from that do not constitute financial advice :lol:.

Hayek's views are flawed and fail to take into account certain key features of supposedly free markets (they never are).

The problem with Keynesianism is that it doesn't work. It assumes a level of control that is impossible and peoples rational self interest always wins. If a guy with control of the purse strings has to choose between giving "targeted stimulus" to himself or his buddies, or someone else, all rationalization eventually leads to self interest. Eventually, people will enter this system of power simply to give themselves the goodies. Look at the state of governments around the world and tell me this isn't true.

You cannot control political power. Once the gun is on the table and the permission slip is given to use it against anyone you wish, it doesn't matter how much "good" is in your heart. The vultures will wrest that gun away and use it as they see fit. Hell, you might even "decide" to eat a "little" carrion.

Hayek understood that you can't control the system. The Knowledge Problem is the mechanism standing in the way of Keynesian economics. It also explains why people in power give themselves the goodies. The farther you get away from yourself, the less you know...how Zen-like is that!

Gandalf understood the Knowledge Problem as well, "Don't... tempt me Frodo! I dare not take it. Not even to keep it safe. Understand, Frodo. I would use this ring from a desire to do good... But through me, it would wield a power too great and terrible to imagine."

 

[Sukerkin]

The problem with Keynesianism is that it doesn't work.

Yes it does, it's Monetarism that doesn't. Monetarism was Hayek-like economics snuck in the back door by Friedman and even he had the good sense to renounce it's foolishness before he died.

 

[billc]

Well we are still waiting for it to kick in over here. But of course, it just needs some more money pumped into it to get this economy rolling. Perhaps the next 2 or 3 stimulus bills will finally get the job done.

 

[elder999]

Yes it does.

'fraid not old chum. None of them will workworth a fig-Malthus wins out in the end: there are too many people on earth, and not enough room to ride my horsie! :lfao:

 

[billc]

Too many people? Not even close really.

 

[Sukerkin]

That and limiting the globalisation of labour might get you somewhere - sadly it is too late now. Those horses have bolted and tho some of them are coming back (e.g. the return of some ceramics industry to Stoke-on-Trent from China) we have a few more decades of worker exploitation in successively poorer countries until the cycle comes back to 'us'.

 

[Sukerkin]

'fraid not old chum. None of them will workworth a fig-Malthus wins out in the end: there are too many people on earth, and not enough room to ride my horsie! :lfao:

Malthus was very wrong too (and, shocking as it may seem, faked his mathematical principles).

 

[billc]

Say it's not so Sukerkin, the next thing you know you'll be trying to tell me all that global warming stuff was fudged too.

 

[Sukerkin]

It was a bit easier to get away with unsound calculations back in Malthus' time :lol:.

 

[Sukerkin]

[h=3]Malthusianism 23rd June 2011[/h]Wed, 22 Jun 11
Duration:
43 mins
Melvyn Bragg discusses the ideas of Thomas Malthus, the Victorian clergyman whose work, 'An Essay on the Principle of Population', forecast that soon the population would outstrip food supply. His philosophy regarding population became known as 'Malthusianism'. But was there any truth in his predictions and what impact did his essay have at the time? Melvyn is joined by Karen O’Brien, Pro-Vice-Chancellor for Education at the University of Birmingham; Mark Philp, Lecturer in Politics at the University of Oxford; and Emma Griffin, Senior Lecturer in History at the University of East Anglia



http://www.bbc.co.uk/podcasts/series/iot

 

[Sukerkin]

Also:

[h=3]Keynes vs Hayek - The LSE Debate 3 AUG 2011[/h]Wed, 3 Aug 11
Duration:
42 mins
John Maynard Keynes and Friedrich Hayek are regarded as two of the twentieth century’s greatest economists. Modern day followers came together at the London School of Economics to debate the ideas of their intellectual heroes. The event was chaired by BBC Newsnight Economics Editor, Paul Mason.


http://www.bbc.co.uk/podcasts/series/analysis

Be aware that to my mind there was something of a bias towards Hayek in the contributors to this.

 

[Makalakumu]

Yes it does, it's Monetarism that doesn't. Monetarism was Hayek-like economics snuck in the back door by Friedman and even he had the good sense to renounce it's foolishness before he died.

Monetarism still invokes the power of central banks. It's a public/private cartel and that doesn't work either. Have you read much of Murray Rothbard or other Austrians?

 

[Sukerkin]

No I haven't read anything of economic note by M. Rothbard. As far as I know he was associated with Ayn Rand which leaves him in something of a credibility vacuum with me.

The Austrian School is likewise not held in high regard by me or indeed many other serious economists (including, oddly Milton Friedman)- they might be the cool kids on the block for non-economists who think it would be great not to have to take any responsibility for anyone but themselves but they preach a fatally flawed axiom.