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» Hatrack River Forum » Active Forums » Books, Films, Food and Culture » Keynes vs Hayek round 2

   
Author Topic: Keynes vs Hayek round 2
Jenos
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The people who made the first Keynes vs Hayek video have come back with a follow up

http://www.youtube.com/watch?v=GTQnarzmTOc

To those who haven't seen the first, you really should: http://www.youtube.com/watch?v=d0nERTFo-Sk

Regardless of ones views on the merit of the arguments presented, I'm sure everyone can agree the videos are at least entertaining.

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AvidReader
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Thanks for posting that. I loved the first one and found this one just as good.

I think the video's right; regardless of who's right, Keynes is the one that lets you feel like you're fixing the problem so he'll always win. Reaction will trump planning and patience every time.

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BlackBlade
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Ha! I loved the first one, but I'm glad they did a round 2.
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Samprimary
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Most people's response to these videos on the internet (like, I'm assuming running 9 out of 10 so far) kind of indicate that the thought process is silently to deduce which of these economists is supported by 'their side' coarsely and then like them automagically without much of a real understanding of what they wrote and what their ideas entail.

Like "Keynes is liberal, I am liberal, Keynes is right!" or "Hayek is conservative, I am conservative, Hayek is right!" boom, blam, blindered.

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TomDavidson
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Well, to be fair, Samp, the videos do wear their bias on their sleeves. That some people interpret this as partisan bias just reflects reasonable confusion.
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Destineer
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Was Hayek really as empirically-minded as he's portrayed here? (Having never read any primary literature in econ, I have no idea.) He seems to be the one saying "There's a lot we still don't know" at a couple points.
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Samprimary
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quote:
Originally posted by TomDavidson:
Well, to be fair, Samp, the videos do wear their bias on their sleeves. That some people interpret this as partisan bias just reflects reasonable confusion.

I look at the videos as a thought experiment by people who obviously love Hayek trying to put him in a fistfight to thematically win in principle, acting out against the diminishing relevance of austrian economics, and the walloping that economies like Ireland took.
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Graeme
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Its worth noting that Lord Robert Skidesky, the eminent Keynes biographer and supporter, felt that the first video fairly represented Keyne's views. For an interesting podcast between the two creators of the videos, check out Econtalk podcast
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Glenn Arnold
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I lack the background to judge accuracy, but my impression was that the first video was emotionally slanted heavily towards Hayek. The second video still played up Hayek as the underdog, but I felt like it did a good job of showing them going back and forth without letting one of them get the last word.
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EarlNMeyer-Flask
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Why did the the police officer in the second one and the receptionist in the first one not recognize Hayek?
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TomDavidson
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Because the creators of the videos believe -- rightly, to some extent -- that Hayek is not sufficiently appreciated, especially by the common man and the political flack. One of the points (or perhaps insinuated) by both videos is that Keynes is more popular because he and his theories pander to the masses' desires.
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Raymond Arnold
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In case it matters, I was actually Glenn Arnold in the above post (forgot to switch logins. My bad).
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Samprimary
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Well, this thread and video inspired me to knuckle down and ask a bunch of questions about austrian economics.

My own personal biases aside, I was surprised with how silly the austrian school actually is. Like, not in terms of ~socialism~ versus ~the free market~, but just in terms of its assumptions and methodology.

I no longer really wonder why austrian economics seems to be marginalized and fading!

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Blayne Bradley
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I agree with Hayek for the most part, 'bailing out the losers' is bad and to me sings of diminishing returns and signals corporations they can get dependent on the government saving them.

(An exception would be if in fact the federal government had bought a commanding share of the corporation and had tight control over it but this never happened)

On the other hand I don't think "Big Business and Regulators" being in cahoots even had the time to even transpire, in our case they were completely either blocked by republicans or defanged and defunded by republicans of their powers.

Though based on the video I'm not sure specifically which context of oversight he means, from the video I think Hayek is perfectly in favor of strong rule of law and an even playing field legally, the question comes down to if hes anti trust or not as thats I think the key point of business regulation. Preventing monopolies.

I don't think either Keynes or Hayek however had to deal with the encroaching globalization thats currently happening though; in the past if a railway company went bust it would just be bought up cheaply by another competing railcompany located in the same country.

Now if said company goes bust it'll be bought by China, the question of security I don't think was ever addressed.

I think the answer to Keynes regarding suffering people is that it will/would be cheaper, far cheaper and healthier to the economy simply instead of bailing out an industry to supply a living wage directly temporarily until they can retrain or find another job.

The Japanese government did similar, when an industry was euthanasized they directly moved people around to find work elsewhere.

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TomDavidson
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Had you asked me a few years ago if I would ever see you type the words "I agree with Hayek for the most part," Blayne, I would have laughed aloud. [Smile]
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Blayne Bradley
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Planned economies generally work best from the perspective of developing from a low position of development. IE 1950's China where there's "nothing" and little means to gain investment capital except for neomercantalistic trade policies. However such economies completely sidestep the issue of "boom and bust" and rely on providing a consistent average growth and work on providing the foundation for later freer market growth to take off.

Sans GLF and CR in China its easy to see that China's gdp and per capita gdp would've been much higher, perhaps ten years ahead of where it is now assuming Deng Xiaping reforms happen at the same date and not sooner.

(Since one could assume that for the GLF and CR to NOT happen means that the 'Capitalist Roaders' so to speak had a much higher degree of influence then what was historical. So "Cat white or black as long as it catches mice" probably would happen sooner).

What good is free market when the railway companies, light industry, fabric factories, machine tool shops, electronics all don't exist in the first place and the educational infrastructure is still early and immature? And the number of "capitalists", entrepreneurs and industrialists are a staggering minority if not non existent?

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Blayne Bradley
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I also play a lot of "Victoria 2" where Kensyian or Kayekian economics can both be tested and viewed in accelerated time on a 19th century economy. Sorta. There's still a bunch of design flaws that prevents this being fairly seen practically in game.

Basically Kensyian economics works well from the perspective of your willing to keep workers employed in strategic industries at government cost to keep the "industry score" high and to provide "supply" of goods that suddenly become scarce during a war.

But this results in half of my factories needing subsidies to be profitable which is really expensive, a more Hayekian economy which is more free is much healthier and generally much more profitable. Problematically though it means (because the game has difficulty right now properly modeling true pricing; quality vs quantity, distance of shipping etc) your industry will lack certain production of goods that during say peacetime are unprofitable and thus will become scarce and unattainable during a war.

So some sort of balance is needed until paradox fixes the game and properly adds some much needed variables.

http://www.youtube.com/watch?v=eBzXpH3Tjo0&feature=related

Creation of the first video.

[ May 19, 2011, 02:05 PM: Message edited by: Blayne Bradley ]

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Destineer
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quote:
Planned economies generally work best from the perspective of developing from a low position of development. IE 1950's China where there's "nothing" and little means to gain investment capital except for neomercantalistic trade policies.
Interesting view. It's actually the opposite of what Marx thought. If I recall right, in his opinion, capitalism was the best way to grow an economy to a developed stage (as happened in the west) and communism should only be implemented after that process had occurred.
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Blayne Bradley
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Marx's view I'm certain was probably colored by the implication that the "developing" world was probably mostly going to be divided up and conquered by the developed imperialist world anyways and thus any capitalism that would occur would be via imperialistic fiat. The concept of backwards nations successfully industrializing on their own I don't think was very likely to happen.

Japan for example I would argue was very much a hybrid planned-state capitalistic economy in most aspects during the Meiji Restoration with a huge amount of government direction that slowly ebbed into the control of the Zaibaitsu oligarchs.

They developed and grew without alot of what I would consider capitalistic determinism and alot more "government needs a steel mill here, we need a shipyard here, and a munitions factory here. Industrialist Guy do the job and here's a contract and money to do it, meet our standards or else."

On a macro level anyways.

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The Rabbit
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quote:
Marx's view I'm certain was probably colored by the implication that the "developing" world was probably mostly going to be divided up and conquered by the developed imperialist world anyways and thus any capitalism that would occur would be via imperialistic fiat.
I'm guessing you haven't read much Marx. Your assessment really doesn't mesh well with the whole materialist dialectic.
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BlackBlade
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quote:
Originally posted by The Rabbit:
quote:
Marx's view I'm certain was probably colored by the implication that the "developing" world was probably mostly going to be divided up and conquered by the developed imperialist world anyways and thus any capitalism that would occur would be via imperialistic fiat.
I'm guessing you haven't read much Marx. Your assessment really doesn't mesh well with the whole materialist dialectic.
You may have guessed wrong, perhaps he misunderstood what he wrote?
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Destineer
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Here we go. This is what I was thinking of:

quote:
For one thing, Marx would have scorned the idea that socialism could take root in desperately impoverished, chronically backward societies like Russia and China. If it did, then the result would simply be what he called "generalized scarcity," by which he means that everyone would now be deprived, not just the poor. It would mean a recycling of "the old filthy business"—or, in less tasteful translation, "the same old crap." Marxism is a theory of how well-heeled capitalist nations might use their immense resources to achieve justice and prosperity for their people. It is not a program by which nations bereft of material resources, a flourishing civic culture, a democratic heritage, a well-evolved technology, enlightened liberal traditions, and a skilled, educated work force might catapult themselves into the modern age.
http://chronicle.com/article/In-Praise-of-Marx/127027/
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Blayne Bradley
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Partly a matter of definitions, I'm viewing socialism more by the definition of the state owning the means of production via a planned economy; a process that I think has proven itself fairly favourable to many developing nations in getting a kickstart. That quote there seems to me more of developed capitalist nations turning more into social democratic welfare states. To speak in a generalization.
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