Who's Dustier and Deader: Hayek or Keynes?

David Boaz detects ideological bias in the way the New York Times uses dustiness and death as an excuse to dismiss economists. Spoiler warning: they seem to respect Keynes more than they respect Hayek.

Of course, both thinkers are very relevant today, though I wish it weren't so in the case of Keynes. This is as good at time as any to drop that famous Hayek/Keynes rap duel video, which is strangely compelling and unembarassing for being a, well, Hayek/Keynes rap duel video. Watch both dead men come to life!

Comments

[Kroneborge]

hmm, I think it's unfair to dismiss Kenyes.

His full theories have never been tried. Sure the've mastered deficit spending, but they have always forgotten the saving before that.

7 fat years, 7 lean years. Save from the fat, and then spend a bit extra in the lean.

Seems like that would smooth out the business cycle.

[nekoxgirl]

Maybe...except the government will never save money.

[Piss Drinkers of Dune]

Are you high!?! You really want to run an economy on the notion that Say's Law is wrong? Can't consume without production, but that doesn't stop idiot Keynesians from trying.

[Kroneborge]

And the savings from the fat years, allows production/consumption in the lean years.

It's really not a hard concept.

If we had entered the current recession with no debt, and 1 trillion in the bank, then yes stimulus would have been a great idea, and probably fairly effective as well.

[Cyto]

One thing missing from this idea - monetary supply. Increasing and decreasing the supply of money by a trillion or two might have an effect on the economy somewhere.

[mark]

Bullshit. Recessions are ended quickly by liquidating unproductive assets and moving the money to more productive uses. Stimulus would prevent that, as it's doing now.

[Piss Drinkers of Dune]

I CAN'T HEAR YOU OVER THE SOUND OF EVERY ECONOMY THAT EVER TRIED KEYNESIAN POLICIES CRASHING. la!la!la! CAN'T HEAR YOU!

Don't be a joke, Kroneborge, just learn to say, 'Fuck Keynes. He doesn't matter.'

His revival is weird. When I was getting my masters he had long been considered an empirical failure by the majority of mainstream economist, and the two Keynesian left in the department were out of touch septuagenarian dinosaurs.

The little he got right was already either common knowledge or cribbed from Fischer. What he got wrong was abysmally off target. The worst public intellectual in all of human history in the matter of accuracy. Marx, Aethyr theorist and alchemist had more going for them in terms of accuracy.

[dantealiegri]

Where have we heard the "full theory has never been tried before"?

[Old Mexican]

Re: Kroneborge,

His full theories have never been tried.

For our good fortune. They're bunk.

7 fat years, 7 lean years. Save from the fat, and then spend a bit extra in the lean. Seems like that would smooth out the business cycle.

No, it would not. Government spending is not productive - it can't be, by design.

[Pedant]

The fundamental error inherent in the above theme is the treatment of boom-bust cycles as some exogenous entity that the government "compensate for". It's telling that the analysis of underlying causes is nowhere to be found.

[Pro Libertate]

It's just crazy to think Keynes might be wrong, especially the extremely truncated Keynes used by the madcap statists of today. SPEND EVERYTHING WE HAVE NOW OR EVER WILL HAVE--WOO-HOO!

[smartass sob]

Sounds like a bunch of degenerate gamblers in Vegas trying to get a payoff that's big enough to pay back the loan sharks.

[JW]

Bumper sticker on Air Force one: I'M SPENDING MY KIDS' INHERITANCE

[Jerry]

I'M SPENDING MY YOUR KIDS' INHERITANCE
FTFY.

[ChrisO]

"I'M SPENDING MY YOUR KIDS' GRANDKIDS' INHERITANCE"

FTFYA

[Obamao]

I'M SPENDING EVERYONE'S INHERITANCE. HA! HA! HA! HA! HA! HA!

[democratsarefascists]

Keynes by a country mile.
He's archaic and totally wrong.

[Jeffersonian]

Spoiler warning: they seem to respect Keynes more than they respect Hayek.

In related news, the Pope remains Catholic, water is still wet, and bears continue to defecate in forested areas.

That is all.

[Jordan]

Meanwhile, we have fools like shriek who claim to respect Hayek, but never met a Keynesian policy they didn't love.

[Old Mexican]

Spoiler warning: they seem to respect Keynes more than they respect Hayek.

That's because Keynes' justification for interventionism meshes perfectly with the NYT staff's eleutherophobia.

[juris imprudent]

You really want to run an economy on the notion that Say's Law is wrong?

Now someone bringing up Say in the context of deader and dustier, that is ironic. Not to mention Say's Law is something Say never said - nor is it particularly true or useful.

Anyway, Keynes has two redeeming qualities that might edge out Hayek: 1) unlike most economists he actually made a buttload of money with his insights into bond markets, and 2) one of his dying regrets was that he hadn't drunk more champagne.

Keynes also argued that the French demands for reparations at Versailles would be ruinous to all.

[Piss Drinkers of Dune]

juris imprudent|10.29.10 @ 7:10PM|#

You really want to run an economy on the notion that Say's Law is wrong?

Now someone bringing up Say in the context of deader and dustier, that is ironic. Not to mention Say's Law is something Say never said - nor is it particularly true or useful.

Anyway, Keynes has two redeeming qualities that might edge out Hayek: 1) unlike most economists he actually made a buttload of money with his insights into bond markets

Show of hands of those who come to this board to escape this kind of commoner bullshit?

Insights into the bond markets, you say? Oh, where did these insights come from have you ever bothered to ask?
From Rothbard(a real economist)'s Keynes the Man

"THE SWINDLER"
The young Keynes displayed no interest whatsoever in economics; his dominant
interest was philosophy. In fact, he completed an undergraduate degree at
Cambridge without taking a single economics course. Not only did he never take
a degree in the subject, but the only economics course Keynes ever took was a
single-term graduate course under Alfred Marshall. He found that spell of
economics exciting, however, as it appealed both to his theoretical interests and to
his thirst for cutting a giant swath through the real world of action. In the fall of
1905, he wrote to Strachey: "I find economics increasingly satisfactory, and I
think I am rather good at it. I want to manage a railroad or organise a Trust or at
least swindle the investing public" (Harrod 1951: 111).7
Keynes, in fact, had recently embarked on his lifelong career as investor and
speculator. Yet Harrod was constrained to deny vigorously that Keynes had begun
speculating before 1919. Asserting that Keynes had "no capital" before then,
Harrod explained the reason for his insistence in a book review six years after the
publication of his biography: "It is important that this should be clearly
understood, since there were many ill- wishers . . . who asserted that he took
advantage of inside information when in the Treasury (1915?June 1919) in order
to carry out successful speculations" (Harrod 1957). In a letter to Clive Bell,
author of the book under review and an old Bloomsburyite and friend of Keynes,
Harrod pressed the point further: "The point is important because of the beastly
stories, which are very widespread . . . about his having made money dishonourably
by taking advantage of his Treasury position" (ibid.; cf. Skidelsky 1983:
286?88).
Despite Harrod's insistence to the contrary, however, Keynes had indeed set up
his own "special fund" and had begun to make investments by July 1905. By
1914, Keynes was speculating heavily in the stock market and, by 1920, had
accumulated ?16,000, which would amount to about $200,000 at today's prices.
Half of his investment was made with borrowed money. It is not clear at this point
whether his fund was used for investment or for more speculative purposes, but
we do know that his capital had increased by more than threefold. Whether
7 As Skidelsky points out, it is typical of Roy Harrod's whitewashing biography that, in quoting
this letter, he leaves out his hero's remark about "swindling the investing public" (Skidelsky 1983:
165n).

Keynes used inside Treasury information to make such investment decisions is
still unproven, although suspicions certainly remain (Skidelsky 1983: 286?88).
Even if we cannot prove the charge of swindling against Keynes, we must
consider his behavior in the light of his own bitter condemnation of financial
markets as "gambling casinos" in The General Theory. It seems probable,
therefore, that Keynes believed his successes at financial speculation to have
swindled the public, although there is no reason to think he would have regretted
that fact. He did realize, however, that his father would disapprove of his
activity.

I ask you, in what fucking world would being a successful investor while also having a high office in the Treasury take any kind of talent?

Oh, yes, the man who lost his ass in the '29 Crash was such a great investor.

Do yourself a favor. Download a PDF of Keynes' General Theory and Carl Menger's Principles of Economics. Read the relevant chapter on Say and the theory in the later work, now go to Keynes and read that early chapter on Say's, and his deliberate augmentative distortions will become apparent. You will accumulate a hatred for the man for the manner in which he manipulated and raped your mind.

Then, I have little doubt, your conscience will force you to come back to me on your hands and knees groveling an apology asking for forgiveness for the piss poor way you have conducted your affairs amongst the two of us for surely once you have done what I asked you will realize that your defense of Keynes reflects poorly on your character and intellectual integrity.

[Piss Drinkers of Dune]

BTW, it may not be as obvious as I intended the last paragraph was hyperbole to lighten the mood (which I felt was necessary for the crass and over the top manner in which you soiled the good name of Says and the theory that bears his namesake caused such a commotion the lady of the house had to ring for more bitters).

[juris imprudent]

commoner bullshit

Ah, so the plurality in your handle is a royal pretension. As many here can attest, my bullshit is anything but common.

[Greg Ransom]

Keynes' rich daddy bailed him out every time he went tits up .. which was more than once ...

"Keynes has two redeeming qualities that might edge out Hayek: 1) unlike most economists he actually made a buttload of money with his insights into bond markets"

Try to loose money if your rich daddy will cover all of YOUR losses.

[Federal Man]

There is only 1 political party in the USA; it simply sells itself to 2 different markets under 2 different brand names, a common corporate gimmick that you people always fall for.

Case in point: McCain and Obama have very similar Senate voting records; they voted alike more often than not.

It's great for us at the government that you stir up so much partisan hostility; that promotes rallying to perceived political parties which, in reality, is a single party. The single party ends up accumulating resources and loyalty as a result making us stronger.

http://youareproperty.blogspot.....-only.html

[Federal Man]

There is only 1 political party in the USA; it simply sells itself to 2 different markets under 2 different brand names, a common corporate gimmick that you people always fall for.

Case in point: McCain and Obama have very similar Senate voting records; they voted alike more often than not.

It's great for us at the government that you stir up so much partisan hostility; that promotes rallying to perceived political parties which, in reality, is a single party. The single party ends up accumulating resources and loyalty as a result making us stronger.

http://youareproperty.blogspot.....-only.html

[shrike]

Keynes is like God would be, if God exited. And only Christ-fags buy shit like that, so Keynes IS God.

[.]

Oh, you mean he'd be gone? But he is gone - he "exited" this world some time ago.

[manuel]

That rap video rivals Shaq's for the worst I have ever seen.

[Apogee]

Maybe, but it's the best economics video I've ever seen.

[DD]

But what about the blatantly fake mustaches?

[gramercy]

Animal spirits?

[Tncm]

While I don't have a PhD in Keynesianism as I'm sure most of our friends at the New York Times do, animal spirits refers to what Keynes called "bearishness" and "bullishness". If people are acting bearish, their demand for money is higher than their demand for goods and services so they don't spend as much and instead keep their money in either cash balances (on-hand) or invest it (the stock market, banks, so on). If people are acting bullish, their demand for money is lower then their demand for goods and services, so they either spend more of their income on goods and services, use money from their cash balance to pay for goods and services, or sell stocks and take money out of their bank account to pay for goods and services. When people are acting bearish, national income goes down, since income can only equal expenditures. When people are acting bullish, national income increases because people's expenditures are higher. The former Keynes called a fall in aggregate demand (the individual demand schedules of everyone in the market put together), which he believed caused unemployment and economic ruin since employers, now finding themselves with less money income, cannot justify employing as many people as before. When aggregate demand falls, Keynes believed that the government had to step in with stimulus spending to prevent the economy from collapsing.

While I don't have the time to explain why Keynes is so wrong in full (entire books have been written on the subject), I'll expose the most glaring fallacies in Keynesianism that even stupid libertarians like us can understand. Keynes ignores the fact that savings, while it may cause constriction in consumer goods or first-order capital goods industries, lowers the interest rate in the loan market and thus allows entrepreneurs to expand the capital structure, putting production in line with consumer time preferences. While there will be unemployment and the closing-down of firms in the consumer goods and first-order capital goods market, this frees up resources which will quickly be absorbed into the capital structure. The reverse happens if consumer time preference increases; their will be unemployment and the closing-down of firms in higher levels of the capital structure, but these resources will be absorbed into the consumer goods and first-order capital industries.

There are many other problems with Keynesianism which people have pointed out here. I'm kind of short on time, so I can't explain them all here. I think if you read the comments section in the Reason articles on stimulus spending, you'll have a good cursory knowledge of Keynesianism. Of course, nothing can replace actually reading books on economics like "Economics in One Lesson" or "Man, Economy, and State'.

[RogC]

Keynes told politicians what they wanted to hear and sadly it has been all the advantage his theories needed to stay prevalent among them.

[Greg Ransom]

Keynes' rich daddy bailed him out every time he went tits up .. which was more than once ...

"Keynes has two redeeming qualities that might edge out Hayek: 1) unlike most economists he actually made a buttload of money with his insights into bond markets"

Try to loose money if your rich daddy will cover all of YOUR losses.

[han]

Inflationists, deflationists, monetarists, goldbugs, Keynesians, Friedmanites, Austrians, freshwaterists, saltwaterists, Grid Epsilon Irregulars and others are urged to listen in.