Wednesday, January 27, 2010

Keynes vs. Hayek set to rap. You gotta check this out!



On second thought...

This is funny, but it distorts the Keynesian approach. (Read below.)






In this video Keynes is depicted as healthy, vibrant and full of energy. He parties, gets drunk and then suffers from a hangover. The metaphor being that, government spending is like booze: You feel good for a while, but then suffer the consequences.

A more realistic depiction would have been Keynes on a hospital bed, hooked up to intravenous. Lifesaving medicine was flowing into his body, not booze.

Keynes never advocated government spending and increased aggregate demand for economies that were strong, healthy and running at levels of full output and employment. He argued for those remedies when demand collapses.

Once again another distortion subtly designed to support Friedrich Hayek's out of touch, Austrian school thinking.

2 comments:

Mike Sandifer said...

Yes, some other blogs I've read, including Sumner's Money Illusion, point out that there was not the drop in employment and GDP when the housing market crash started in 2006 that the Austrians would predict. But, the Austrians I've read never point to empirical evidence anyway.

Mike Norman said...

They can't because the entire school of thought is bankrupt