@@edmorgan5720 At least it got a guy (me) who considered economics as so hopelessly complex as to be ignored and just "see what happens" interested in actually looking into the theories of those mentioned. So, I guess we can go with Walt Disney's quote of "I would rather entertain people and hope they learned something than educate people and hope they were entertained." and call it a wash?
@@edmorgan5720 Def not true. That is nearly 10 yrs old now, and you see so much things that happened in this time, that these lyrics can easily be applied to. The pros and cons of things like government spending is something that most people do not have the slightest idea of. And there are elements in the movie apart from the text that are really astounding. Ever thought about why Hayek punches him out in the ring, but Keynes is celebrated as victor in the end? ;) A masterpiece!
Fun fact: the boxing coaches in this video have the names of influential economists; on Keynes' side are John Hicks (1:35) and Thomas Malthus (4:15 and 6:14). On Hayek's side are Jean-Baptiste Say (1:38, 4:18 and 4:56) and Ludwig von Mises (1:38, 4:19).
Issue with this is that Marx doesn't offer any thesis unto how individual's should organize the economy, but rather a comprehensive criticism of capitalism and a theory as to how it'd eventually develop into communism due to capitalism's "inherent contradictions." An example of this contradiction would be how it's theoretically in the capitalist's interest to reduce wages to raise profits, and in the worker's interest to raise wages as a means to raise their living standards. These distinct interests, combined with the "petty bourgeoises"[1] fall into either the class of proletariat[2] or bourgeoisie[3] would lead to resistance being formed by the proletariat, in the form of strikes and organized labor-action. This is known as "class struggle," which is the idea that classes will gradually fight for control, politically and economically, as a means to serve their own functioning interests. Only organizational theory he mentions is how a communist society would potentially look like, but due his historically determinist tones this isn't as much a proposal as it's an "idea." For Marx, Capitalism isn't inherently evil, it's not a "bad system." For Marx, the overhaul of capitalism and its destruction is a historic inevitability. Capitalism is necessary in the step towards communism, it's supposed to build up the productive forces and infrastructure of a nation before succumbing to its contradiction, which would lead to the proletariat seizing control over the means of production and the state[4] and thereby turning another wheel towards communism. Socialism, as it'd be known, would also consist of inherent contradictions which would eventually lead to a communist society. If anyone who's more knowledgeable on the topic got any objections to my little "essay" here, they're more than free to voice them. Footnotes: 1. Owners of small industries who partake in work 2. Anyone who earns a wage 3. Owners of bigger industries who tend to be absentee proprietors 4. The "dictatorship of the proletariat," which runs in contrast to the current "dictatorship of the bourgeois." These concepts aren't supposed to be confused with dictatorship in the dictionary sense.
@@nils191 I agree that the historically deterministic part about Capitalism never held great appeal, either as an idea or as a thesis. For one, Marx never contemplated that technological innovation could count as a means of production which he argued that labour was in the favour of development of. However, we know today that if technology is unendingly developed, labour would be made useless. I refuse to be charitable to the extent that Marx envisioned the useless of labour to be a foreground for a Communist society which was based on technological innovation. Marx wasn't a technocrat by any means. That being said, I'm an eternal Marxist to the extent that his and following NeoMarxist criticism of the system is concerned. Hegels, Powell and any other significant name I'm missing out on all point out the self sustaining nature of the disparity that arises and self-aggravates in a capitalist regime. How there's a legitimizing myth of a meritocracy (read: the American dream). The Capitalism is self sustaining and aggravating to the extent that people in the upper class can engage in cultural and class reproduction through the intergenerational transfer of capital, whether that's economic, social, emotional, cultural or environmental. They also control society (media, education and religion) to prevent rebellion while promulgating values favourable to them. The people from the lower classes that can adapt are rewarded adequately to prevent them from being a threat to the system. In this sense, the critique of Capitalism that he and his contemporaries have laid down is thorough, unrelenting and something I'm willing to stand by till the end of time. Feedback, criticisms and counterarguments appreciated as always.
@@nils191 Marxist and Neomarxist criticisms of Capitalism and the institutions that exist within like family, education, culture, media and religion. I'm doing the same.
I'm definitely on team "let's take some distance with that black and white approach". Mostly because I live in a country that managed to keep the national debt under 35% pre-covid by sparing during the boom. Now that we are in a bust, we are spending a lot (well, way less than expected actually, 'cause our leaders made it so that taking the state's money had so many constraints, only those who truly needed it would take it) and the unemployment rate didn't even reach 4%, feeding the machine. Hayek and Keynes. Take the best from both worlds (and also explore the others paradigms). - spending during a boom is just feeding a bubble - regulation are indeed useless if the government is corrupt. So maybe deal with the corruption first... - leaving everything to price regulation ignores the fact that prices tends to not account for externalities. Tragedy of the commons ? Staleway phenomeon ? How can we claim that the price of a mask produced by forced labor in China truly represents the cost of the production of that mask ? We can't control the economy just like we can't control the weather. Doesn't mean we shouldn't try or at the very least somewhat predict what's going to happen to take pre-emptive measures. Farmers know it very well, people in cities tend to forget.
Well, Hayek is more of a sensitive person. He lived in the years of peace and didn't notice overpopulation. That is why his arguments are weak in the 21st century. Especially now. The world has seen an enormous growth in the human population that it is already lost its balance and will get worse if people do not control it. When the quantity increases, demand increases making the quality decrease. Control will heal this earth, not freedom. Freedom is like a virus. The more rights they have the more they will hurt. Therefore, it needs great responsibility and control over some actions.
Hayek's arguments are definitely stronger and way more ground based. Full employment when everybody is in the army doesn't really help growth or governmental aid to unsuccessful business is definitely harms the economy as the tax payers money goes to bad businesses and companies that should not exist in a fully competitive market. Go Hayek!
Well sure, but this was intentionel. The video was made by Hayek fans to promote his views. It is easy to win over a strawman, and Keynes's role is solely a strawman to make Hayek look better.
@@Guldmann266 Because Keynes never said war was the solution, but rather government employment of the unemployed generally, war is just one example, and probably the worst one. Better to put people to work on infrastructure which will create wealth through increased investment spending.
I just want to say, I was involved in an alternate history RPG where the group I was with eventually recruited Keynes early to help manage their economics. It was effectively a case of "Random teenager, explain to me the economy."
Not a chance. Democrat Leftists will choose the "winners" as their ideological friends/allies/masters while conservative "loser" values are ignored in favor of personal power and profit funneled to certain minions and their families. It's about robbing the bank and skipping town as fast as you can.
@@HegelBagel have you seen the latest stat in US inflation? is the largest increase since november 1990, over the past month it was a 0.9%. Sure in the short term it looks nice that's how keynes model work but as the dollar becomes worthless and wages doesn't follow inflation you will see the chaos that Hayek is talking about.
@@HegelBagel The US had interest rate at 0% for over a decade, do you know how insane that is? some countries even go negative interest rates which is just pure madness, we created a situation that is not easy to come out of now any bump in rising interest rates you collapse the financial system as it did before.
"Creating employment is a straightforward craft, when you're at war, and there's a draft. If every worker was staffed in the military and fleet, we'd have full employment, and nothing to eat." No line better counters the argument that government war spending boosts GDP.
Except, you know, the fact that certain jobs were considered essential. But sure. We wouldnt have staffed everyone in the army or navy. Tooth to tail matters.
Awesome work. It's interesting when Keynes talks about what Hayek would do to help the unenployed he gets Hayek to a corner and having a hard time. That's because in free market, the unnenployed are the most affected. Of course, when markets equilibrate, and those workers find their job, wish should not take long in a free market, their work is more valuable and well placed in a balanced economy. Their adquisitive power grows with lower priced products. That's the long run benefit of a free market. Of course, Hayek has a hard time there because to have a real advance in the hole economy, you have to tolerate cicles with high unnenployment. On the contrary, if you finnance the market with unnecesary more expense, you create what Hayek calls "Bubbles". Of course, you create jobs temporarely, but that's not sustainable. As soon as the public expenses gets shut by any reason, the main cause it's not solved, and it's even worse. because there are even more unnenployed, due to the lack of reality in the economys expression, in that scenario, people tends to trust in gobberment, and weakens their incentives to look for better ways to better their skills and be more competitive and useful to the market. Sorry for bad english. Greetings.
A backup plan should, in that case, be something like stacking food and water lol. Even though everything could happen to the economy, it's always certain of going up from down and down from up. It's more about luck than a right or wrong strategy (as a person). If you're lucky you have a job that won't be as heavily affected. If you're unlucky then you're about to go out in pension or having an "unnecessary" job. Your potential savings won't count for much in a nation wide crash.
If Hayek was in charge during the financial crisis of 2008, the GDP would have at least halved. Letting AIG, a 'loser', go bankrupt would have devastated every financial institution in the US along with all the major US companies that needed commercial paper to sustain their operations.
That may be, but it was only because of Keynesian Economics (and its later derivatives) that the situation got that far in the first place. (Well, for the most part. There was also the issue of massive political interventionism by and for special interest groups.) In an actual (Austrian) economic system the specific pile of manure in this case would never have gotten that sky high since the necessary corrections would have happened MUCH sooner (if required) and the financial distortions would not have just pilled up and swept under the rug by said special interest groups and their "experts"...
@@Pantheraunicus Keynesianism was abolished in the 70s as a consequence of stagflation. In 1936, he wrote in „The General Theory of Employment, Interest and Money“: „When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill done.“ His solution was a combination of cheap money for investment in the real economy and hard regulations for the financial sector so that he would divert money in projects that served real production instead of speculation. The US had interest rate ceilings, liquidity ratio requirements, higher bank reserve requirements , capital controls like in China today, restrictions on market entry into the financial sector, credit ceilings or restrictions on the directions of credit allocation, a seperation of commercial from investment banks and government ownership or domination of the banks. Through this, no significant asset bubble developed, despite massive capital inflows from oil-producing countrys in the 70s. The average real interest rate between 1950-1970 was 1,3%, between 1990 and 2008 it was 1,9%. Still, the former period was much more stable. The Great Financial Crisis came because keynesian insight in the unstable nature of financial markets were replaced with the efficient market hypothesis, leading Greenspan to think that the markets could price the risks of their assets adaquately - while, in reality, they couldn‘t. Hayeks phrase „if we don‘t try to steer them, they won‘t go berserk“ is just false. In the 1860s, the Australian banking system had a gold standard, no central bank, no capital controls, few statutory barriers to entry, no branching restrictions and no credible limits on assets, liabilities or bank capital, and no statutory price controls or government deposit insurance. What happened? Did the economy prosper? An obvious factor that a free banking system will never control is the speculative capital inflows and outflows that each country experiences: by this factor alone there is always the possibility of rapid inflation of the commodity monetary base (gold in this case) causing an increase in the credit supply. This is what happened in the case of Australia: there was a surge of capital inflows in 1881-1885 and a flood in 1886-1890. This is a true paradox: the free bankers - like the Austrians - make the free markets a fetish. For them, only unrestricted capital movement is compatible with economic freedom, but this very characteristic means that any free banking system is subject to exogenous factors that cause its capital inflows and outflows to fluctuate. That's the Achilles' heel. Theoretically, there is no reason why a free banking system overflowing with foreign capital could not see a credit boom. Second, without prudential regulation, there is nothing banks can be prevented from doing, e.g. lowering lending standards and buying the latest trending poor-quality assets that are held on their books only to lose value later. And why shouldn't a free banking system succumb to speculation frenzy when people and banks believe they can make quick money from rising asset prices? This is exactly what happened in the case of Australia: banks began lending to property speculators and to those who bought so-called "pastoral securities". A new class of companies emerged specializing in real estate and stock market speculation, as well as building societies and real estate development companies, and received loans from the banks for this. The speculative boom in real estate and real estate prices, real estate financing, and mining companies peaked in 1888 but ended in October of that year. From 1891 to March 1892, 41 housing or real estate finance companies in Melbourne and Sydney went bankrupt. However, the full force of the banking crisis only hit after January 30, 1893, when the "Federal Bank" collapsed. From April, when the Commercial Bank of Australia was hit by the crisis, there was widespread panic and by May 17 some 11 commercial banks had been suspended, with stampedes on many others. There was an organization of private banks called The Associated Banks of Victoria, which existed in part to coordinate the activities of the banks. Such associations are supposed to take part in self-regulation and serve as “lenders of last resort” in times of panic. But in January 1893, the Federal Bank, a member of the Associated Banks Association, collapsed, and then the Commercial Bank of Australia failed without any help. The result was first a recession, then a depression. By the middle of that year, 54 of the 64 financial institutions operating in Australia in 1891 had closed - 34 of them permanently. During 1892 and 1893, GDP fell by 17 per cent. By 1893, around a third of Melbourne’s breadwinners were unemployed. One in ten Melbourne houses was repossessed by the banks. Instability is written in the DNA of an unregulated financial system, see Minsky's cycle theory which is far superior to the hayekian ABCT. Sidenote: Hayek changed his opinion in his later life, distancing himself from liquidationism.
@@CoryPchajek if you let the financial sector die, you destroy the whole economy - completely independent from the status of the individual firm. When the banking sector was under stress in 2008, even bluechip companies like McDonalds had problems financing themselves.
Some people are Hayek even after that. And I'd say not everyone's Hayek until Corona Virus comes knocking. That's not the case. I'd say most of the policymakers in the last 30 years are Keynesians. Look back to 2008.
@@GazzettinoEconomico spending during the coronavirus has already been insanely high, government spending needs to slow down for a minute and let the markets catch back up.
@@GazzettinoEconomico This is somewhat true since the Reagan/Trump tax cuts are still demand side stimulus. Except they employ supply side mumbo jumbo to claim the tax cuts will pay for themselves, which Keynes did not.
"The economy's not a class ya can master in college - to think otherwise is the pretence of knowledge!" Hayek was a philosopher of freedom, not just another economist (they're virtually all Keynesian nowadays).
Top down is more Government Spending or lowering interest rate or both to stimulate the economy, in hopes that the multiplier effect kicks in (high liquidity preference, high income velocity of money,increase in investment, a shift in the capacity of the economy et cetera); whereas, bottom-up is less government intervention, lowering barriers to entry, reducing red-tape, cutting taxes, in hopes that the population would be freer to pursue whatever they want, whether it be opening a business, reinvesting in themselves (human capital) such as returning to education et cetera. Putting it crudely, top-down is trying to steer the economy, whereas bottom-up is trying to make the economy freer (free market).
Bottom up means that the majority make a collective decision by voting with their wallets. It's not that they get together and come into agreement, it's that individuals simply chose what they want, and that majority becomes the prevailing thinking of what should be produced and what investments are to be made within the economy. Top down is when an oligarch, of whatever sort, tries to predict what is "best for society" (supposedly) and forces the majority to accept their decision. In a free market system, everything is VOLUNTARY trade, so prices are determined by what people are willing to pay and what produces are willing to sell at. This is bottom up. We are not in a free market system, and haven't been for a long long time. Bottom up is FREE market supply and demand. No artificial scarcity, not government imposed regulations. No one person is smarter than a million idiots.
@@mxpants4884 People who make money legitimately make money because society VOLUNTARILY gave them money. Governments take money at the end of a gun. People make money illegitimately though as well, but they always do it with government assistance. For example a lot of "investors" would be bankrupt, but they were bailed out in the last economic crash. George Soros and Warren Buffet are two examples.
@@fuzzywzhe I'm not going to waste a lot of time defending either of those men, but neither needed a bailout. Do you expect to vote only with the dollars you see as legitimately earned? How does that solve the problems of giving more votes to the rich? Oh and taxes don't fund the federal government, but if you want to accept and use money, collecting taxes in dollars is what generates a demand for your dollars to be worth trading for actual goods.
Hayek says Keynes model will lead to uncontrollable inflation. Keynes says Hayeks model cause increasingly destructive crisis. Sadly, they are both right, neither works
Hayek and the Austrian School is undiluted freedom for everyone to find their value. It is self-reliance and responsibility. That's why it is the best long-term solution to our problems.
This is rly good. 7:48 Wow that was pretty amazing. 8:53 there was a book about this is that is rejected now. I don't want to go full edge lord but if they reject you you may not be wrong. I'm tno saying ur better then them but analyze your beliefs and if you are just wishing well never let anyone sham you out of that.
That's nothing to be sorry about... 😉 Your conclusion is spot on. 👍 Check out "The Fiat Standard" by Saifedean Ammous (and his podcast) for a much better monetary analysis and general economic framework. 😎
Nope, Hayek will prepare a plan when millions of people die because of unemployment. People cant w8 long. Keynes' idea saves a lot of life simply by increasing the demand and by handing incentives. It solves issues in a short time with less casualty. Hayek will let people die of starvation while he plans his actions. We simply don't have enough time to do such a thing. Every single second wasted people die. That is why Keynes' theory is so strong and still the most preferred method. During the COVID-19 you have seen a lot of incentives from governments around the world. It saved millions of lives. SOMETIMES WE JUST DONT HAVE PERFECT ANSWER!
@@mr.e2962 The world is turning to be more of a Marxist because of overpopulation. You are seeing it everywhere on the news. The regulations are becoming more strict etc. Hayek's plan takes a lot of time and he still doesn't have any. People don't have much time to w8 because they are at the knife's edge. There is not enough time and overpopulation makes human value lower and lower. Hayek's plan will work with a lower population not higher one.
I'll be honest, these videos continue to make me sympathize more with Hayek. Anyone who, like me, started with a nonexistent knowledge of economics who found Keynes to make more sense?
That's right! They should tax more the richer and distribute the wealth! I would love to see that in practice! I recommend you going back to Russia in the second half of the 20th Century, that was a great model. That'd be a great place to live in!
@@GazzettinoEconomico No they shouldn't. I already have taxes up my ass. 50% goes to the government of my own hard earned money. In The Netherlands the more you earn the more you pay taxes. I fucking hate taxes and I don't agree how my money is used either, especially not in the times we live in now. I would rather gave my money directly to a poor person than to the government.
Was this saying hayek was bottom up and keynes was top bottom? That's not quite right. Generally the least likely to be granted money by the keynes model would be the rich, since they tend to have sizable savings and would likely just save more rather than go out and spend. It's the bottom who are poor or jobless and need money to buy basic goods pay basic bills and other stuff that would be stimulated in a keynes situation since the more desperate they are they more they'll spend what you give them and thus stimulate the cycle.
They are not stating top-bottom as an analogy for rich-poor, but rather top as in government planned or guided economies and bottom as in free markets were individuals steer the economy with their spending with little government (top) intervention.
@@EsselRey Which is odd too, since keyne never really argued for government planned or guided economies so much as government being an entity to balance out the economic waves. So in a depression-or as it's known today a recession-the government gives tax cuts and subsidaries to the populace that they spend freely to bolster aa faltering economy, and then when at a boom they cut spending and increase taxes to make up the economic deficit created during the depression. It exists to minimize the damage to the people of fluxuations-and could technically be done by anything not just the government. An independant private bussiness could do just as well in the keynseian theory of balancing.
Not many people now, thus the shithole the world is in. He said decades ago that we’re just living in interventionist chaos. It is that interventionism people mistake for free markets funny enough. I don’t get how they on the one hand talk about some western economy being market anarchism with all of the regulations on the books. 🤷🏼♂️
Hayek was also top down. This is a misrepresentation of Hayek's views. Bottom up would involve capital being placed directly in the hands of the disenfranchised and an end to placing a dollar value on all life.
@@censorduck from freedom itself comes up to a certain point. Then charity while their are poor. When there are not more poor people there's no need for this
@@cidagus1518 there will always be wealth inequality and honestly it;s not something we should be stopping. People who prioritize work or generate wealth by taking risky business ventures should be allowed to make more money. As far as I can see both rich and poor are better off with more economic freedom and not less.
@@censorduck And why you would stop inequality? That's ideas wich Marxs left to the world difficult our evolution, because we naturally are all different, and in free market people gain wealth proportionally as they serve to society's demands, so why we would let an external organism (who always looks for their own interests and uses the monopoly of violence) redistribute our money?
![HAYEK vs KEYNES: La pelea del siglo [hip-hop, sub esp]](http://i.ytimg.com/vi/IX_0mgW5Fus/mqdefault.jpg)
A brilliant and cleaver way to help explain economics. Well done
actually, a bunch of rhyming platitudes that does as much to explain complex economic theories as Snow white does to explain how marriage works.
@@edmorgan5720 At least it got a guy (me) who considered economics as so hopelessly complex as to be ignored and just "see what happens" interested in actually looking into the theories of those mentioned. So, I guess we can go with Walt Disney's quote of "I would rather entertain people and hope they learned something than educate people and hope they were entertained." and call it a wash?
@@edmorgan5720 Def not true. That is nearly 10 yrs old now, and you see so much things that happened in this time, that these lyrics can easily be applied to. The pros and cons of things like government spending is something that most people do not have the slightest idea of. And there are elements in the movie apart from the text that are really astounding. Ever thought about why Hayek punches him out in the ring, but Keynes is celebrated as victor in the end? ;) A masterpiece!
Can't get enough of this.... Now I got books I need to read.
Check out "The Fiat Standard" by Saifedean Ammous (and also his podcast/website). 👍😎
Fun fact: the boxing coaches in this video have the names of influential economists; on Keynes' side are John Hicks (1:35) and Thomas Malthus (4:15 and 6:14). On Hayek's side are Jean-Baptiste Say (1:38, 4:18 and 4:56) and Ludwig von Mises (1:38, 4:19).
And they have shout outs to these economists during the credits. "Where you at, Mises? Shout out to Malthus!" 😂
hayek spitting hot fire
I want to see one where they have to team up to take on Marx
The reason it hasnt happened is thats like a having a minor league team face the world champion.
Issue with this is that Marx doesn't offer any thesis unto how individual's should organize the economy, but rather a comprehensive criticism of capitalism and a theory as to how it'd eventually develop into communism due to capitalism's "inherent contradictions." An example of this contradiction would be how it's theoretically in the capitalist's interest to reduce wages to raise profits, and in the worker's interest to raise wages as a means to raise their living standards. These distinct interests, combined with the "petty bourgeoises"[1] fall into either the class of proletariat[2] or bourgeoisie[3] would lead to resistance being formed by the proletariat, in the form of strikes and organized labor-action. This is known as "class struggle," which is the idea that classes will gradually fight for control, politically and economically, as a means to serve their own functioning interests.
Only organizational theory he mentions is how a communist society would potentially look like, but due his historically determinist tones this isn't as much a proposal as it's an "idea." For Marx, Capitalism isn't inherently evil, it's not a "bad system." For Marx, the overhaul of capitalism and its destruction is a historic inevitability. Capitalism is necessary in the step towards communism, it's supposed to build up the productive forces and infrastructure of a nation before succumbing to its contradiction, which would lead to the proletariat seizing control over the means of production and the state[4] and thereby turning another wheel towards communism. Socialism, as it'd be known, would also consist of inherent contradictions which would eventually lead to a communist society. If anyone who's more knowledgeable on the topic got any objections to my little "essay" here, they're more than free to voice them.
Footnotes:
1. Owners of small industries who partake in work
2. Anyone who earns a wage
3. Owners of bigger industries who tend to be absentee proprietors
4. The "dictatorship of the proletariat," which runs in contrast to the current "dictatorship of the bourgeois." These concepts aren't supposed to be confused with dictatorship in the dictionary sense.
@@nils191 I agree that the historically deterministic part about Capitalism never held great appeal, either as an idea or as a thesis. For one, Marx never contemplated that technological innovation could count as a means of production which he argued that labour was in the favour of development of. However, we know today that if technology is unendingly developed, labour would be made useless. I refuse to be charitable to the extent that Marx envisioned the useless of labour to be a foreground for a Communist society which was based on technological innovation. Marx wasn't a technocrat by any means.
That being said, I'm an eternal Marxist to the extent that his and following NeoMarxist criticism of the system is concerned. Hegels, Powell and any other significant name I'm missing out on all point out the self sustaining nature of the disparity that arises and self-aggravates in a capitalist regime. How there's a legitimizing myth of a meritocracy (read: the American dream). The Capitalism is self sustaining and aggravating to the extent that people in the upper class can engage in cultural and class reproduction through the intergenerational transfer of capital, whether that's economic, social, emotional, cultural or environmental. They also control society (media, education and religion) to prevent rebellion while promulgating values favourable to them. The people from the lower classes that can adapt are rewarded adequately to prevent them from being a threat to the system. In this sense, the critique of Capitalism that he and his contemporaries have laid down is thorough, unrelenting and something I'm willing to stand by till the end of time.
Feedback, criticisms and counterarguments appreciated as always.
@@bastian894 What criticism are you referring to? This was me describing his ideas.
@@nils191 Marxist and Neomarxist criticisms of Capitalism and the institutions that exist within like family, education, culture, media and religion. I'm doing the same.
Definitely team Hayek
I'm definitely on team "let's take some distance with that black and white approach".
Mostly because I live in a country that managed to keep the national debt under 35% pre-covid by sparing during the boom. Now that we are in a bust, we are spending a lot (well, way less than expected actually, 'cause our leaders made it so that taking the state's money had so many constraints, only those who truly needed it would take it) and the unemployment rate didn't even reach 4%, feeding the machine.
Hayek and Keynes. Take the best from both worlds (and also explore the others paradigms).
- spending during a boom is just feeding a bubble
- regulation are indeed useless if the government is corrupt. So maybe deal with the corruption first...
- leaving everything to price regulation ignores the fact that prices tends to not account for externalities. Tragedy of the commons ? Staleway phenomeon ? How can we claim that the price of a mask produced by forced labor in China truly represents the cost of the production of that mask ?
We can't control the economy just like we can't control the weather. Doesn't mean we shouldn't try or at the very least somewhat predict what's going to happen to take pre-emptive measures. Farmers know it very well, people in cities tend to forget.
@@lepetitroquet9410 Too much text, didn't read.
@@joaquinstechina1997 As expected ^^.
@@lepetitroquet9410 Great argumentation, makes me want to study more on economics.
Well, Hayek is more of a sensitive person. He lived in the years of peace and didn't notice overpopulation. That is why his arguments are weak in the 21st century. Especially now.
The world has seen an enormous growth in the human population that it is already lost its balance and will get worse if people do not control it. When the quantity increases, demand increases making the quality decrease. Control will heal this earth, not freedom. Freedom is like a virus. The more rights they have the more they will hurt. Therefore, it needs great responsibility and control over some actions.
Hayek's arguments are definitely stronger and way more ground based.
Full employment when everybody is in the army doesn't really help growth or governmental aid to unsuccessful business is definitely harms the economy as the tax payers money goes to bad businesses and companies that should not exist in a fully competitive market.
Go Hayek!
War helps employment in another way. When soldiers die off, there are fewer unemployed. 🤷
Well sure, but this was intentionel. The video was made by Hayek fans to promote his views.
It is easy to win over a strawman, and Keynes's role is solely a strawman to make Hayek look better.
@@Guldmann266 Because Keynes never said war was the solution, but rather government employment of the unemployed generally, war is just one example, and probably the worst one. Better to put people to work on infrastructure which will create wealth through increased investment spending.
@@cliftt are you kidding me , war kills and destroys lives and natural resources like coal and steel. your statement is very wrong
@@seanoreilly5247 you are totally wrong
Team Hayek!!!
what's really sad that economics in my state in Brazil teaches only Keynes argument. they don't even mention Hayek at all.
This is a better education than any university.
I can only assume you've never been to university.
@@Grimscribe732 Well universities are pushing Marxism which is an objective failure
I just want to say, I was involved in an alternate history RPG where the group I was with eventually recruited Keynes early to help manage their economics. It was effectively a case of "Random teenager, explain to me the economy."
God I hope Hayek’s ideas are used in real life after the pandemic
Not a chance. Democrat Leftists will choose the "winners" as their ideological friends/allies/masters while conservative "loser" values are ignored in favor of personal power and profit funneled to certain minions and their families. It's about robbing the bank and skipping town as fast as you can.
@@jeremypace249 dude, Conservatives also plays the same game, but they choose different winners.
@@HegelBagel is not recovery if you cure a hangover with more alcohol. Thats why inflation is skyrocketing and is going to get worse.
@@HegelBagel have you seen the latest stat in US inflation? is the largest increase since november 1990, over the past month it was a 0.9%. Sure in the short term it looks nice that's how keynes model work but as the dollar becomes worthless and wages doesn't follow inflation you will see the chaos that Hayek is talking about.
@@HegelBagel The US had interest rate at 0% for over a decade, do you know how insane that is? some countries even go negative interest rates which is just pure madness, we created a situation that is not easy to come out of now any bump in rising interest rates you collapse the financial system as it did before.
they are just too cool!
"Creating employment is a straightforward craft, when you're at war, and there's a draft. If every worker was staffed in the military and fleet, we'd have full employment, and nothing to eat."
No line better counters the argument that government war spending boosts GDP.
Except, you know, the fact that certain jobs were considered essential. But sure. We wouldnt have staffed everyone in the army or navy. Tooth to tail matters.
I always return to rewach this masterpiece!
Awesome work. It's interesting when Keynes talks about what Hayek would do to help the unenployed he gets Hayek to a corner and having a hard time. That's because in free market, the unnenployed are the most affected. Of course, when markets equilibrate, and those workers find their job, wish should not take long in a free market, their work is more valuable and well placed in a balanced economy. Their adquisitive power grows with lower priced products. That's the long run benefit of a free market. Of course, Hayek has a hard time there because to have a real advance in the hole economy, you have to tolerate cicles with high unnenployment. On the contrary, if you finnance the market with unnecesary more expense, you create what Hayek calls "Bubbles". Of course, you create jobs temporarely, but that's not sustainable. As soon as the public expenses gets shut by any reason, the main cause it's not solved, and it's even worse. because there are even more unnenployed, due to the lack of reality in the economys expression, in that scenario, people tends to trust in gobberment, and weakens their incentives to look for better ways to better their skills and be more competitive and useful to the market.
Sorry for bad english. Greetings.
Funny how "Of course" often means "the following statement has no basis so I'm just pretend it's obvious".
@@jolnanis13 I just developed the hole argument in the rest of the comment.
@@jolnanis13 funny how you presented an non-argument and think you've accomplished something.
Always make sure to have a back up plan for any economic situation lol
A backup plan should, in that case, be something like stacking food and water lol. Even though everything could happen to the economy, it's always certain of going up from down and down from up. It's more about luck than a right or wrong strategy (as a person). If you're lucky you have a job that won't be as heavily affected. If you're unlucky then you're about to go out in pension or having an "unnecessary" job. Your potential savings won't count for much in a nation wide crash.
If Hayek was in charge during the financial crisis of 2008, the GDP would have at least halved. Letting AIG, a 'loser', go bankrupt would have devastated every financial institution in the US along with all the major US companies that needed commercial paper to sustain their operations.
That may be, but it was only because of Keynesian Economics (and its later derivatives) that the situation got that far in the first place. (Well, for the most part. There was also the issue of massive political interventionism by and for special interest groups.)
In an actual (Austrian) economic system the specific pile of manure in this case would never have gotten that sky high since the necessary corrections would have happened MUCH sooner (if required) and the financial distortions would not have just pilled up and swept under the rug by said special interest groups and their "experts"...
@@Pantheraunicus
Keynesianism was abolished in the 70s as a consequence of stagflation. In 1936, he wrote in „The General Theory of Employment, Interest and Money“: „When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill done.“ His solution was a combination of cheap money for investment in the real economy and hard regulations for the financial sector so that he would divert money in projects that served real production instead of speculation. The US had interest rate ceilings, liquidity ratio requirements, higher bank reserve requirements , capital controls like in China today, restrictions on market entry into the financial sector, credit ceilings or restrictions on the directions of credit allocation, a seperation of commercial from investment banks and government ownership or domination of the banks. Through this, no significant asset bubble developed, despite massive capital inflows from oil-producing countrys in the 70s. The average real interest rate between 1950-1970 was 1,3%, between 1990 and 2008 it was 1,9%. Still, the former period was much more stable. The Great Financial Crisis came because keynesian insight in the unstable nature of financial markets were replaced with the efficient market hypothesis, leading Greenspan to think that the markets could price the risks of their assets adaquately - while, in reality, they couldn‘t.
Hayeks phrase „if we don‘t try to steer them, they won‘t go berserk“ is just false. In the 1860s, the Australian banking system had a gold standard, no central bank, no capital controls, few statutory barriers to entry, no branching restrictions and no credible limits on assets, liabilities or bank capital, and no statutory price controls or government deposit insurance. What happened? Did the economy prosper?
An obvious factor that a free banking system will never control is the speculative capital inflows and outflows that each country experiences: by this factor alone there is always the possibility of rapid inflation of the commodity monetary base (gold in this case) causing an increase in the credit supply. This is what happened in the case of Australia: there was a surge of capital inflows in 1881-1885 and a flood in 1886-1890. This is a true paradox: the free bankers - like the Austrians - make the free markets a fetish. For them, only unrestricted capital movement is compatible with economic freedom, but this very characteristic means that any free banking system is subject to exogenous factors that cause its capital inflows and outflows to fluctuate. That's the Achilles' heel. Theoretically, there is no reason why a free banking system overflowing with foreign capital could not see a credit boom. Second, without prudential regulation, there is nothing banks can be prevented from doing, e.g. lowering lending standards and buying the latest trending poor-quality assets that are held on their books only to lose value later.
And why shouldn't a free banking system succumb to speculation frenzy when people and banks believe they can make quick money from rising asset prices? This is exactly what happened in the case of Australia: banks began lending to property speculators and to those who bought so-called "pastoral securities". A new class of companies emerged specializing in real estate and stock market speculation, as well as building societies and real estate development companies, and received loans from the banks for this. The speculative boom in real estate and real estate prices, real estate financing, and mining companies peaked in 1888 but ended in October of that year. From 1891 to March 1892, 41 housing or real estate finance companies in Melbourne and Sydney went bankrupt. However, the full force of the banking crisis only hit after January 30, 1893, when the "Federal Bank" collapsed. From April, when the Commercial Bank of Australia was hit by the crisis, there was widespread panic and by May 17 some 11 commercial banks had been suspended, with stampedes on many others. There was an organization of private banks called The Associated Banks of Victoria, which existed in part to coordinate the activities of the banks. Such associations are supposed to take part in self-regulation and serve as “lenders of last resort” in times of panic. But in January 1893, the Federal Bank, a member of the Associated Banks Association, collapsed, and then the Commercial Bank of Australia failed without any help. The result was first a recession, then a depression. By the middle of that year, 54 of the 64 financial institutions operating in Australia in 1891 had closed - 34 of them permanently. During 1892 and 1893, GDP fell by 17 per cent. By 1893, around a third of Melbourne’s breadwinners were unemployed. One in ten Melbourne houses was repossessed by the banks. Instability is written in the DNA of an unregulated financial system, see Minsky's cycle theory which is far superior to the hayekian ABCT.
Sidenote: Hayek changed his opinion in his later life, distancing himself from liquidationism.
@@theprofessional1375 this answer is so good I have nothing else to add, I'll just thank you for your insight
@@CoryPchajek if you let the financial sector die, you destroy the whole economy - completely independent from the status of the individual firm. When the banking sector was under stress in 2008, even bluechip companies like McDonalds had problems financing themselves.
Good. Better sooner than later.
Everyone's a Hayek until Corona Virus comes knocking.
Some people are Hayek even after that.
And I'd say not everyone's Hayek until Corona Virus comes knocking.
That's not the case. I'd say most of the policymakers in the last 30 years are Keynesians.
Look back to 2008.
@@GazzettinoEconomico spending during the coronavirus has already been insanely high, government spending needs to slow down for a minute and let the markets catch back up.
@@GazzettinoEconomico This is somewhat true since the Reagan/Trump tax cuts are still demand side stimulus. Except they employ supply side mumbo jumbo to claim the tax cuts will pay for themselves, which Keynes did not.
Y gracias a eso tenemos una influencia tan grande que solo esta debajo de mediados del siglo xx (cuando inició la la ww2)
The debt printing has precipitated our collapse. The Empire is falling. Lol.
Brilliant!
The nerdiness makes me cry, even 7 years later. hahaha
Government spending should not be included in GDP calculations.
Nor should GDP be used to define/measure a nations prosperity.
Amazing. Very clever
Just realized Hayek's coaches are Mises and Say
Coache timestamps: Malthus 4:15, Say 4:18, Mises 4:19
Im here because of Mark Meldrum :V
As inflation gets harder and harder to hide, this video will become more and more relevant, regardless of view count.
Truth ain’t popular.
fuck me that made a lot of sense. i've only done macro101 and i love econ i think?
Soon you will see that economics is more politics than actual science. You will start to despise Keynesian ideas and embrace the Austrian view.
"The economy's not a class ya can master in college - to think otherwise is the pretence of knowledge!"
Hayek was a philosopher of freedom, not just another economist (they're virtually all Keynesian nowadays).
so i interpreted bottom up vs top as supply vs demand is this anyone else's interpretation? Any thoughts?? there are no "dumb" answers
Top down is more Government Spending or lowering interest rate or both to stimulate the economy, in hopes that the multiplier effect kicks in (high liquidity preference, high income velocity of money,increase in investment, a shift in the capacity of the economy et cetera); whereas, bottom-up is less government intervention, lowering barriers to entry, reducing red-tape, cutting taxes, in hopes that the population would be freer to pursue whatever they want, whether it be opening a business, reinvesting in themselves (human capital) such as returning to education et cetera. Putting it crudely, top-down is trying to steer the economy, whereas bottom-up is trying to make the economy freer (free market).
Bottom up means that the majority make a collective decision by voting with their wallets. It's not that they get together and come into agreement, it's that individuals simply chose what they want, and that majority becomes the prevailing thinking of what should be produced and what investments are to be made within the economy.
Top down is when an oligarch, of whatever sort, tries to predict what is "best for society" (supposedly) and forces the majority to accept their decision.
In a free market system, everything is VOLUNTARY trade, so prices are determined by what people are willing to pay and what produces are willing to sell at. This is bottom up. We are not in a free market system, and haven't been for a long long time.
Bottom up is FREE market supply and demand. No artificial scarcity, not government imposed regulations. No one person is smarter than a million idiots.
@@fuzzywzhe Reminder: voting with your dollars means those who have more dollars get more votes.
@@mxpants4884 People who make money legitimately make money because society VOLUNTARILY gave them money. Governments take money at the end of a gun.
People make money illegitimately though as well, but they always do it with government assistance. For example a lot of "investors" would be bankrupt, but they were bailed out in the last economic crash. George Soros and Warren Buffet are two examples.
@@fuzzywzhe I'm not going to waste a lot of time defending either of those men, but neither needed a bailout.
Do you expect to vote only with the dollars you see as legitimately earned? How does that solve the problems of giving more votes to the rich?
Oh and taxes don't fund the federal government, but if you want to accept and use money, collecting taxes in dollars is what generates a demand for your dollars to be worth trading for actual goods.
Gold.. need more of this & less sports & ganstar booty rap songs! 😆
ABSOLUTELY AMAZING but where was marx?
ruclips.net/video/QwqnRYPcrl0/видео.html
does anyone know some minecraft speedrun tactics?
Damn Keynes is ripped
Well he was a frigging giant in real life.
Hayek says Keynes model will lead to uncontrollable inflation. Keynes says Hayeks model cause increasingly destructive crisis. Sadly, they are both right, neither works
I love how both part 1 and 2 have a jab at Ben Bernanke
Explain how Keynes is doing this?
Troede dette var en Andreas Hoffmann jeg kender :O
The production values on this are really high. They must have spent quite a bit to make this video!
This is like astrology (Keynes) fighting against astronomy (Hayek).
Sounds like Lin Manuel Miranda saw this right before he wrote the Hamilton cabinet rap battle. Definitely a similar flow.
i just wanted to watch dream videos how did i end up what is this
This is how every CFO and Treasurer should me selected and hired.
Hayek and the Austrian School is undiluted freedom for everyone to find their value. It is self-reliance and responsibility. That's why it is the best long-term solution to our problems.
Very good - two economic systems up against each other, dramatised.
This is rly good. 7:48 Wow that was pretty amazing.
8:53 there was a book about this is that is rejected now. I don't want to go full edge lord but if they reject you you may not be wrong. I'm tno saying ur better then them but analyze your beliefs and if you are just wishing well never let anyone sham you out of that.
Put away the wrenches the economy's organic.
Epic.
Keynes loves his broken window fallacy. Can we see rothbard or mises demolish him? 😂
#dope
Im sorry but the more i learn about Keynes the more I think he's just wishful thinking. I dont see why he's well respected. What am I missing.
That's nothing to be sorry about... 😉
Your conclusion is spot on. 👍
Check out "The Fiat Standard" by Saifedean Ammous (and his podcast) for a much better monetary analysis and general economic framework. 😎
When I hear his theories laid out all I can think about is the poem gods of the copybook headings playing in my head.
Why steal the video?
I believe they produced the video
More corona virus checks please
wreck'em tech I mean...I liked getting a cut of inflation, too
Hayek won, end of discussion.
Nope, Hayek will prepare a plan when millions of people die because of unemployment. People cant w8 long. Keynes' idea saves a lot of life simply by increasing the demand and by handing incentives. It solves issues in a short time with less casualty. Hayek will let people die of starvation while he plans his actions. We simply don't have enough time to do such a thing. Every single second wasted people die. That is why Keynes' theory is so strong and still the most preferred method. During the COVID-19 you have seen a lot of incentives from governments around the world. It saved millions of lives. SOMETIMES WE JUST DONT HAVE PERFECT ANSWER!
@@aslof1069 Hayek Will use the Austrian School of Economics. keyns will use Marxism.
@@mr.e2962 The world is turning to be more of a Marxist because of overpopulation. You are seeing it everywhere on the news. The regulations are becoming more strict etc. Hayek's plan takes a lot of time and he still doesn't have any. People don't have much time to w8 because they are at the knife's edge. There is not enough time and overpopulation makes human value lower and lower. Hayek's plan will work with a lower population not higher one.
@@aslof1069 Do you believe that the market is some type of machine?
@@mr.e2962 Nope, But Keynes is right on one thing. He sees reality. If we do things for everyone this earth won't stand a chance.
I'll be honest, these videos continue to make me sympathize more with Hayek. Anyone who, like me, started with a nonexistent knowledge of economics who found Keynes to make more sense?
They are supposed to. These are pro-Hayek videos.
Keynes model can work efficiently, only just not in the US. Where they tax less the more money you have....
That's right! They should tax more the richer and distribute the wealth!
I would love to see that in practice!
I recommend you going back to Russia in the second half of the 20th Century, that was a great model.
That'd be a great place to live in!
I guess it would work in the Netherlands then based on your thought.
@@GazzettinoEconomico No they shouldn't. I already have taxes up my ass. 50% goes to the government of my own hard earned money. In The Netherlands the more you earn the more you pay taxes. I fucking hate taxes and I don't agree how my money is used either, especially not in the times we live in now. I would rather gave my money directly to a poor person than to the government.
@@bluegiant13 I was being sarcastic, I thought that was obvious!
@@GazzettinoEconomico I don't know much about Russian history but looked it up, now it is more obvious that you were sarcastic lmao
MC Marshall.
Was this saying hayek was bottom up and keynes was top bottom? That's not quite right. Generally the least likely to be granted money by the keynes model would be the rich, since they tend to have sizable savings and would likely just save more rather than go out and spend. It's the bottom who are poor or jobless and need money to buy basic goods pay basic bills and other stuff that would be stimulated in a keynes situation since the more desperate they are they more they'll spend what you give them and thus stimulate the cycle.
They are not stating top-bottom as an analogy for rich-poor, but rather top as in government planned or guided economies and bottom as in free markets were individuals steer the economy with their spending with little government (top) intervention.
@@EsselRey Which is odd too, since keyne never really argued for government planned or guided economies so much as government being an entity to balance out the economic waves. So in a depression-or as it's known today a recession-the government gives tax cuts and subsidaries to the populace that they spend freely to bolster aa faltering economy, and then when at a boom they cut spending and increase taxes to make up the economic deficit created during the depression. It exists to minimize the damage to the people of fluxuations-and could technically be done by anything not just the government. An independant private bussiness could do just as well in the keynseian theory of balancing.
Who support Hayek now? Hahahahaha...
I wanna know too hahaha
Intelligent people.
Not many people now, thus the shithole the world is in. He said decades ago that we’re just living in interventionist chaos. It is that interventionism people mistake for free markets funny enough. I don’t get how they on the one hand talk about some western economy being market anarchism with all of the regulations on the books. 🤷🏼♂️
@@jasonterry1959 😂😂
Team hyak
2021: Oof
Nice freebooting...
? It's literally plagiarism wtf
Hayek was also top down. This is a misrepresentation of Hayek's views. Bottom up would involve capital being placed directly in the hands of the disenfranchised and an end to placing a dollar value on all life.
Thomas Smart - Go away, commie.
yes but where can this forceful redistribution of wealth come from other than a government entity?
@@censorduck from freedom itself comes up to a certain point. Then charity while their are poor. When there are not more poor people there's no need for this
@@cidagus1518 there will always be wealth inequality and honestly it;s not something we should be stopping. People who prioritize work or generate wealth by taking risky business ventures should be allowed to make more money. As far as I can see both rich and poor are better off with more economic freedom and not less.
@@censorduck And why you would stop inequality? That's ideas wich Marxs left to the world difficult our evolution, because we naturally are all different, and in free market people gain wealth proportionally as they serve to society's demands, so why we would let an external organism (who always looks for their own interests and uses the monopoly of violence) redistribute our money?