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@@AdityaDeo-cg6eu They teach and make students understand multiple schools of thought very well that they basically become indecisive. Hence, instead of 5 people and 5 answers, its 5 people and 6 answers because one can't make his mind up on 2 answers from 2 different thought processes.
@@sciencemanguy There's a big difference between being indecisive and recognizing that one problem might not have just a single viable answer. This is actually something taught in math classes in middle schools.
@@dontmisunderstand6041 It... it's also a joke... It's not supposed to represent reality 100% accurate, rather, just poke fun at something you observe...
@@sciencemanguy The original comment was a joke, but your reply seemed more like an explanation. So I treated it as such. I would hope the irony of your response to me isn't lost on you in this situation, because I found it pretty amusing.
Bro, I'm only 17. But understanding is so important. Get into it, watch videos about it, learn its history also its social impacts, and it will change the way you view the world.
What I would add to the problem of "economics is really hard to experiment on" is also that even if you get the law passed and study the results, there are so many other variables that economists can always plausibly argue that the results actualy does not support/disprove the hypothesis since they were caused by other aspects... Say you had an idea for new brilliant taxation scheme and got a country to pass these with effect since 1.1.2019 . You study it's results now and obviously the country is very much not better then before, but odds are it has more to do with covid then your taxation scheme...
Not to negate your general point, but in your specific example, you could compare to similar countries who were affected by COVID but didn’t implement this fabulous new tax.
How can one understand economics if staying Wealthy depends on not understanding it? The real truth : The Inflation is unmanaged relation between owned Wealth and money to represent it. The real Truth : "to own" is a political claim. It does not require "effort". To "Work" , for example, does require some effort. "Ownership" is a description of an effortless Relation between things, "Work" is a description of an Effort between things. Creation is effort, therefore the Employee creates the business, the Owner just owns what has been created.
Which coincides with Taleb's view that so much is ruled by randomness that our ability to predict or drive outcomes is so heavily dependent on the said randomness, we shouldn't overestimate our abilities to affect a complex system such as economics of a country.
@@MrPinguinzz Yeah, that's what it's all about. If we could trust politicians to be responsible, fiat wouldn't be a problem. Since we obviously cannot, we need honest money with finite resource backing. If only the paper commodities market weren't so derivative and fake, fiat would have been taken down by the Hunt brothers.
@@ysdom Just be aware that the finite resource chosen will then be no longer available for industrial use, may end up being too finite to service the economy and will make to currency vulnerable to destabilisation due to fluctuations in resource scarcity.
Economist Simon Kuznets said that there are four kinds of countries: developed countries, underdeveloped countries, Japan - nobody knows why it grows - and Argentina - nobody knows why it doesn't
7:50 That reminds me of the essay "I, Pencil", one that I absolutely adore. Since I'm no economist, I never realized that Leonard E Read's phenomenal essay was directly based on the principle by Adam Smith!
Adam Smith had to be paid so he wrote stuff that justify the Wealth of those who can pay him. How can one understand economics if staying Wealthy depends on not understanding it? The Wealthy create economic theories that serve their needs. The real truth : The Inflation is unmanaged relation between owned Wealth and money to represent it. The real Truth : "to own" is a political claim. It does not require "effort". To "Work" , for example, does require some effort. "Ownership" is a description of an effortless Relation between things, "Work" is a description of an Effort between things. Creation is effort, therefore the Employee creates the business, the Owner just owns what has been created.
@@lights473 you: even less of an intellectual: failing to see that the question has a clear premise, that is the statement to which the non-intellectual is referring.
Don't worry mate. As a science student I already have a strong disdain for you just because you're an economist and what passes for 'science' in your field reads like a bad joke to the rest of us. It'd be hard to make my opinion of you any worse. ;p
@@edmundironside9435 of course value is a concept full of different meanings, and there are almost a whole library dedicated to that only, but i didn't meant the concept but the theory as a whole
Friedman, we got a dictator to take Allende out of Chile. Argentina's following soon. You can send your boys in, test out your Austrian school based theories there. If it doesn't work out and the governments actually have to step in with fiscal policy, we'll just lie and say it was a success.
I don't think there is enough emphasis on the fact that economics is fundamentally a social science. No matter what there will be chaos in the economy because people are chaotic
And therefore it can't be treated like physics or mathematics. There is no need for calculations and you can't do experiments like in physics because the lab is the humanity and the variables are too many.
@@enixfu It can and should be treated with some mathematics, yet those results are only observations of historic developments, IF those data were measured in the first place of course. What those observations do not deliver, alas, is explanations. We only know WHAT happened but not WHY, because the chain of causality is, as EE said: unanswerable. I like the systematic approach of his video in the 4 chapters. If all math is thrown out of the window, then economics becomes religion. That is the worst that can happen to it.
@@enixfu Math is just a language. It can describe chaos just as well as it can certainty. I'd encourage you to be more open minded... any problem can be solved with math, even answers to chaotic or irrational questions. Even questions that have more than one definitive answer, and especially questions that have zero answers.
In the past I think this was true, but I think things may change soon. Turns out people and populations are far easier to model and predict with machine and deep learning algorithms than weather patterns for example. It was always believed meteorology and social sciences were more in common, but I've worked with research psychologists (I'm a clinical psychologist myself, but still get to study with those folks :)), and they're pretty much admitting the best results they're getting now are from their collaborations with computer science majors. The gap is closing on the days when we thought humans were special in a non-mechanical sense. Determinism is going to become a very harsh reality in the not too distant future if some of what I've seen is any indication, and people are going to learn they really are extremely basic, simple, predictable, manipulable, and ultimately naive entities that can be very well defined and controlled like any other variable in our more hard sciences. Granted, we won't be getting 5 sigma results in social sciences for a long time to come, but what's interesting is while it was once thought probably impossible, I think uncertainty is building in that area, and we may very well discover that while we can't explain the black boxes that pump out the predictions of human behavior we create, they actually might be able to get accuracy on that order of magnitude given enough time to learn about us. Once psychology gives way, sociology and economics will follow naturally... Also probably those two will give way before psychology frankly, just because noise can wash out in larger trends, and if you're just looking for large scale accurate predictions with a reasonable margin of error (Which is generally what sociology and economics is doing), you don't need near the accuracy you need for individual psychology. This is all VERY speculative based purely on what I've seen by the way... But... I think if you explore these sciences you might at least understand why I'm so persuaded, even if you conclude I'm wrong.
0:00: 📚 Economics is a complex social science with no definitive solution, leading to disagreements among practitioners. 4:28: 📚 The classical school of economics, led by Adam Smith, emerged in the 18th century and challenged the flawed mercantilist system, focusing on increasing the wealth of nations through mass creation of wealth. 7:27: 💰 The early philosophers and economists believed in the importance of an optimal distribution of wealth and division of labor for economic growth. 11:29: 📚 The Austrian School of Economics challenged classical economics by introducing the theory of marginal utility. 14:11: 📚 The Austrian School of economics emphasizes the importance of subjective value and rational consumer decision-making. 17:26: 💡 Keynesian economics introduced countercyclical fiscal policy to smooth out the business cycle and manage economic affairs. 21:10: 📚 Economists have different opinions and approaches, but they all work towards solving the central economic problem and agree on the importance of investing in the future. Recap by Tammy AI
Actually, Austrian econ is mostly concerned with having governments empower bank CEOs to determine public policy by determining what public goods get funded when banks make loans. Austrians despise federally funded public goods that reduce household reliance on bank loans. They think our government should only fund narrow interests when it issues our currency and only pretend to despise government spending more generally Because our elites actually do understand that we use government issued 💵 to shop, pay our banks back, pay tax & net save. In this sense, Austrian thought leaders are just a bunch of demigods
How can one understand economics if staying Wealthy depends on not understanding it? The Wealthy create economic theories that serve their needs. The real Truth : The Inflation is a unmanaged relation between owned Wealth and money to represent it. The real Truth : "to own" is a political claim. It does not require "effort". To "Work" , for example, does require some effort. "Ownership" is a description of an effortless Relation between things, "Work" is a description of an Effort between things. Creation is effort, therefore the Employee creates the business, the Owner just owns what has been created.
I understand you needed to prioritize certain information, but I think it would have been great to point out why Keynes and Hayek disagreed soo much. For Hayek, the entire reason that the business cycle of ups and downs existed in the first place was because the state intervened to control currency and its ease of access (federal interest rates), which lead to systemic malinvestment. Keynes looked at the business cycle as it was and proposed a solution to the question of how to minimize the symptoms of that intervention, but the Austrians largely felt he was ignoring the root causes of the the problem and proposing a bandaid solution that would leave us worse off in the long run.
Comment was more informative than the entire video. I'm reading How Markets Fail by John Cassidy which has been very hard to slog through, but has highlighed that fact.
@@Gadottinho Japan is a unique case. Culture has a habit of interfering with otherwise rational economic models, which is largely what we are seeing the impact of in Japan. They have low employment and business dynamism because their society created social consequences for leaving your employer for a better wage, or taking a risk on a startup with the banks money, which means there's little change in wages or production. Couple that with very low birth rates, no immigration, the need to care for the elderly, and Japan never really had a chance. Their problems are far from being caused by some business cycle, their currency has been stable for quite a while.
Would you call this the “political business cycle”? An interesting quote about the 1930s depression compared with the fed’s action in 2020: “Economists Milton Friedman and Anna Jacobson Schwartz showed that the Fed helped turn an ordinary recession into the Great Depression. In a speech given in honor of Friedman’s 90th birthday, Ben Bernanke, a governor of the Federal Reserve Board who later served as chairman, said, “I would like to say to Milton and Anna: Regarding the Great Depression, you’re right. We did it. We’re very sorry.” In the current crisis, by contrast, the Fed acted swiftly and aggressively to shore up the financial system. The central bank took such unprecedented steps as massive purchases of corporate bonds, even including some below-investment-grade issues.”
Mises in Human Action says statistics and cardinal math (1, 2,3, not 1st, 2nd, 3rd) are valid in economic history, not economics. Even the most fanatical econometrician needs theory to explain statistics but they evade that. Theory in economics is abstraction from observing and conceptualizing production for a market. Theory says what necessarily happens. Statistics says how much happened in a concrete situation. Pikettys Capital is statistics w/o theory, signifying nothing except political correctness. Trade-Richard Cantillon Treatise Political Economy-Say Principles Economics-Menger Individualism-Hayak Capitalism-Rand
@@Gallic_Gabagool Evidence for statistics identifying cause? Statistics can say identify the price of bread in late 19th century rural France but it cant say that it had to be that price. Moderns confuse cause w/coincidence.
Kudos, to you. As I'm weird, I'm currently watching your channel for entertainment whilst on holidays lol! I've also recommended your channel to my eldest, who recently completed an undergraduate degree in public health and is doing her Masters next year. In this era of globalisation, I believe all the social sciences are interlinked... your channel is very accessible to those without a background in economic theory. And compulsive viewing. Live long and prosper!
More of this style, please. The country videos are cool for exploring specific subjects and reinforcing those ideas with specific case studies. But these in-depth videos on the basic terminology help a layperson like me understand what each position in the discourse is even referring to. Thanks for doing what you do!
“All governments around the world are lowering taxes” “Governments are very quick to lower taxes but often forget to raise them later” *laughs in Argentina*
I enjoy your videos. Probably mostly because I enjoy your accent and enunciation so much, but also believe I learn things from you. I’ve read a lot of the comments and I’m disappointed that no one criticized your talking about Adam Smith’s pin making breakdown, while illustrating it with videos of needles.
"Even Engineering is not a science! And engineers do deliver. " But imagine engineering in a world without scientists. It wouldn't really work that well. So even if economists were supposed to be more like engineers; who would be their equivalence to scientists?
@@ungainlytitan1460Trail and error can get you a decent bit, especially if you record it loosely. Although if you were to attempt modern civil without any scientists or physics, it wouldn't go that well. Do remember you don't get to see all the structures the romans failed at; survivorship bias.
Because science is based on tangible, empirical evidence (or the closest we can get to that). If you want to have somebody adopt your definition of what you think the world is/should be, they cannot argue with empirical proof.
I will not allow you to make fun of Keynes vs Hayek. That work of art has given me more knowledge in 10 minutes than a certain smooth talking kangaroo has in all of his videos.
Well it equalized both but it’s like saying Einstein’s vs Newton’s theory of gravity. They are on different levels Keynes has founded a new Macroeconomic perspective just like Einstein showed a new perspective on gravity. The producers were Hayekians either way so there is that. But at least you could learn 1/10th of the Keynesian Theory Building.
Marc T wrong, Keynes and Post-Keynesians proved predicted that there is no Labour Market in the Classical Economic Thinking. As if you cut wages, to lower the price of Labour to get full employment, you also cut demand in the market, so you have less economic activity and create more Unemployment. Just like we saw in Greece, in the US during the Great Depression, and in every other country that cut wages while productivity rose. Through lower wages we could also see that companies invested fewer and instead put their money into banks, without the banks being able to find investors as companies were saving instead of investing. The Banks then gambled in The financial sector’s creating bubbles after bubbles to keep the economy running. Same thing happened from 1919 to 1929-1933 when the bubble finally burst and Roosevelt was elected. Starting the great Keynesian era
Try to get Keynesians and Austrians to agree on what inflation is: Keynesian economics believes that inflation is "meh rising prises tho"; Austrian economics knows it's the expansion of the money supply, thus resulting in rising prises
Austrian economics would describe inflation as increased money supply that has various consequences, and a general level of higher prices is one of them..I think of this as the currency loses value relative to everything else.
@@Rainy_Day12234Correct, and the reason why it doesn't loses value at an even faster pace, it's because the production and logistics technology gets better overtime. So if expanding the money supply (printing money) wasn't a thing, the norm would be for currency to increase in value.
You speak as if these two are not concordant. Inflation is rising prices, caused by growth in money supply. One is a definition, the other is the reason.
As an Econ student who got very tired of hearing “this is important because this S&D graph represents what a monopoly would look like”, it’s very refreshing to see your videos!
Windigo Jones public healthcare is a thing many americans accuse of being communist, and that’s not strictly about taxing the rich to give to poor people. It’s more of a trade-off. But it may just be a thing in the media and layman’s opinion. I’m not sure if that is a widely held view in the USA because I don’t live there. And by the way, I don’t see how you took his comments as saying communism is about trade-offs? Maybe I’m just confused.
Rodrigo Andrade i don’t know who told u that Americans think it’s communist, but those aren’t the main reasons Americans are against it. A lot of it has to do with taxes and government efficiency
Just a commentary. In the marginal revolution there were two visions: Carl Menger (Founder of Austrian School) and Walras & Jevons. Menger's explanations didn't use math formulas, didn't start with idea of "Markets in equilibrium", didn't think of economics as something static, didn't think as individuals to be rationally perfect, etc. Don't mix marginals schools.
@@rwatertree Rational is a weaker condition than it sounds - people are allowed to want wildly different things and value them differently, subject to only a few consistency constraints. It's very specifically not a value judgement on whether one consumer will think another consumer's preferences are prudent/reasonable/sensible. And "subjective" in the same sense as "situational" - e.g. a medicine is only directly valuable to the consumer that needs that specific medication; most consumers probably don't have any use for a combine harvester, or a big crane, or .
@@forzaacmilan36 Chile now is worst than 10 years ago so I would reconsidering it. Not having a perfect society at the time does not mean the economy was destroyed. It was one of the best of South America and still was growing. With your last few socialist governments shift you stoped that progress and are going in the wrong direction. Now there is more inequality than 10 years ago. Typical socialist governments doing the opposite of what they claim to change, good intentions but not enough if you ignore classic economics.
@FagundaioFagundes imagine using “cuck” unironically, nowadays I have come around to the idea that taxation by a bourgeois government is theft (became a communist). However you still radiate incel energy
I think there's another reason that wasn't mentioned in the video: economics is a relatively young science. It's been only 250 years since Wealth of Nations. For all the comparisons to physics that scholars like to make, physics has been studied in one form or another for more than 2000 years, going back to the first astronomers studying the regularity of the planets' and stars' movements. Even then, there were enormous disagreements about fundamentals for hundreds of years. To expect a similar sort of consensus from economics is silly, despite the relative ease with which information is transmitted since its inception. Econ is going to achieve similar levels of understanding and consensus, but it will take time.
Economics is a human driven thing, that's why we or atleast the scientific community doesn't welcome it. It's simply too human centric therefore not standardizable and testible and reproducible.
Not welcome in the scientific community ? Economics is about concluding and reaching optimal solutions based on scientific hypothesis. It uses scientific tools to calculate hypothesis and proves the validity of economic theories. I think you never heard of econometrics before
@@Dan16673 you can do that with human behavior. You don't get precise and specific answers. However, you get ranges and estimates that you can base your decisions on. That would put you in the best statistical situation
As someone who has a very rudimentary understanding of economics, I welcome the broader scope of this lesson as opposed to the regular case studies and topical discussions (which are still really good).
If you want a general understanding of the dialog around theory, then bear in mind that talking about Keynes is really talking about Karl Marx. Keynes was a Marxist. Some economists admit this, but most don't because it's politically divisive. Keynes was controversial during his time, was admittedly a socialist, and was aligned with socialist causes. Like all influential thinkers, Marx was wrong about some things. But he was right about democracy and capitalism successfully coexisting only if political equilibrium between the social classes is established. That translated to the famed 1950s middle class. Socialism and capitalism are addressed in black & white terms mainly for the sake of keeping voters divided.
@phoearwenien4355 Based on your response it sounds like you take issue with living in a developed nation since without the New Deal the US wouldn't be one.
Neither of them make any sense. The Real truth : Inflation is unmanaged relation between owned Wealth and money to represent it. The real Truth : "to own" is a political claim. It does not require "effort". To "Work" , for example, does require some effort. "Ownership" is a description of an effortless Relation between things, "Work" is a description of an Effort between things. Creation is effort, therefore the Employee creates the business, the Owner just owns what has been created.
3 месяца назад+1
Both have been debunked by empirical studies on a rolling basis.
I think what I hate the most about Austrian economics is that its supporters tend to be the most dismissive condescending know-it-all assholes in the field.
I think he said that is the whole point of Keynesian theory, it smooths out the Boom and Bust. We are getting there... Fed: QE to Infinity!!! Fire up the Money Printer!!!
Japan has a problem that it has reached the technologic frontier, has aging and shrinking population, they really cant grow much more than 1 or 2%. But you can find many developing countries using Keynesian tools that have high growth rates.
@@GhPadua Like which Country? Do those countries also have a huge Bust Cycle though? The only Country I can think if is Australia which avoided the recession for almost 3 decades. But those countries piggybacked their growth off the rise of China, Australia for is absolutely did. Right now China is about to hit a brick wall, and rising tension between China and the West will throw another wrench into the mix. We will see how it goes.
@@lysergidedaydream5970 I would also like to see if he contrasts the different forms of socialism (centrally-planned state socialism/communism, syndicalism, market socialism, etc.).
@@ShnoogleMan I would like to see this too. I'm an AnCap, but Im usually pretty disgusted at how anarcho syndaclists are immediately dismissed. I dont agree with any of the more nuanced implementation details of socialist thought, but I think its pretty disingenuous to lump all of that in with Stalinism.
Adam Smith's economic theories work incredibly well for consumer markets. The problem is they pretty much overlook that the labor market is completely different.
@GaslitWorld f. Melissa B Environmental economics and Ecological economics. Both schools are relatively new and brilliant, but they're viewed with skepticism by the mainstream schools of economics(or in the case of the more laissez-faire schools, outright hostility), because as you rightly pointed out, many economists are too narrow minded and seem to rely on a certain set of assumptions, generalizations and abstractions about both the natural world and human behavior towards it, when confronted with difficult ecological and environmental issues. To much models and assumptions about the limits and capabilities of people and environment, based on armchair theorizing in academic ivory towers that are completely detached from real world ecological and environmental issues.
No no no.... Labor is the same. Its just being stomped on, because it doesn't line the "stockholder's" pockets, or the CEO's, CFO's and board members. Unionizing is now a legal gray area due to now trillions of dollars of lobbying. Its not being VIEWED as the same. But know your worth and your rights, don't let yourself be bullied, make a paper trail so they can't make a different one.
@Loganls I heard that same argument by unions and the government in my home town. Their belief lead to the results. If you think that is a good thing, move to Detroit.
I’m sure videos will eventually be made about this on your channel but I’d love to see you take on the neoclassical, heterodox, and Marxist schools of economics. Especially talking about the socialist calculation debate in the context of data analytics would be fun EDIT: Marxism vs laissez-faire might address these concepts so I’m pumped!
@@drake1896 no. Classical is a branch of laissez faire. Austrian economics is a positive(no value judgement on action) view of economics that leads to laissez faire conclusions.
@@YellowgaryIn fact there is Distributism/Corporativism that makes way more sense. But the best proved economic system of the XX and XXI centuries have been National-Socialist economy, with MEFOs, leasing in the international market, a money based on work and not on gold or debt etc. The austrian painter was a f*cking genius. The true austrian school of economics.
17:12 very strange that they would label austrian economics as ''philosophy'' since it's more about ''Psychology'' which in many schools is still part of philosophy, the argument of austrian economics lacking verifiable data is somewhat silly, since all models created by economics is about Psychology of choice, resources and distribution of goods and services, in this way Austrian economics is more laissez faire than keynsian economics, where as Keynsian are almost authoritarian and corporatist in an attempt to quantify all economic data to it's models, merely having more data does not mean your analisis or superiority is somehow proven, in fact we've seen and endured the problems with keynsian economics for some time now, with the accumulation of debt, where as the invention of crypto currencies and other new forms of economic development shows that this debt based system of keynsian economics does not work long term, it collapses and merely borrows more money, creates more corruption, more government power to the point that we have protectionists and open socialist and communists claiming to want to abolish capitalism. I know this channel is honest and does good work and I think they are trying to represent both economic systems as best they can but I realy can't stand keynsian economics. but if what I wrote her comes across as arrogant, ignorant, austrian school, economics fanboyism, I would like to hear from you why that is and why keynsian is beter compared to austrian school, thank you for your time.
Well, most of the criticism you have against keynesians is indirect arguments. Yes, gouvernment corruption is indeed the Achilles heel of a keynesian oriented economy, but you cannot say say the keynesian economy is bad because of that since his model assumes the gouvernment fulfilling its role to the best it can. Corruption means that you break away from such a system. It's like saying a Smart (the car) is bad because you cannot go off-road hill climbing with it.
@@Dwarfplayer what do you mean? From my perspective it seems that austrian economics is more individualistic compared to keynsian economics, economics is not a hard science like phisics or mathamatics, it might use models based on math but it's goal is to predict outcomes of economic models. If you enforce protectionism, this will be the likely outcome, you enforce capitalism then this is your likely outcome, the problem is that words, meanings and economic systems like governments changes, current CCP China has communism in it's name but it's nothing like the historical model of communism, technology changes, therefor economics can change as well and with that economic models. Perhaps keynsian economics became nessisary due to changes in economics or perhaps it's a imperfect model which austrian economics can surpass, perhaps they are both wrong and Chinese economics are the future, we don't know, though from my perspective keynsian economics is failing to a degree.
@@nottoday3817 well in a perfect world communism actualy makes perfect economic sense, the reality is that historical communism has been a utter disaster for the world and economics of the USSR, was it nothing? No but it failed to compete. It's like natural selection and evolution, the side that is most adaptable wins, though this relies on what the environment demands. I know biology and economics have little to do with eachother but if keynsian economics are perfect than there would be no austrian economics to attempt to compete with it, nor would China be the second biggest economy in the world.
Economics is OF COURSE a philosophy. The same way any deductive/inductive rational thinking is. Experimental science is a branch of philosophy. What they should have said is that "Classical theory is a branch of metaphysics (sic!)".
I think you should do at least a video for each one of those theories,a single video is just not enough to talk about all they argue for,and also a video for the neoliberal school of though and how it diverses from the new liberal model
This. As it stands it leads the viewer to believe that the three schools are just stages of evolution, each fully replacing the last much like the different theories of the atom.
Just listened to the President of Argentina‘s explanation of how he turned around his economy with an Austrian economics school of thought. Fascinating listen and I would like for you to please make a video on his comments and the available statistics. (currently a business administration undergrad student interested in getting my masters in business)
This popped in on my feed. I realized what I was listening a minute or 2 in and was like boom sub. My brain loves delicious info snacks in this format! You've got a like sub abd a bell out of me
Austrian>Keynesian. The inflation we are experiencing now is a direct result of using Keynesian philosophy to "fix" the recession caused by government overaction to Covid. Countries like the USA are recovering faster because many states chose to not overreact and destroy their own economies. Australia on the other hand has a long fight left to overcome their governments self-immolation of their economy. I'd say it is hard to tell if application of Keynesian philosophies has actually ever helped anything.
This is a really great video. I think about the differences in these ideologies all the time but you compiled and explained them very well in just a 27 min video!
Just to note: scientists do argue about quite new theories in many aspects but it does get settled after more evidence comes up. Economics on the other hand...
If Keynesian economics basically enabled the government to spend more money (by inflating the currency), and we know the government funds our colleges and student loans, what economic model do you think academics are going to support when they are looking for government funding for their college programs?
Good point. How can one understand economics if staying Wealthy depends on not understanding it? The Wealthy create economic theories that serve their needs. The real truth : The Inflation is a unmanaged relation between owned Wealth and money to represent it. The real Truth : "to own" is a political claim. It does not require "effort". To "Work" , for example, does require some effort. "Ownership" is a description of an effortless Relation between things, "Work" is a description of an Effort between things. Creation is effort, therefore the Employee creates the business, the Owner just owns what has been created.
I have a bachelor's degree in economics, and now since I have stumbled upon austrian economics, I can say that all econ schools are rubbish because they're all keynesians.
@@shyguy1845 yeah, all those fascists/nationalists that said "I've been a libertarian before" have clearly never been a true libertarian that understands the true core of freedom.
That very phrase brings some hugely impactful assumptions though, "How to satisfy unlimited demand with limited resources". Most of all it equates all demand, like my demand for video games and starving persons demand for food. Has demand never been put in second priority after the actually limited needs, in economic theory? Can you not make a market-system that makes sure everybodies needs are satisfied before the demands(wants)? (yehyeh needs are subjective, but to a point. Everyone needs food and housing.)
It actually doesn't equate those things... by definition the demand for a need is objectively higher than the demand for wants. That's what the words want and need mean, after all. Current economic models can already explain the difference between the two, and it gets pretty ugly if left unchecked. Fortunately most markets don't meet literal infinite demand, because most needs and wants are also finite. The closest we really get to actual infinite demand is with healthcare, as people always want to be in top condition... the more that need is met, the more people will demand it. Healthcare is also interesting on the supply side, as quite a large number of healthcare issues don't actually require any resources at all to fix, so the main "supply" that is limited is knowledge, which is met by supplying the time of the doctor in question. It's a huge mess, really... with so many inefficiencies, most of which stem from it not actually being an industry that fits any type of market. Infinite demand met with uneven and unsteady supply which can vary from zero to infinite in itself. It's a chaotic market specifically because it breaks the fundamental question of economics by *not* having strictly limited resources in all cases.
@@dontmisunderstand6041 i dont know, for each and every person that might be true, but for society as a whole it is not. Pharmacuetical research is driven by luxury demand, things like hair-loss or impotence prevention. If it were driven by aggregate need it would be focusing on fixing malaria or any major diseases. Of course now that the west is experincing Covid, research may actually be centered around this disease.
@@adamsvensson8818 The demand for research is an interesting discussion in itself, as it has an inherent disconnect from the market it actually impacts. Researchers are meeting the demand of the companies that want to make money from consumers, while those companies are the ones actually trying to meet the demands of consumers. This creates a buffer between the consumer demand and the entities actually producing the product that ultimate reaches the consumers. This pushes the profit incentive away from meeting consumer demand and toward meeting the demands of the middleman. The two likely overlap in quite a number of ways, but it's important to remember that they will not be identical. Another interesting aspect is that the demand for research is also quite limited, almost exclusively to ideas that can be monetized or capitalized upon... with obvious exceptions for public sector research.
@@dontmisunderstand6041 that is interesting! But the same is still true for basic things like access too food, no? The dominant economic theories of today still suggest the best way to fight hunger on a social level is to increase overall GDP. The obvious answer seems to me to be a basic income/basic ammenities program that would stem from an economic theory that prioritizes needs over wants.
Of course, my gift is to refine things. Your depiction of Classical and Austrian is excellent. You omit the fundamental question that drove their respective, become collective, investigations. Namely, "What is the source of value?" The Mercantilists believed it was gold as you said, and/or whatever could be traded for gold because conversely, gold could be traded for anything, duh. For your reasons cited, Adam Smith et al realized nope, it wasn't gold but labor (your depiction of "production"), or the turning of useless raw materials into useful stuff. A log is useless whereas lumber is useful, therefor labor is the pixie dust that makes something "valuable." The trouble was the uneven distribution of just how useful/valuable a given thing could be across diverse populations. The quandary was summed up by the infamous water diamond paradox. How can the most useful thing to humans, water, be so cheap while the most useless thing (at the time), diamonds, be so expensive? How can diamonds be more "valuable" than water? As you say, the Austrians stumbled upon the idea of "utility," which today means "usefulness", but back then had a broader meaning of "serves your desires". Utility explained how the same object, like a porcelain figurine of a dog, could be valued highly by one person and absolutely worthless to another person. This was their "discovery" of the "individual", of the power of individual wants and needs. It was the cap stone principle in the collection of broad sweeping changes called The Reformation; the transition from the idea that the individual's purpose is to serve/maximize the group to the idea that the group's purpose is to facilitate the potential of the individual. The overarching quest of Mercantilists, Classicists, and Austrians was to explain the source of "value." That, however, was not Keynes' question.
@@Copperhell144 The source is my brain filled by 50 years of reading most everything on political economy from the Magna Carta to the Federalist Papers. In short, The Reformation was the movement to break the political stranglehold of the Catholic Church over Europe, which power the Church maintained via religious hegemony. We know the Catholic protestors today by the religious name Protestants. The root idea which spread like wild fire was, the individual can approach God himself without the need of The Church to do so on his behalf. This had huge political ramifications because no government in Europe existed without the sanction of the Catholic Church; the Church and State were married and the Church was a polygamist. But more importantly, it had a huge effect on the psyche. You had to think for yourself if there was no Priest to intercede for you. Thinking for yourself was heresy, execution level heresy. The Reformation essentially made it okay to think for yourself. HUGE mind shift, absolutely huge, almost incomprehensible to Westerners today. This awakening of the human mind, over roughly a 100 years, laid the foundation for The Enlightenment; the birth of "science." The classical economists like Smith and Riccardo flower and bear fruit in this period. But they never would have without The Reformation breaking the Catholic Church's mental chains on the human mind & spirit.
Here's to hoping that sometime between now and the eventual heat-death of the universe that Economics Explained will rank the economies he already covered. Anyways, great video. You're always great at teaching economics in both a captivating and informative way!
If you learn so much from this imagine reading books... Maybe like Human Action by Ludwig von Mises. :P I'm not fully convinced EE has read this book yet.
Has the "Marxism vs Laissez-faire Capitalism" video mentioned at 22:58 been produced? I can't seem to find it. I would be most interested to hear your analysis.
Thank you EE for such a great video! However, I have a small in objection to do. The true founders of economics where the Spanish scholastic. Francisco de Victoria and other members of the University of Salamanca were not economist as such, but were led to economic reasoning as a way of explaining the world around them. They were at least as pro-free market as the Scottish tradition come to be centrifuges later. Plus, their rhetorical foundation was even more solid. They anticipated the theories of value and price of the “marginalists” of late-nineteenth-century Austria. Sorry but as a Spaniard, I couldn’t keep it to myself. 😬
The criticism levied at the Austrians that their theories are not “falsifiable” and that the Austrian school is more like philosophy is correct, but not really a criticism. No economic theory is falsifiable because you can’t isolate variables properly in an economy. Even if you pass a policy to test a theory, you can’t really isolate it’s effects. That’s my opinion, at least, as someone with a background in “harder” science.
But that's because people assume the base issues of basic economic woes are solvable, when they aren't, if we in practice had the PERFECT economic system, there would still be poverty, there would still be wars, there would still be the problems associated with human nature and people would demand "solutions" to such things, and a politician will answer with a "economic solution". This is because people assume poverty is something that needs explaining yet humanity began in poverty and it's more about creating prosperity, not removing poverty.
That doesn't mean Hayek is right just that Keynes thought he was wrong lol. What if Marxian economics is more correct? Frankly I don't think both schools are showing there age.
@@FKaps16 The 100 years of communism already went against whatever Marx wanted to have as he predicted a revolution would occur in highly industrialized countries like Western Europe and the US not some backwater like Russia and China the idea of which is wrong in itself as people in a highly industrialized country would been too comfortable and have more too loose than to gain
I firmly believe that counteracting the natural cycle of economics is the worst thing we could have ever done. It's created bigger crashes, prevented new growth by protecting the old businesses that should have failed, created megacorperations and all their evils, and is pushing the world off the cliff at the end of "infinite growth". It's also the root cause of inflation outstripping income, the housing crisis, and generational wealth inequality.
Thank you! This is a very good and simple overview of economics. By the way: I don`t see a real contradiction between Austrians and Keynesians as long as both stick to their specific aspect of economics. Austrians have the perfect explanation for how value is defined (namely by the individual consumer). Their field is micro economics. Keynsians are macro-economists. Till now they claim to have (and probably do have) the best recipes how to handle boom and bust cycles. If during an economic downturn the government would pay workers to dig useless holes that would of course be a waste of money but paying workers instead to build necessary public infrastructure (which the market cannot provide anyway) for example would be a perfectly sensible way to avoid or at least dampen a recession.
They are inherently contradictory. A) Austrians disagree on the validity of macroeconomic as it and it’s formulas are based on (mathematical) canceling B) Austrians see (central bank) policies prescribed by Keynesian as the root of the business cycles as it sets artificial non-equilibrium prices for money and thus creates artificial oversupply/shortages. C) Austrians certainly do not agree with the idea of the Keynesian multiplicators realizing the higher opportunity cost surpassed by taxing the money away from people. Apart from that, it is highly questionable whether Keynesian economics works best to tackle crises. It is mostly base don the misconception that the Great depression was caused and heightened by laissez faire government policy. A claim which does not stand the test of reality.
Thank you for the explanations. As an Austrian I am inclined towards Austrian Economics, but not without checking contradictions to certain positions which might arise from actual economic developments. @@fabianbogg9382
*Austrian school:* Consumers are smart enough to decide what they need, we have to focus on efficiency not flattening the cycles. *Keynesian school:* Consumers are too dump to decide what they need, we have to tax them and make state cool down the economy. *Classical school:* dOeSn'T maTteR, jUsT mAkE mORe gOOdS.
@@superduperfreakyDj Austrians get that from Krugman who said that productivity is not everything but in the long run is almost everything. You will run into that quotation a lot.
@@EconomicsExplained Definitely, not only did I get a video but a whole series! Thanks for the high quality content, just started my BSc in Economics 2 weeks ago
I feel like this one-sided Keynesian economic system of only dampening the bad times is gonna result in a wound-up rubber band slamming the global economy all at once.
Wow! You are really a great communicator. Learning some basics about economics with these videos is really easy and pleasant. It won't make me an expert but increses my general knowledge. Keep up the good work.
Sowell doesn't expand too much on his ideas about economics. Of course he dabbles in economics but he's more focused on other social studies. We know he would be tight with Friedman but anything that would get into the weeds of Chicago vs Austrian school he stays as "milquetoast" as he can on. I agree with Marin Stinic. He has some basic books to help teach people economics but he's not really a defining figure in that area.
Great video. Thanks for uploading. In response to the statement at 7:00 The WEF seems to be trying to get the majority of the world's population to just "forget" the unhappy part & just tell people "You Will Own Nothing and be Happy..." 😆
Classical economics is about "self interest", not "selfishness". There's a difference. Is it "selfish" to be a baker instead of a blacksmith if your skills and interests better align with baking?
Have you looked into (or made a video on) the taxation of land values only and the removal of all other taxes? This theory relates to keeping the productive gains within the economy which benefits the most productive communities.
Ps you said the quiet part out loud; economics makes sense as philosophy and not science. That’s not a bad thing and means humans have maximal control over the field, not an irreducible axiom like the law of gravity
I think part of the problem is that pop-economic and pundit-economics are philosophy heavy, which is what most people are going to encounter and makes the 'most sense' to them. The more science end of economics tends to bore people.. it doesn't produce flashy results and involves a lot of math... so people tend to think of economics in terms of philosophy.
neeneko there are literally no laws within economics that resist human input. You can’t politicize gravity, but human input literally affects all economics. At the macro and micro scale. Therefore, Econ experiments and theories rooted in science are equally nonfalsifiable, except in material reality. Which means that economics is a subset of politics and philosophy, not a science
neeneko I think the bigger problem is most folks have little to no understanding of how to approach philosophy and go around demonizing it, devaluing it and poorly debating it. Like when you claim “the scientific part of econ bores people” I can’t help but laugh at how backwards you are. Literally the opposite is true, having your beliefs substantively challenged bores (or scares) people, so they run to a superficial understanding of a poorly applied scientific principle to explain away the chaos and diversity in the world
I was listening along (not watching the screen) and when you said "mercantilism" I didn't have a clue what you were saying because I have never heard your interesting Aussie pronunciation of the word. 😂 BTW, Hayek and Von Mises are the best.
It’s the government intervention that causes such radical economical cycles. Distorting the market signs like interest (price of money) they make entrepreneurs and people in general take loans and invest when they shouldn’t. When the reality of the market imposes itself it causes a big crash. It would be best to just let economy be. BUT as printing and spending money is the primary work of politics, they would never leave the economy in peace. It’s like asking for the wolf to leave the chickens be
Not even a mention of the Austrian business cycle theory and Ludwig von Mises and Friedrich Hayek? Can't believe this. This is by far their most underrated contribution.
Morally certainly factors in. For example the classical and Austrian school gets critisized for not doing enough to even out inequality while Keynesianism has done some bizarre things like burning food during a food shortage to boost prices and claim wars are good for the economy etc. There was no mention of this but Austrian school proponents claim that the boom and bust cycle is actually made worse by Keynesianism since it bails out the companies that would have gone under for them to be a bigger problem in the future and low interest rates and printing money leads to the boom and the inevitable bust.
There’s a very good reason why hard science says “you can’t sit with us!” to the social sciences. Remember, hard science is repeatable, measurable, quantifiable. Soft science is based on empirical data, data that can, and does, change. I think we could all benefit from drawing a more firm line between hard science and the social sciences
Cool video, but, specially in what regards Austrian economics, I would agree that it became more philosophy than economics. On the other hand, I find weird that you didn't mention Mises of Rothbard, really important contributions to it.
A huge thank you to Acorns for making this video possible.
Go check them out, it helps the channel and hopefully makes saving and investing that little bit easier! Sign-up for Acorns now and they'll deposit $5 into your investment account to help you get started with investing! 👉 acorns.com/ee?s2=ECON1
_"Acorns makes investing as easy as spending",_ but should investing *be* easy, at all?
Can you do a video on the Chicago school of economics?
*Taxation is theft.*
Where is the vig in Acorns?
@@andreylucass Property is theft
"Ask five economists and you'll get five different answers - six if one went to Harvard." - Edgar Fiedler
Why Harvard
@@AdityaDeo-cg6eu
They teach and make students understand multiple schools of thought very well that they basically become indecisive. Hence, instead of 5 people and 5 answers, its 5 people and 6 answers because one can't make his mind up on 2 answers from 2 different thought processes.
@@sciencemanguy There's a big difference between being indecisive and recognizing that one problem might not have just a single viable answer. This is actually something taught in math classes in middle schools.
@@dontmisunderstand6041
It... it's also a joke... It's not supposed to represent reality 100% accurate, rather, just poke fun at something you observe...
@@sciencemanguy The original comment was a joke, but your reply seemed more like an explanation. So I treated it as such. I would hope the irony of your response to me isn't lost on you in this situation, because I found it pretty amusing.
I cant believe I ever thought economics was boring. Thank you for making it so fascinating and well; down right addictive.
Glad you enjoyed it!
Yay? Is this form of addictive good? Or should we put it in the Anarcho-Capitalist corner?
Bro, I'm only 17. But understanding is so important. Get into it, watch videos about it, learn its history also its social impacts, and it will change the way you view the world.
All comes down to presentation. I think a lot of math is interesting, but I also think many math teachers should be flogged and banned from schools.
Ever since being a kid I was fascinated by articles on economics. The authors on mises.org do well in explaining complex concepts in simple terms.
What I would add to the problem of "economics is really hard to experiment on" is also that even if you get the law passed and study the results, there are so many other variables that economists can always plausibly argue that the results actualy does not support/disprove the hypothesis since they were caused by other aspects... Say you had an idea for new brilliant taxation scheme and got a country to pass these with effect since 1.1.2019 . You study it's results now and obviously the country is very much not better then before, but odds are it has more to do with covid then your taxation scheme...
"The Pretense of Knowledge" is all you need to know about these economic "sciences".
Not to negate your general point, but in your specific example, you could compare to similar countries who were affected by COVID but didn’t implement this fabulous new tax.
Or the fact that there are literally 10’s of millions of variables, each and every individual in said country and 100’s of millions in some.
How can one understand economics if staying Wealthy depends on not understanding it?
The real truth : The Inflation is unmanaged relation between owned Wealth and money to represent it.
The real Truth : "to own" is a political claim. It does not require "effort". To "Work" , for example, does require some effort.
"Ownership" is a description of an effortless Relation between things, "Work" is a description of an Effort between things.
Creation is effort, therefore the Employee creates the business, the Owner just owns what has been created.
Which coincides with Taleb's view that so much is ruled by randomness that our ability to predict or drive outcomes is so heavily dependent on the said randomness, we shouldn't overestimate our abilities to affect a complex system such as economics of a country.
“All models are wrong, but some are useful.”
--George E. P. Box
True but it often depends upon the requirements of a proof and conditions under which the proof is made.
"Have many theories but tell people you have the right one." - Phillip Mirowski
For controlling society*****
@@MrPinguinzz Yeah, that's what it's all about. If we could trust politicians to be responsible, fiat wouldn't be a problem. Since we obviously cannot, we need honest money with finite resource backing. If only the paper commodities market weren't so derivative and fake, fiat would have been taken down by the Hunt brothers.
@@ysdom Just be aware that the finite resource chosen will then be no longer available for industrial use, may end up being too finite to service the economy and will make to currency vulnerable to destabilisation due to fluctuations in resource scarcity.
EE: "If the experiment doesnt work, well you just destroyed a nation"
Argentinian economists: well, is worth the shot
@Bubonic SoS It's not even a new experiment. Oops venezuela failed, meh let's try again, it will be different this time!
Economist Simon Kuznets said that there are four kinds of countries: developed countries, underdeveloped countries, Japan - nobody knows why it grows - and Argentina - nobody knows why it doesn't
reaganomics economist said the same thing
samantha chong lets not exaggerate Americas doing pretty well
Sadly, they're not experimenting, they're just doing the same mistakes over and over again
7:50 That reminds me of the essay "I, Pencil", one that I absolutely adore. Since I'm no economist, I never realized that Leonard E Read's phenomenal essay was directly based on the principle by Adam Smith!
Adam Smith had to be paid so he wrote stuff that justify the Wealth of those who can pay him.
How can one understand economics if staying Wealthy depends on not understanding it? The Wealthy create economic theories that serve their needs.
The real truth : The Inflation is unmanaged relation between owned Wealth and money to represent it.
The real Truth : "to own" is a political claim. It does not require "effort". To "Work" , for example, does require some effort.
"Ownership" is a description of an effortless Relation between things, "Work" is a description of an Effort between things.
Creation is effort, therefore the Employee creates the business, the Owner just owns what has been created.
hey thanks to you i got to know about such an amazingly cool essay!
"Why Economists Never Agree on Anything?"
Me, an intellectual: *"Well they'll never agree on that statement"*
Talking Rubbish Again !
You, not an intellectual: thinking a question is a statement
@@lights473 you: even less of an intellectual: failing to see that the question has a clear premise, that is the statement to which the non-intellectual is referring.
@@yevgeniygorbachev5152 no, a statement is not a question, ever. It is a true or false sentence.
Yes they will.
I feel like I am about to be very unpopular with 2/3rds of viewers all of a sudden.
I like your content also be safe from covid-19
Nah, mate you are doing a fine job. Would love if you did a video on Anarcho-Communist and Anarcho-Capitalist Economies
Ask chi-na
Don't worry mate. As a science student I already have a strong disdain for you just because you're an economist and what passes for 'science' in your field reads like a bad joke to the rest of us.
It'd be hard to make my opinion of you any worse. ;p
You just need to block out the haters with the sounds of the collapsing world economy
Carl Menger's Principles of Economics is such a great book
I love fiction books too!
@@Amquacktador Care to expand on that sarcasm or are you just trolling?
@@edmundironside9435 Sorry, but the subjective theory of value just doesn't hold on for me
@@Amquacktador How so? Am I to believe that you don't think that value is a subjective concept?
@@edmundironside9435 of course value is a concept full of different meanings, and there are almost a whole library dedicated to that only, but i didn't meant the concept but the theory as a whole
Economists be like: "I may be wrong but... ugh, darn it. Just destroyed another nation." ¯\_(ツ)_/¯
"How was your day honey?" - "Well, turns out my theory about taxation was wrong... and I may have just started a civil war."
Talking Rubbish Again !
Friedman, we got a dictator to take Allende out of Chile. Argentina's following soon. You can send your boys in, test out your Austrian school based theories there. If it doesn't work out and the governments actually have to step in with fiscal policy, we'll just lie and say it was a success.
The Chicago school is just this without the "I may be wrong ... ugh, darn it" bit
This is true especially in some developed nations.
I don't think there is enough emphasis on the fact that economics is fundamentally a social science. No matter what there will be chaos in the economy because people are chaotic
And therefore it can't be treated like physics or mathematics. There is no need for calculations and you can't do experiments like in physics because the lab is the humanity and the variables are too many.
@@enixfu It can and should be treated with some mathematics, yet those results are only observations of historic developments, IF those data were measured in the first place of course. What those observations do not deliver, alas, is explanations. We only know WHAT happened but not WHY, because the chain of causality is, as EE said: unanswerable. I like the systematic approach of his video in the 4 chapters.
If all math is thrown out of the window, then economics becomes religion. That is the worst that can happen to it.
@@enixfu Math is just a language. It can describe chaos just as well as it can certainty. I'd encourage you to be more open minded... any problem can be solved with math, even answers to chaotic or irrational questions. Even questions that have more than one definitive answer, and especially questions that have zero answers.
The Austrians did address this with Praxeology.
In the past I think this was true, but I think things may change soon. Turns out people and populations are far easier to model and predict with machine and deep learning algorithms than weather patterns for example.
It was always believed meteorology and social sciences were more in common, but I've worked with research psychologists (I'm a clinical psychologist myself, but still get to study with those folks :)), and they're pretty much admitting the best results they're getting now are from their collaborations with computer science majors.
The gap is closing on the days when we thought humans were special in a non-mechanical sense. Determinism is going to become a very harsh reality in the not too distant future if some of what I've seen is any indication, and people are going to learn they really are extremely basic, simple, predictable, manipulable, and ultimately naive entities that can be very well defined and controlled like any other variable in our more hard sciences.
Granted, we won't be getting 5 sigma results in social sciences for a long time to come, but what's interesting is while it was once thought probably impossible, I think uncertainty is building in that area, and we may very well discover that while we can't explain the black boxes that pump out the predictions of human behavior we create, they actually might be able to get accuracy on that order of magnitude given enough time to learn about us.
Once psychology gives way, sociology and economics will follow naturally... Also probably those two will give way before psychology frankly, just because noise can wash out in larger trends, and if you're just looking for large scale accurate predictions with a reasonable margin of error (Which is generally what sociology and economics is doing), you don't need near the accuracy you need for individual psychology.
This is all VERY speculative based purely on what I've seen by the way... But... I think if you explore these sciences you might at least understand why I'm so persuaded, even if you conclude I'm wrong.
0:00: 📚 Economics is a complex social science with no definitive solution, leading to disagreements among practitioners.
4:28: 📚 The classical school of economics, led by Adam Smith, emerged in the 18th century and challenged the flawed mercantilist system, focusing on increasing the wealth of nations through mass creation of wealth.
7:27: 💰 The early philosophers and economists believed in the importance of an optimal distribution of wealth and division of labor for economic growth.
11:29: 📚 The Austrian School of Economics challenged classical economics by introducing the theory of marginal utility.
14:11: 📚 The Austrian School of economics emphasizes the importance of subjective value and rational consumer decision-making.
17:26: 💡 Keynesian economics introduced countercyclical fiscal policy to smooth out the business cycle and manage economic affairs.
21:10: 📚 Economists have different opinions and approaches, but they all work towards solving the central economic problem and agree on the importance of investing in the future.
Recap by Tammy AI
👍
Actually, Austrian econ is mostly concerned with having governments empower bank CEOs to determine public policy by determining what public goods get funded when banks make loans.
Austrians despise federally funded public goods that reduce household reliance on bank loans.
They think our government should only fund narrow interests when it issues our currency and only pretend to despise government spending more generally
Because our elites actually do understand that we use government issued 💵 to shop, pay our banks back, pay tax & net save.
In this sense, Austrian thought leaders are just a bunch of demigods
Thank you 😊
How can one understand economics if staying Wealthy depends on not understanding it? The Wealthy create economic theories that serve their needs.
The real Truth : The Inflation is a unmanaged relation between owned Wealth and money to represent it.
The real Truth : "to own" is a political claim. It does not require "effort". To "Work" , for example, does require some effort.
"Ownership" is a description of an effortless Relation between things, "Work" is a description of an Effort between things.
Creation is effort, therefore the Employee creates the business, the Owner just owns what has been created.
@@reasonerenlightened2456well said
I understand you needed to prioritize certain information, but I think it would have been great to point out why Keynes and Hayek disagreed soo much. For Hayek, the entire reason that the business cycle of ups and downs existed in the first place was because the state intervened to control currency and its ease of access (federal interest rates), which lead to systemic malinvestment. Keynes looked at the business cycle as it was and proposed a solution to the question of how to minimize the symptoms of that intervention, but the Austrians largely felt he was ignoring the root causes of the the problem and proposing a bandaid solution that would leave us worse off in the long run.
Comment was more informative than the entire video. I'm reading How Markets Fail by John Cassidy which has been very hard to slog through, but has highlighed that fact.
And it is worse in the long run, just look at Japan, the whole economy is a zombie, with already negative interest rate and it's stagnating.
@@Gadottinho Japan is a unique case. Culture has a habit of interfering with otherwise rational economic models, which is largely what we are seeing the impact of in Japan. They have low employment and business dynamism because their society created social consequences for leaving your employer for a better wage, or taking a risk on a startup with the banks money, which means there's little change in wages or production. Couple that with very low birth rates, no immigration, the need to care for the elderly, and Japan never really had a chance. Their problems are far from being caused by some business cycle, their currency has been stable for quite a while.
And then he said that we all would be dead in the long run so who cares
Would you call this the “political business cycle”?
An interesting quote about the 1930s depression compared with the fed’s action in 2020:
“Economists Milton Friedman and Anna Jacobson Schwartz showed that the Fed helped turn an ordinary recession into the Great Depression. In a speech given in honor of Friedman’s 90th birthday, Ben Bernanke, a governor of the Federal Reserve Board who later served as chairman, said, “I would like to say to Milton and Anna: Regarding the Great Depression, you’re right. We did it. We’re very sorry.” In the current crisis, by contrast, the Fed acted swiftly and aggressively to shore up the financial system. The central bank took such unprecedented steps as massive purchases of corporate bonds, even including some below-investment-grade issues.”
“He uses statistics like a drunken man uses a lamp post, more for support than illumination.”
-- Andrew Lang
Is he related to Yang?
Mises in Human Action says statistics and cardinal math (1, 2,3, not 1st, 2nd, 3rd) are valid in economic history, not economics. Even the most fanatical econometrician needs theory to explain statistics but they evade that. Theory in economics is abstraction from observing and conceptualizing production for a market. Theory says what necessarily happens. Statistics says how much happened in a concrete situation. Pikettys Capital is statistics w/o theory, signifying nothing except political correctness.
Trade-Richard Cantillon
Treatise Political Economy-Say
Principles Economics-Menger
Individualism-Hayak
Capitalism-Rand
Statistics identify coincidences, not causes.
@@TeaParty1776 naw it can def identify causes, look up causal inference...
@@Gallic_Gabagool Evidence for statistics identifying cause? Statistics can say identify the price of bread in late 19th century rural France but it cant say that it had to be that price. Moderns confuse cause w/coincidence.
Kudos, to you. As I'm weird, I'm currently watching your channel for entertainment whilst on holidays lol!
I've also recommended your channel to my eldest, who recently completed an undergraduate degree in public health and is doing her Masters next year. In this era of globalisation, I believe all the social sciences are interlinked... your channel is very accessible to those without a background in economic theory. And compulsive viewing. Live long and prosper!
More of this style, please. The country videos are cool for exploring specific subjects and reinforcing those ideas with specific case studies. But these in-depth videos on the basic terminology help a layperson like me understand what each position in the discourse is even referring to. Thanks for doing what you do!
THIS!
“All governments around the world are lowering taxes” “Governments are very quick to lower taxes but often forget to raise them later” *laughs in Argentina*
USA has collected more taxes most every year since forever. Including 21019. They just abuse the budgets even more.
ROFL in all Latin-American countries
Argentina is very quick to raise taxes, and never forgets to raise them later.
@@Tenebrousable 21019 was quite the year.
If you have an "Austrian" party and a "Keynesian" party, guess who gets elected in good time, and who gets elected in bad time?
I enjoy your videos. Probably mostly because I enjoy your accent and enunciation so much, but also believe I learn things from you.
I’ve read a lot of the comments and I’m disappointed that no one criticized your talking about Adam Smith’s pin making breakdown, while illustrating it with videos of needles.
cause it doesn't matter in the context of the video as a whole. keep useless negativity at home
I will never understand why economist want to be scientists so badly.
Even Engineering is not a science! And engineers do deliver.
Hahaha fair enough. :(
"Even Engineering is not a science! And engineers do deliver.
"
But imagine engineering in a world without scientists. It wouldn't really work that well.
So even if economists were supposed to be more like engineers; who would be their equivalence to scientists?
@@josephburchanowski4636 I dunno, the Romans managed well enough
@@ungainlytitan1460Trail and error can get you a decent bit, especially if you record it loosely. Although if you were to attempt modern civil without any scientists or physics, it wouldn't go that well. Do remember you don't get to see all the structures the romans failed at; survivorship bias.
Because science is based on tangible, empirical evidence (or the closest we can get to that). If you want to have somebody adopt your definition of what you think the world is/should be, they cannot argue with empirical proof.
I will not allow you to make fun of Keynes vs Hayek. That work of art has given me more knowledge in 10 minutes than a certain smooth talking kangaroo has in all of his videos.
:(
Well it equalized both but it’s like saying Einstein’s vs Newton’s theory of gravity.
They are on different levels Keynes has founded a new Macroeconomic perspective just like Einstein showed a new perspective on gravity.
The producers were Hayekians either way so there is that. But at least you could learn 1/10th of the Keynesian Theory Building.
Marc T wrong, Keynes and Post-Keynesians proved predicted that there is no Labour Market in the Classical Economic Thinking. As if you cut wages, to lower the price of Labour to get full employment, you also cut demand in the market, so you have less economic activity and create more Unemployment.
Just like we saw in Greece, in the US during the Great Depression, and in every other country that cut wages while productivity rose.
Through lower wages we could also see that companies invested fewer and instead put their money into banks, without the banks being able to find investors as companies were saving instead of investing. The Banks then gambled in The financial sector’s creating bubbles after bubbles to keep the economy running. Same thing happened from 1919 to 1929-1933 when the bubble finally burst and Roosevelt was elected. Starting the great Keynesian era
"Smooth talking Kangaroo"
Really had to do my mans like that? 💀
Keynes: A war save the economy.
that's all folks
Try to get Keynesians and Austrians to agree on what inflation is: Keynesian economics believes that inflation is "meh rising prises tho"; Austrian economics knows it's the expansion of the money supply, thus resulting in rising prises
Austrian economics would describe inflation as increased money supply that has various consequences, and a general level of higher prices is one of them..I think of this as the currency loses value relative to everything else.
@@Rainy_Day12234Correct, and the reason why it doesn't loses value at an even faster pace, it's because the production and logistics technology gets better overtime. So if expanding the money supply (printing money) wasn't a thing, the norm would be for currency to increase in value.
Keyesian>Austrian
You speak as if these two are not concordant. Inflation is rising prices, caused by growth in money supply. One is a definition, the other is the reason.
@@so6568Growth in money simply not backed by increase production *
As an Econ student who got very tired of hearing “this is important because this S&D graph represents what a monopoly would look like”, it’s very refreshing to see your videos!
Pretty much everything in Economics is a trade-off. Pair that with the different knowledge of people and you get a good mess!
*cough**cough* America's definition of communism
Im American and i can vouch for that
Windigo Jones public healthcare is a thing many americans accuse of being communist, and that’s not strictly about taxing the rich to give to poor people. It’s more of a trade-off.
But it may just be a thing in the media and layman’s opinion. I’m not sure if that is a widely held view in the USA because I don’t live there. And by the way, I don’t see how you took his comments as saying communism is about trade-offs? Maybe I’m just confused.
I disagree
Rodrigo Andrade i don’t know who told u that Americans think it’s communist, but those aren’t the main reasons Americans are against it. A lot of it has to do with taxes and government efficiency
Sending you love, brother. I've been there too. For what it's worth, you are seen in my heart. May you find peace.
What's so crazy about a seed based economy?
-Birds
SEED BASED ECONOMY, NOW!
Yeah, that is less crazy than gold based economy that medieval Europe had
Talking Rubbish Again !
@@ritwikreddy5670 What's even crazier is NOT having a gold-standard. Normies will catch-up soon enough.....
Japanese rice based feudal economy *sweating*
Just a commentary. In the marginal revolution there were two visions: Carl Menger (Founder of Austrian School) and Walras & Jevons. Menger's explanations didn't use math formulas, didn't start with idea of "Markets in equilibrium", didn't think of economics as something static, didn't think as individuals to be rationally perfect, etc. Don't mix marginals schools.
Right. It seems contradictory to say that value is subjective but individuals are all rational economic actors.
@@rwatertree Rational is a weaker condition than it sounds - people are allowed to want wildly different things and value them differently, subject to only a few consistency constraints. It's very specifically not a value judgement on whether one consumer will think another consumer's preferences are prudent/reasonable/sensible. And "subjective" in the same sense as "situational" - e.g. a medicine is only directly valuable to the consumer that needs that specific medication; most consumers probably don't have any use for a combine harvester, or a big crane, or .
“I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible.”
Milton Friedman
That idea destroyed chile
@@forzaacmilan36 not true. How would lower taxes destroy a nation?
@@forzaacmilan36 the most important part here is “whenever it’s possible”,” cutting taxes at a wrong time will lead to bad consequences
@@forzaacmilan36 Chile now is worst than 10 years ago so I would reconsidering it. Not having a perfect society at the time does not mean the economy was destroyed. It was one of the best of South America and still was growing. With your last few socialist governments shift you stoped that progress and are going in the wrong direction. Now there is more inequality than 10 years ago. Typical socialist governments doing the opposite of what they claim to change, good intentions but not enough if you ignore classic economics.
EE: "Economics is a science"
Milton Friedman: "Economists shouldn't concern themselves with real-world data."
You make me want to pursue an economics career in the future.
Well it certainly isn't going anywhere :)
I’ve got the same feeling from these videos, he’s like the Bill Nye of economics
@@ahumanpeople Bill Nye? Don't insult EE.
Grade requirements for economics tend to be high 😭
@@sajanator3 *laughs in econometrics*
Classical: hard work and produce as much stuff
Austrian: smart work and be selective about what’s produced
Rationalism moment
Keynesian: hard work to produce nothing of value, get paid by the government with other people's tax money
@@davigurgel2040 incel detected
@FagundaioFagundes imagine using “cuck” unironically, nowadays I have come around to the idea that taxation by a bourgeois government is theft (became a communist). However you still radiate incel energy
Keynsian: Money printer go brrr
I think there's another reason that wasn't mentioned in the video: economics is a relatively young science. It's been only 250 years since Wealth of Nations. For all the comparisons to physics that scholars like to make, physics has been studied in one form or another for more than 2000 years, going back to the first astronomers studying the regularity of the planets' and stars' movements. Even then, there were enormous disagreements about fundamentals for hundreds of years. To expect a similar sort of consensus from economics is silly, despite the relative ease with which information is transmitted since its inception. Econ is going to achieve similar levels of understanding and consensus, but it will take time.
Economics is a human driven thing, that's why we or atleast the scientific community doesn't welcome it. It's simply too human centric therefore not standardizable and testible and reproducible.
Not welcome in the scientific community ? Economics is about concluding and reaching optimal solutions based on scientific hypothesis. It uses scientific tools to calculate hypothesis and proves the validity of economic theories.
I think you never heard of econometrics before
@@midogarf9366 Isn't it the other way around?
@@midogarf9366 it's not. Cannot do that with human behavior
@@Dan16673 you can do that with human behavior. You don't get precise and specific answers. However, you get ranges and estimates that you can base your decisions on.
That would put you in the best statistical situation
@@midogarf9366 nah. It's just math-ter-bation. If so we could predict the future with good accuracy.
As someone who has a very rudimentary understanding of economics, I welcome the broader scope of this lesson as opposed to the regular case studies and topical discussions (which are still really good).
If you want a general understanding of the dialog around theory, then bear in mind that talking about Keynes is really talking about Karl Marx. Keynes was a Marxist. Some economists admit this, but most don't because it's politically divisive. Keynes was controversial during his time, was admittedly a socialist, and was aligned with socialist causes. Like all influential thinkers, Marx was wrong about some things. But he was right about democracy and capitalism successfully coexisting only if political equilibrium between the social classes is established. That translated to the famed 1950s middle class. Socialism and capitalism are addressed in black & white terms mainly for the sake of keeping voters divided.
@@tuberific454 When you mentioned Marx I understood why I couldn't stand aspects of Keynes theory even without knowing this fact XD
@phoearwenien4355 Based on your response it sounds like you take issue with living in a developed nation since without the New Deal the US wouldn't be one.
@@tuberific454 Yeah, developed since '89, because before it was under communism with things like general poverty and hipeinflation ;)
@@phoearwenien4355 You're saying before 1989 the US wasn't a developed nation?
"WE NEED TOILETPAPER!", shout the Consumers while the economists cry in a corner
"And that's how you know value is subjective"-Austrians, probably.
@@ingold1470 well....my parents did panic-buy toiletpaper......but we're not rich yet. :(
but we still have tp left from last year xD
Last time I was this early, economics were not a thing.
ahhh a mercantalist I see!
Hunter-gatherer I see
return to monke
Return to your hovel you serf!
EE: "In the next video: the comment section is a free for all brawl!"
Classical and Austrian Economics are the only ones that make sense, honestly, and are consistent with first principles.
u hella dumb
Neither of them make any sense.
The Real truth : Inflation is unmanaged relation between owned Wealth and money to represent it.
The real Truth : "to own" is a political claim. It does not require "effort". To "Work" , for example, does require some effort.
"Ownership" is a description of an effortless Relation between things, "Work" is a description of an Effort between things.
Creation is effort, therefore the Employee creates the business, the Owner just owns what has been created.
Both have been debunked by empirical studies on a rolling basis.
I think what I hate the most about Austrian economics is that its supporters tend to be the most dismissive condescending know-it-all assholes in the field.
Japan's economy stagnated massively since they adopted keynesian economics back in the 90s.
I think he said that is the whole point of Keynesian theory, it smooths out the Boom and Bust.
We are getting there...
Fed: QE to Infinity!!! Fire up the Money Printer!!!
They did it too late, years late, that was the bane of the Japanese economy
Japan has a problem that it has reached the technologic frontier, has aging and shrinking population, they really cant grow much more than 1 or 2%. But you can find many developing countries using Keynesian tools that have high growth rates.
sim l 0% growth isn’t smoothing out irregularities
@@GhPadua Like which Country? Do those countries also have a huge Bust Cycle though? The only Country I can think if is Australia which avoided the recession for almost 3 decades.
But those countries piggybacked their growth off the rise of China, Australia for is absolutely did. Right now China is about to hit a brick wall, and rising tension between China and the West will throw another wrench into the mix. We will see how it goes.
Oh good, I'm sure the comments underneath your Marxism vs laissez-faire video are going to be *totally* civilised...
I just hope he accurately represents the labor theory of value.
@@lysergidedaydream5970 Yeah lol.
@@lysergidedaydream5970 I would also like to see if he contrasts the different forms of socialism (centrally-planned state socialism/communism, syndicalism, market socialism, etc.).
@@ShnoogleMan
That would be awesome, but I doubt he will. Here's hoping.
@@ShnoogleMan I would like to see this too. I'm an AnCap, but Im usually pretty disgusted at how anarcho syndaclists are immediately dismissed. I dont agree with any of the more nuanced implementation details of socialist thought, but I think its pretty disingenuous to lump all of that in with Stalinism.
If you were my lecturer I wouldn't be leaving my assignments to the last second every single time! Great job!
Adam Smith's economic theories work incredibly well for consumer markets. The problem is they pretty much overlook that the labor market is completely different.
@GaslitWorld f. Melissa B Environmental economics and Ecological economics.
Both schools are relatively new and brilliant, but they're viewed with skepticism by the mainstream schools of economics(or in the case of the more laissez-faire schools, outright hostility), because as you rightly pointed out, many economists are too narrow minded and seem to rely on a certain set of assumptions, generalizations and abstractions about both the natural world and human behavior towards it, when confronted with difficult ecological and environmental issues.
To much models and assumptions about the limits and capabilities of people and environment, based on armchair theorizing in academic ivory towers that are completely detached from real world ecological and environmental issues.
Labour is a commodity (a lot of people don't like this fact). It is exactly the same as the toothpaste market.
No no no.... Labor is the same. Its just being stomped on, because it doesn't line the "stockholder's" pockets, or the CEO's, CFO's and board members. Unionizing is now a legal gray area due to now trillions of dollars of lobbying.
Its not being VIEWED as the same. But know your worth and your rights, don't let yourself be bullied, make a paper trail so they can't make a different one.
@Loganls I heard that same argument by unions and the government in my home town. Their belief lead to the results. If you think that is a good thing, move to Detroit.
Resource. Not commodity.
I’m sure videos will eventually be made about this on your channel but I’d love to see you take on the neoclassical, heterodox, and Marxist schools of economics. Especially talking about the socialist calculation debate in the context of data analytics would be fun
EDIT: Marxism vs laissez-faire might address these concepts so I’m pumped!
Isn't classical just lassez faire?
@@drake1896 no. Classical is a branch of laissez faire. Austrian economics is a positive(no value judgement on action) view of economics that leads to laissez faire conclusions.
@Yellow Gary so classical is a school of economics that believes laissez-faire is ideal
@@YellowgaryIn fact there is Distributism/Corporativism that makes way more sense. But the best proved economic system of the XX and XXI centuries have been National-Socialist economy, with MEFOs, leasing in the international market, a money based on work and not on gold or debt etc.
The austrian painter was a f*cking genius. The true austrian school of economics.
Marxism belongs in theological discussions and not economics.
Thank you to our host for this thoughtful presentation. Your graphics are the best ever. Learned a lot
“Fiscal policy didn’t matter during mercantilism”
Tell that to the spanish lol
But for the most part that seems legit
17:12 very strange that they would label austrian economics as ''philosophy'' since it's more about ''Psychology'' which in many schools is still part of philosophy, the argument of austrian economics lacking verifiable data is somewhat silly, since all models created by economics is about Psychology of choice, resources and distribution of goods and services, in this way Austrian economics is more laissez faire than keynsian economics, where as Keynsian are almost authoritarian and corporatist in an attempt to quantify all economic data to it's models, merely having more data does not mean your analisis or superiority is somehow proven, in fact we've seen and endured the problems with keynsian economics for some time now, with the accumulation of debt, where as the invention of crypto currencies and other new forms of economic development shows that this debt based system of keynsian economics does not work long term, it collapses and merely borrows more money, creates more corruption, more government power to the point that we have protectionists and open socialist and communists claiming to want to abolish capitalism.
I know this channel is honest and does good work and I think they are trying to represent both economic systems as best they can but I realy can't stand keynsian economics.
but if what I wrote her comes across as arrogant, ignorant, austrian school, economics fanboyism, I would like to hear from you why that is and why keynsian is beter compared to austrian school, thank you for your time.
Well, most of the criticism you have against keynesians is indirect arguments. Yes, gouvernment corruption is indeed the Achilles heel of a keynesian oriented economy, but you cannot say say the keynesian economy is bad because of that since his model assumes the gouvernment fulfilling its role to the best it can. Corruption means that you break away from such a system. It's like saying a Smart (the car) is bad because you cannot go off-road hill climbing with it.
@@Dwarfplayer what do you mean? From my perspective it seems that austrian economics is more individualistic compared to keynsian economics, economics is not a hard science like phisics or mathamatics, it might use models based on math but it's goal is to predict outcomes of economic models.
If you enforce protectionism, this will be the likely outcome, you enforce capitalism then this is your likely outcome, the problem is that words, meanings and economic systems like governments changes, current CCP China has communism in it's name but it's nothing like the historical model of communism, technology changes, therefor economics can change as well and with that economic models.
Perhaps keynsian economics became nessisary due to changes in economics or perhaps it's a imperfect model which austrian economics can surpass, perhaps they are both wrong and Chinese economics are the future, we don't know, though from my perspective keynsian economics is failing to a degree.
@@nottoday3817 well in a perfect world communism actualy makes perfect economic sense, the reality is that historical communism has been a utter disaster for the world and economics of the USSR, was it nothing? No but it failed to compete.
It's like natural selection and evolution, the side that is most adaptable wins, though this relies on what the environment demands.
I know biology and economics have little to do with eachother but if keynsian economics are perfect than there would be no austrian economics to attempt to compete with it, nor would China be the second biggest economy in the world.
Economics is OF COURSE a philosophy. The same way any deductive/inductive rational thinking is. Experimental science is a branch of philosophy. What they should have said is that "Classical theory is a branch of metaphysics (sic!)".
I think you should do at least a video for each one of those theories,a single video is just not enough to talk about all they argue for,and also a video for the neoliberal school of though and how it diverses from the new liberal model
I think it's coming. He ended on Hayek. He's going onto the debate between free market and socialism. There's a chronology here...
This. As it stands it leads the viewer to believe that the three schools are just stages of evolution, each fully replacing the last much like the different theories of the atom.
"Titanium Porsche? Yeah, sure." - Bezos, after buying everything else on the planet.
Just listened to the President of Argentina‘s explanation of how he turned around his economy with an Austrian economics school of thought. Fascinating listen and I would like for you to please make a video on his comments and the available statistics. (currently a business administration undergrad student interested in getting my masters in business)
This popped in on my feed. I realized what I was listening a minute or 2 in and was like boom sub. My brain loves delicious info snacks in this format! You've got a like sub abd a bell out of me
Austrian>Keynesian. The inflation we are experiencing now is a direct result of using Keynesian philosophy to "fix" the recession caused by government overaction to Covid. Countries like the USA are recovering faster because many states chose to not overreact and destroy their own economies. Australia on the other hand has a long fight left to overcome their governments self-immolation of their economy. I'd say it is hard to tell if application of Keynesian philosophies has actually ever helped anything.
This is a really great video. I think about the differences in these ideologies all the time but you compiled and explained them very well in just a 27 min video!
Just to note: scientists do argue about quite new theories in many aspects but it does get settled after more evidence comes up.
Economics on the other hand...
That wasn't a true communism! Next time it will work!
@@S3Mi87 a mass starvation and multiple dissolved nations later
If Keynesian economics basically enabled the government to spend more money (by inflating the currency), and we know the government funds our colleges and student loans, what economic model do you think academics are going to support when they are looking for government funding for their college programs?
But when they manipulate the currency for the elites (all the time), u have no criticism. Nice.
exactly!!!
Good point. How can one understand economics if staying Wealthy depends on not understanding it? The Wealthy create economic theories that serve their needs.
The real truth : The Inflation is a unmanaged relation between owned Wealth and money to represent it.
The real Truth : "to own" is a political claim. It does not require "effort". To "Work" , for example, does require some effort.
"Ownership" is a description of an effortless Relation between things, "Work" is a description of an Effort between things.
Creation is effort, therefore the Employee creates the business, the Owner just owns what has been created.
"There is only so much tea and coffee a household really needs..."
...
You take that back.
“Well you just destroyed a nation” 😂
#oops
Economics Explained I love your channel a lot. It’s amazing
And really, a destroyed nation is such a small sample size. To prove a theory, you must destroy *many* nations.
@@Reavenk
*Authoritative economics like Nazism (more political, but still economical theories), Stalinism, Maoism, and Pinochet has entered the chat.*
@@Reavenk I think we’ve had a large enough sample size to know Marxism is terrible 😂
Should’ve included Chicago school of thought and it would also be useful to do a video of saltwater vs freshwater economists
Chicago school, an attempt at bridging the doctrines between Neoclassical and Neoliberal thought if I'm correct?
chicago school is part of neoclassical econ
@@marinstinic5206 ah. 👍
@@marinstinic5206 more specifically monetarism
I have a bachelor's degree in economics, and now since I have stumbled upon austrian economics, I can say that all econ schools are rubbish because they're all keynesians.
Same Lol, I haven't turned back since reading Human action by Ludwid Von Mises.
@@shyguy1845 yeah, all those fascists/nationalists that said "I've been a libertarian before" have clearly never been a true libertarian that understands the true core of freedom.
i'm learning about austrian econ as well
That doesn’t make sense, Austrian school is not Keysian!
@@torpedodropkick59 I never said that it is
15:36 - Rational consumers - Background full of vodka bottles
That is fine.
The marginal utility of alcohol is infinite.
@@rwatertree Ha, 😂 I like that,
That very phrase brings some hugely impactful assumptions though, "How to satisfy unlimited demand with limited resources".
Most of all it equates all demand, like my demand for video games and starving persons demand for food. Has demand never been put in second priority after the actually limited needs, in economic theory? Can you not make a market-system that makes sure everybodies needs are satisfied before the demands(wants)? (yehyeh needs are subjective, but to a point. Everyone needs food and housing.)
It actually doesn't equate those things... by definition the demand for a need is objectively higher than the demand for wants. That's what the words want and need mean, after all. Current economic models can already explain the difference between the two, and it gets pretty ugly if left unchecked. Fortunately most markets don't meet literal infinite demand, because most needs and wants are also finite. The closest we really get to actual infinite demand is with healthcare, as people always want to be in top condition... the more that need is met, the more people will demand it. Healthcare is also interesting on the supply side, as quite a large number of healthcare issues don't actually require any resources at all to fix, so the main "supply" that is limited is knowledge, which is met by supplying the time of the doctor in question. It's a huge mess, really... with so many inefficiencies, most of which stem from it not actually being an industry that fits any type of market. Infinite demand met with uneven and unsteady supply which can vary from zero to infinite in itself. It's a chaotic market specifically because it breaks the fundamental question of economics by *not* having strictly limited resources in all cases.
@@dontmisunderstand6041 i dont know, for each and every person that might be true, but for society as a whole it is not. Pharmacuetical research is driven by luxury demand, things like hair-loss or impotence prevention. If it were driven by aggregate need it would be focusing on fixing malaria or any major diseases. Of course now that the west is experincing Covid, research may actually be centered around this disease.
I do agree on your assesment of healthcare in general though.
@@adamsvensson8818 The demand for research is an interesting discussion in itself, as it has an inherent disconnect from the market it actually impacts. Researchers are meeting the demand of the companies that want to make money from consumers, while those companies are the ones actually trying to meet the demands of consumers. This creates a buffer between the consumer demand and the entities actually producing the product that ultimate reaches the consumers. This pushes the profit incentive away from meeting consumer demand and toward meeting the demands of the middleman. The two likely overlap in quite a number of ways, but it's important to remember that they will not be identical. Another interesting aspect is that the demand for research is also quite limited, almost exclusively to ideas that can be monetized or capitalized upon... with obvious exceptions for public sector research.
@@dontmisunderstand6041 that is interesting! But the same is still true for basic things like access too food, no? The dominant economic theories of today still suggest the best way to fight hunger on a social level is to increase overall GDP. The obvious answer seems to me to be a basic income/basic ammenities program that would stem from an economic theory that prioritizes needs over wants.
Of course, my gift is to refine things. Your depiction of Classical and Austrian is excellent. You omit the fundamental question that drove their respective, become collective, investigations. Namely, "What is the source of value?" The Mercantilists believed it was gold as you said, and/or whatever could be traded for gold because conversely, gold could be traded for anything, duh. For your reasons cited, Adam Smith et al realized nope, it wasn't gold but labor (your depiction of "production"), or the turning of useless raw materials into useful stuff. A log is useless whereas lumber is useful, therefor labor is the pixie dust that makes something "valuable." The trouble was the uneven distribution of just how useful/valuable a given thing could be across diverse populations. The quandary was summed up by the infamous water diamond paradox. How can the most useful thing to humans, water, be so cheap while the most useless thing (at the time), diamonds, be so expensive? How can diamonds be more "valuable" than water? As you say, the Austrians stumbled upon the idea of "utility," which today means "usefulness", but back then had a broader meaning of "serves your desires". Utility explained how the same object, like a porcelain figurine of a dog, could be valued highly by one person and absolutely worthless to another person. This was their "discovery" of the "individual", of the power of individual wants and needs. It was the cap stone principle in the collection of broad sweeping changes called The Reformation; the transition from the idea that the individual's purpose is to serve/maximize the group to the idea that the group's purpose is to facilitate the potential of the individual. The overarching quest of Mercantilists, Classicists, and Austrians was to explain the source of "value." That, however, was not Keynes' question.
Sources and explanation about The Reformation being about individuals and groups, please? Really liked the way you explain
@@Copperhell144 The source is my brain filled by 50 years of reading most everything on political economy from the Magna Carta to the Federalist Papers. In short, The Reformation was the movement to break the political stranglehold of the Catholic Church over Europe, which power the Church maintained via religious hegemony. We know the Catholic protestors today by the religious name Protestants. The root idea which spread like wild fire was, the individual can approach God himself without the need of The Church to do so on his behalf. This had huge political ramifications because no government in Europe existed without the sanction of the Catholic Church; the Church and State were married and the Church was a polygamist. But more importantly, it had a huge effect on the psyche. You had to think for yourself if there was no Priest to intercede for you. Thinking for yourself was heresy, execution level heresy. The Reformation essentially made it okay to think for yourself. HUGE mind shift, absolutely huge, almost incomprehensible to Westerners today. This awakening of the human mind, over roughly a 100 years, laid the foundation for The Enlightenment; the birth of "science." The classical economists like Smith and Riccardo flower and bear fruit in this period. But they never would have without The Reformation breaking the Catholic Church's mental chains on the human mind & spirit.
Here's to hoping that sometime between now and the eventual heat-death of the universe that Economics Explained will rank the economies he already covered.
Anyways, great video. You're always great at teaching economics in both a captivating and informative way!
I mean, if the multiverse theory is correct, we could just move humanity to a more stable universe not undergoing heat death and survive as a species.
I love this channel. Always learning so much.
If you learn so much from this imagine reading books... Maybe like Human Action by Ludwig von Mises. :P I'm not fully convinced EE has read this book yet.
Has the "Marxism vs Laissez-faire Capitalism" video mentioned at 22:58 been produced? I can't seem to find it. I would be most interested to hear your analysis.
Same
best feeling when you can spot your home in the vienna footage
Thank you EE for such a great video! However, I have a small in objection to do.
The true founders of economics where the Spanish scholastic. Francisco de Victoria and other members of the University of Salamanca were not economist as such, but were led to economic reasoning as a way of explaining the world around them. They were at least as pro-free market as the Scottish tradition come to be centrifuges later. Plus, their rhetorical foundation was even more solid. They anticipated the theories of value and price of the “marginalists” of late-nineteenth-century Austria.
Sorry but as a Spaniard, I couldn’t keep it to myself. 😬
The criticism levied at the Austrians that their theories are not “falsifiable” and that the Austrian school is more like philosophy is correct, but not really a criticism. No economic theory is falsifiable because you can’t isolate variables properly in an economy. Even if you pass a policy to test a theory, you can’t really isolate it’s effects. That’s my opinion, at least, as someone with a background in “harder” science.
But that's because people assume the base issues of basic economic woes are solvable, when they aren't, if we in practice had the PERFECT economic system, there would still be poverty, there would still be wars, there would still be the problems associated with human nature and people would demand "solutions" to such things, and a politician will answer with a "economic solution". This is because people assume poverty is something that needs explaining yet humanity began in poverty and it's more about creating prosperity, not removing poverty.
10 days before Keynes died, he admitted that Hayek and the 'Invisible Hand' theory had been correct all along. Better late than never i guess.
That doesn't mean Hayek is right just that Keynes thought he was wrong lol. What if Marxian economics is more correct? Frankly I don't think both schools are showing there age.
is this true?
To be honest, the last 100 years and and the unending misery that communism provides have already proved Marx wrong...
@@FKaps16
The 100 years of communism already went against whatever Marx wanted to have as he predicted a revolution would occur in highly industrialized countries like Western Europe and the US not some backwater like Russia and China the idea of which is wrong in itself as people in a highly industrialized country would been too comfortable and have more too loose than to gain
@MX 3 lol the ussr never surpassed us in gdp growth and was much less efficient industry wise than the us, China has a majority private economy
Economics explained: there's only so much tea and coffee a person really needs
coffee and tea lovers: are you sure
🍵
Those people need medication. No unlimited supply
I firmly believe that counteracting the natural cycle of economics is the worst thing we could have ever done. It's created bigger crashes, prevented new growth by protecting the old businesses that should have failed, created megacorperations and all their evils, and is pushing the world off the cliff at the end of "infinite growth". It's also the root cause of inflation outstripping income, the housing crisis, and generational wealth inequality.
Last time I was this early, countries were still hoarding gold and silver!
Hey could you do a video on the effectiveness of worker co-ops or the validity of the labour theory of value?
The labor theory of value is pretty much 100% *invalid* by the definition of the word "value."
I don't think the labour theory of value has much redeeming qualities, but it is worth making a video on
Man I wish my econ professor introduced Economics like you just did.
Thanks!
Thank you! This is a very good and simple overview of economics. By the way: I don`t see a real contradiction between Austrians and Keynesians as long as both stick to their specific aspect of economics. Austrians have the perfect explanation for how value is defined (namely by the individual consumer). Their field is micro economics. Keynsians are macro-economists. Till now they claim to have (and probably do have) the best recipes how to handle boom and bust cycles. If during an economic downturn the government would pay workers to dig useless holes that would of course be a waste of money but paying workers instead to build necessary public infrastructure (which the market cannot provide anyway) for example would be a perfectly sensible way to avoid or at least dampen a recession.
They are inherently contradictory.
A) Austrians disagree on the validity of macroeconomic as it and it’s formulas are based on (mathematical) canceling
B) Austrians see (central bank) policies prescribed by Keynesian as the root of the business cycles as it sets artificial non-equilibrium prices for money and thus creates artificial oversupply/shortages.
C) Austrians certainly do not agree with the idea of the Keynesian multiplicators realizing the higher opportunity cost surpassed by taxing the money away from people.
Apart from that, it is highly questionable whether Keynesian economics works best to tackle crises. It is mostly base don the misconception that the Great depression was caused and heightened by laissez faire government policy. A claim which does not stand the test of reality.
Thank you for the explanations. As an Austrian I am inclined towards Austrian Economics, but not without checking contradictions to certain positions which might arise from actual economic developments. @@fabianbogg9382
*Austrian school:* Consumers are smart enough to decide what they need, we have to focus on efficiency not flattening the cycles.
*Keynesian school:* Consumers are too dump to decide what they need, we have to tax them and make state cool down the economy.
*Classical school:* dOeSn'T maTteR, jUsT mAkE mORe gOOdS.
Production goes brrrrrr
@@superduperfreakyDj Austrians get that from Krugman who said that productivity is not everything but in the long run is almost everything. You will run into that quotation a lot.
Fantastic video, yet again. Keep up the great work👍
I remember requesting a similar video over a year ago and was greeted with a yes, finally it has arrived :-)
Hope you enjoyed it! Hope it was worth the wait!
@@EconomicsExplained Definitely, not only did I get a video but a whole series! Thanks for the high quality content, just started my BSc in Economics 2 weeks ago
I feel like this one-sided Keynesian economic system of only dampening the bad times is gonna result in a wound-up rubber band slamming the global economy all at once.
Good metaphor.
You have just become my favorite RUclips chanel.
Wow! You are really a great communicator.
Learning some basics about economics with these videos is really easy and pleasant.
It won't make me an expert but increses my general knowledge.
Keep up the good work.
Finally 😍Do you think you could expand on the ideas by Thomas Sowell in a future video?
Yes we probably will in the future, but it will probably be in the form of a case study.
why? he was not important economist. he did not make any contributions to economics. he was political pundit who happened to have a econ degree
@@EconomicsExplained Oh wow! Can I hug you?
Sowell doesn't expand too much on his ideas about economics. Of course he dabbles in economics but he's more focused on other social studies. We know he would be tight with Friedman but anything that would get into the weeds of Chicago vs Austrian school he stays as "milquetoast" as he can on. I agree with Marin Stinic. He has some basic books to help teach people economics but he's not really a defining figure in that area.
Great video. Thanks for uploading.
In response to the statement at 7:00 The WEF seems to be trying to get the majority of the world's population to just "forget" the unhappy part & just tell people "You Will Own Nothing and be Happy..." 😆
Classical economics is about "self interest", not "selfishness". There's a difference. Is it "selfish" to be a baker instead of a blacksmith if your skills and interests better align with baking?
Have you looked into (or made a video on) the taxation of land values only and the removal of all other taxes? This theory relates to keeping the productive gains within the economy which benefits the most productive communities.
An exceptional class on economy, at least from my layman perspective. Thank you.
I'm with Hayek.
Ps you said the quiet part out loud; economics makes sense as philosophy and not science. That’s not a bad thing and means humans have maximal control over the field, not an irreducible axiom like the law of gravity
Given that the philosophical part of economics is largely questioning human nature, "maximal control" sounds a lot like social engineering...
I think part of the problem is that pop-economic and pundit-economics are philosophy heavy, which is what most people are going to encounter and makes the 'most sense' to them. The more science end of economics tends to bore people.. it doesn't produce flashy results and involves a lot of math... so people tend to think of economics in terms of philosophy.
And the math models have failed us. There was never supposed to be such a thing as stagflation, buuuuuuuuuuuuuuuuut...
neeneko there are literally no laws within economics that resist human input. You can’t politicize gravity, but human input literally affects all economics. At the macro and micro scale. Therefore, Econ experiments and theories rooted in science are equally nonfalsifiable, except in material reality. Which means that economics is a subset of politics and philosophy, not a science
neeneko I think the bigger problem is most folks have little to no understanding of how to approach philosophy and go around demonizing it, devaluing it and poorly debating it. Like when you claim “the scientific part of econ bores people” I can’t help but laugh at how backwards you are. Literally the opposite is true, having your beliefs substantively challenged bores (or scares) people, so they run to a superficial understanding of a poorly applied scientific principle to explain away the chaos and diversity in the world
Your stock videos that you use fit well! Where do you get them? Is it a specific website?
7:53
Talk about pins
Video show needles
alright look here you petantic little..
@@EconomicsExplained But being a pedant is fun. It is like having constant *pins and needles* ...
Ok, now that I think about it, it isn't fun.
@@EconomicsExplained Not to be that guy, but it's "pedantic" with a d not a t... Aaaaand I'm that guy
I was listening along (not watching the screen) and when you said "mercantilism" I didn't have a clue what you were saying because I have never heard your interesting Aussie pronunciation of the word. 😂 BTW, Hayek and Von Mises are the best.
Can you explain where the Chicago School of Economics stands here, and particularly Milton Fridman?
Classical
Very close to Austrian. The main difference is their monetary theory
It’s the government intervention that causes such radical economical cycles. Distorting the market signs like interest (price of money) they make entrepreneurs and people in general take loans and invest when they shouldn’t. When the reality of the market imposes itself it causes a big crash. It would be best to just let economy be. BUT as printing and spending money is the primary work of politics, they would never leave the economy in peace. It’s like asking for the wolf to leave the chickens be
Not even a mention of the Austrian business cycle theory and Ludwig von Mises and Friedrich Hayek? Can't believe this. This is by far their most underrated contribution.
Hayek was mentioned in Keynes part.
great ! It was great explanations with super understandable and releatable examples. its hard today to come across videos like this .
*Economics Explained:* "Economics is something that we all feel day-in and day-out."
*Physics:* "Am I a joke to you?"
Morally certainly factors in. For example the classical and Austrian school gets critisized for not doing enough to even out inequality while Keynesianism has done some bizarre things like burning food during a food shortage to boost prices and claim wars are good for the economy etc. There was no mention of this but Austrian school proponents claim that the boom and bust cycle is actually made worse by Keynesianism since it bails out the companies that would have gone under for them to be a bigger problem in the future and low interest rates and printing money leads to the boom and the inevitable bust.
And Keynesianism increases inequality by having the government and its central bank shovel money at the rich every time there is a crisis.
There’s a very good reason why hard science says “you can’t sit with us!” to the social sciences.
Remember, hard science is repeatable, measurable, quantifiable.
Soft science is based on empirical data, data that can, and does, change.
I think we could all benefit from drawing a more firm line between hard science and the social sciences
Cool video, but, specially in what regards Austrian economics, I would agree that it became more philosophy than economics. On the other hand, I find weird that you didn't mention Mises of Rothbard, really important contributions to it.
Please do a video on the economy of Finland🇫🇮
we will do every country eventually :)
@@EconomicsExplained no, you already have stock footage of Austria ready. Do Austria first
@@EconomicsExplained what if new countries are formed in the meantime?