Keynes vs. Hayek: The Debate Continues

American Rattlesnake ^ | November 27, 2011 | Gerard Perry

[OddLane]

Such was the title of a debate held at the Asia Society, sponsored by Thomson Reuters, which I attended several weeks ago. Coming at a time of agonizing societal fissures arising from debates over austerity, stimulus, and the wisdom of government intervention into the economy, this event pitting the backers of a Hayekian view of economics against those who espoused a Keynesian model seemed incredibly timely.

After explaining to the audience the general structure of the debate and how it would be judged-spectators were given gadgets similar to those distributed at IQ2 debates, which they were to use to vote for the side they agreed with at the beginning and conclusion of the debate-Harold Evans and Nicholas Wapshott, author of Keynes Hayek: The Clash That Defined Modern Economics, limned the underlying philosophical division that gave rise to this debate.

As the introductory remarks made clear, the 80 year-old clash between Keynes and Hayek was “one of the most vituperative divisions in economics,” and the fact that this debate still carried resonance many years after the deaths of both men demonstrated the pertinacity of both schools, which reflected in some measure the confidence that both men had that their views reflected the definitive understanding of how economics works at an empirical level.

[cripplecreek]

Debate hell. Keynes is a proven failure who seemed to think “spend all you want and let the next generation pay the tab”.

Meanwhile, our founders were near unanimous in their feeling that leaving debt for the next generation was destructive to the nation.

[OddLane]

One of the things that continues to shock me is how even the most ridiculous suggestion, even if it's framed as a transparently sarcastic critique of Keynesianism, is embraced by the adherents of Keynes. During the last IQ2 debate, about the Obama jobs bill, Daniel MItchell made a passing reference to the economic growth rate of the early 1950s.

Which led to Mark Zandi, who supported the bill, to remark that the Korean War was a "form of stimulus."

So apparently, if we had had a nuclear war with Red China our economy would have been been in the stratosphere.

[PGalt]

Consider this...(Keynes/Lenin)...

“The setback to Lenin’s project would not have surprised Lenin; the setback to Keynes’ would have surprised Keynes. Lenin’s project will be revived, but not Keynes’, except as a staging post in the march towards Lenin’s goal.”

http://www.networkideas.org/featart/apr2011/fa15_Lenin_Keynes.htm

[ripley]

Has the left seized a hold of Keynes’ theories and subverted them along with everything else it touches?

Seems that it wasn’t a debate about economic policy in a free world but a conflict between leftist subversives and those advocating free and open economies.

(The psychotic left subverts everything it touches.)

IMHO

[sauropod]

read

[PGalt]

“The psychotic left subverts everything it touches.”

EXACTLY!

“Everything about socialism is sham and affectation.” - 23.11 Evil; Ch23 Economic Harmonies; Frederic Bastiat 1801-1850

How about this...(HOORAY Thomas Sheridan!)...

Labyrinth of the Psychopath...

http://www.youtube.com/watch?v=tro2U-cezqo

[OddLane]

Fascinating stuff.

I'm reading the Wapshott book now and it only has one passing reference to Lenin.

[bt-99]

Good Piece, I particullay liked the admonition that government should never undertake projects where the anticiated benefit is less than the cost. If they actually did this 50% of spending(even with a liberal cost analysis) would vanish.

[csmusaret]

If Keynes were right our $15 Trillion debt should equal utopia.

[csmusaret]

http://www.youtube.com/watch?v=pCQAJ5na5Z4&feature=related

[Jacquerie]

Democrats soil institutions.

[OddLane]

Barack Obama's Solution to Unemployment

The casual dismissal of reality by the supporters of the Stimulus package during that debate was astounding.

It's as if they had been sequestered from any news source for the past year and a half.

[ripley]

Thanks for the references. (23.11?)

thanks again.

[nathanbedford]

I was struck by that too.

I suppose the problem is that politicians decide for or against spending according to a different matrix then does a businessman. A businessman wants a return for capital commensurate with risk. A politician wants votes regardless of cost.

That is why there cannot be any permanent hope of rationalizing government spending. It can only be eliminated and that is so difficult as to be next to impossible.

[PGalt]

You’re welcome (thank YOU)...

Click on 23 Evil...(then scroll down to 23.11)...

http://www.econlib.org/library/Bastiat/basHar.html

[PGalt]

That is why there cannot be any permanent hope of rationalizing government spending. It can only be eliminated and that is so difficult as to be next to impossible.

Very well-stated (per usual).

Above all, if you wish to be strong, begin by rooting out every particle of socialism that may have crept into your legislation. This will be no light task. - The Law; Legal Plunder Has Many Names; Frederic Bastiat 1801-1850

[Wildbill22]

Part 1;

http://www.youtube.com/watch?v=d0nERTFo-Sk

and part 2;

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

[Designer]

Thanks for the post!

Perhaps it will even be expanded to include an even more consistently anti-state Austrian viewpoint that will satisfy my disenchanted anarcho-capitalist friends.

This betrays Mr. Perry's understated position. For anyone to consider the two viewpoints as reasonably comparable, one is required to adopt a "moderate" position. Heaven forbid we should ever get back on the right track.

[Designer]

"..our economy would have been been in the stratosphere."

Yea, and not just our economy, but everything, including buildings, children, etc.