The Great Debate

I want to hang out with these people. People that can take a dry and academic subject, like the debate between Keynesian and Austrian economic schools of thought, and turn it into a hip hop music video! 

These are very well produced videos with great acting, editing, and production values. A good bit of movie making with a message, it brings the economic debate mainstream and answers that age old question, “Can bald white guys really Rap?”

Keynesian economics is named after John Maynard Keynes a British economist from the 1920’s and ’30’s who advocated steering and manipulating the economy through centralized governmental regulation, taxation and spending. 

The Austrian school of economic thought is represented by Friedrich August Hayek an Austrian born economist also from the 1920’s and ’30’s. The Austrian school of economic thought is pretty much hands off, “laissez faire“, let the free market discover equilibrium through it’s own, organic actions and price discovery.

Austrian economics is out of favor these days, it doesn’t give the government very much to do and how boring is that? It’s much more fun to wield power, dole out government pork-barrel stimulus spending, and hang out with the lobbyists for big business. 

The economic policies employed today are often described as Keynesian. We have the government borrowing and spending “money” like mad in an attempt to stimulate the economy, but all we’ve achieved is the discovery that perverse incentives makes for strange bedfellows. Thanks a lot Lord Keynes!

Again I’ll ask the question, why must we always have growth? Don’t we have enough stuff already? Isn’t there plenty to do just taking care of what we’ve already got? Shouldn’t we really be working toward sustainability and leaving something for our children and grandchildren as opposed to exploiting and exhausting all of the world’s resources as rapidly as possible? 

Are we being driven by the insatiable demands of our debtmoney system or by our fundamental human needs? 

  • Q) Is perpetual exponential growth possible on this finite little planet?
  • A) No. The math is clear.  

Growth can’t go on forever and eventually we’re going to have to contract and consolidate. I only hope we can figure out how to let that happen in an orderly way.

Here’s a quote from another prominent Austrian economist:

“There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved.” – Ludwig von Mises

It’s too bad EF Schumacher couldn’t make an appearance in the videos to give us an idea of what a decentralized, localized free market community might look like. Maybe in the next one. 

I really should do a post on Ernst Friedrich “Fritz” Schumacher, as well as a follow-up on my “solutions” post. I sent my solutions to Jessie, Mish, and Denniger, and have gotten some good feedback. Primarily, “how can you have a free market if your going to give the government the power to create money so freely?”. It’s a great point and it brings me to the question of “Legal Tender” and the idea that if markets are to be truly free we should have competing currencies.

I’ve noticed videos don’t play as well here as they do directly on You-tube. I’m not sure why that is but if you have any trouble playing these here head on over to you-tube and watch them there.

Part one

And here’s round two.

Enjoy.  

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