This document summarizes a rap battle between John Maynard Keynes and FA Hayek on their differing economic philosophies. Keynes advocates for government intervention and spending to stimulate the economy, while Hayek believes in free markets and opposes government interference. They debate topics like the Great Depression, fiscal policy, the role of savings, and how best to address economic downturns and unemployment. The document portrays their century-long intellectual debate in a rap battle format.
This document summarizes a rap battle between John Maynard Keynes and FA Hayek on their differing economic philosophies. Keynes advocates for government intervention and spending to stimulate the economy, while Hayek believes in free markets and opposes government interference. They debate topics like the Great Depression, fiscal policy, the role of savings, and how best to address economic downturns and unemployment. The document portrays their century-long intellectual debate in a rap battle format.
This document summarizes a rap battle between John Maynard Keynes and FA Hayek on their differing economic philosophies. Keynes advocates for government intervention and spending to stimulate the economy, while Hayek believes in free markets and opposes government interference. They debate topics like the Great Depression, fiscal policy, the role of savings, and how best to address economic downturns and unemployment. The document portrays their century-long intellectual debate in a rap battle format.
This document summarizes a rap battle between John Maynard Keynes and FA Hayek on their differing economic philosophies. Keynes advocates for government intervention and spending to stimulate the economy, while Hayek believes in free markets and opposes government interference. They debate topics like the Great Depression, fiscal policy, the role of savings, and how best to address economic downturns and unemployment. The document portrays their century-long intellectual debate in a rap battle format.
>>KEYNES: Yeah, we're opposed >>HAYEK: We oppose each other philosophically >>KEYNES: In the same studio We've been going back and forth for a century >>KEYNES: I want to steer markets >>HAYEK: I want them set free There's a boom and bust cycle, and good reason to fear it >>HAYEK: Blame low interest rates >>KEYNES: No... it's the animal spirits >>KEYNES: John Maynard Keynes wrote the book on modern macro The man you need when the economy's off track Depression, recession, Now your question's in session Have a seat and I'll school you in one simple lesson Boom! 1929: the big crash, We didn't bounce back, economy's in the trash Persistent unemployment, the result of sticky wages, Waiting for recovery? (Seriously?) That's outrageous I had a real plan any fool can understand, The advice real simple: boost aggregate demand! C, I, G, altogether gets to Y, Keep that total growing, watch the economy fly We've been going back and forth for a century >>KEYNES: I want to steer markets >>HAYEK: I want them set free There's a boom and bust cycle, and good reason to fear it. >>HAYEK: Blame low interest rates >>KEYNES: No... it's the animal spirits >>KEYNES: You see it's all about spending, Hear the register cha-ching Circular flow, The dough is everything So if that flow is getting low, It doesn't matter the reason We need more government spending, Now it's stimulus season
So forget about saving,
Get it straight out of your head Like I said, "In the long run, we're all dead" Savings is destruction, that's the paradox of thrift, Don't keep money in your pocket or that growth will never lift, because Business is driven by the animal spirits, The bull and the bear and there's reasons to fear It's effects on capital investment, income, and growth That's why the state should fill the gap, with stimulus both The monetary and the fiscal, they're equally correct Public works, digging ditches, war has the same effect Even a broken window helps the glass man have some wealth The multiplier driving higher the economys health And if the Central Banks interest rate policy tanks A liquidity trap, that new moneys stuck in the banks! Deficits could be the cure, you been looking for Let the spending soar, now that you know the score My General Theorys made quite an impression [a revolution] I transformed the econ profession You know me, modesty, still Im taking a bow Say it loud, say it proud, were all Keynesians now Weve been goin back and forth for a century >>KEYNES: I want to steer markets, >>HAYEK: I want them set free Theres a boom and bust cycle and good reason to fear it >>KEYNES: I made my case, Freddie H Listen up, can you hear it? >>HAYEK: Ill begin in broad strokes, just like my friend Keynes His theory conceals the mechanics of change That simple equation, too much aggregation Ignores human action and motivation And yet it continues as a justification For bailouts and payoffs by polls with machinations You provide them with cover to sell us a free lunch Then all that were left with is debt, and a bunch If youre living high on that cheap credit hog Dont look for cure from the hair of the dog Real savings come first if you want to invest The market coordinates time with interest Your focus on spending is pushing on thread In the long run, my friend, its your theory thats dead
So sorry there, buddy, if that sounds like invective
Prepare to get schooled in my Austrian perspective Weve been going back and forth for a century >>KEYNES: I want to steer markets, >>HAYEK: I want them set free Theres a boom and bust cycle and good reason to fear it >>HAYEK: Blame low interest rates. >>KEYNES: No its the animal spirits >>HAYEK: The place you should study isnt the bust Its the boom that should make you feel leery, thats the thrust Of my theory, the capital structure is key. Malinvestments wreck the economy The boom gets started with an expansion of credit The Fed sets rates low, are you starting to get it? That new money is confused for real loanable funds But its just inflation thats driving the ones Who invest in new projects like housing construction The boom plants the seeds for its future destruction The savings arent real, consumptions up too And the grasping for resources reveals theres too few So the boom turns to bust as the interest rates rise With the costs of production, price signals were lies The boom was a binge thats a matter of fact Now its devalued capital that makes up the slack. Whether its the late twenties or two thousand and five Booming bad investments, seems like theyd thrive You must save to invest, dont use the printing press Or a bust will surely follow, an economy depressed Your so-called stimulus will make things even worse Its just more of the same, more incentives perverse And that credit crunch aint a liquidity trap Just a broke banking system, Im done, thats a wrap. Weve been goin back and forth for a century >>KEYNES: I want to steer markets, >>HAYEK: I want them set free Theres a boom and bust cycle and good reason to fear it >>HAYEK: Blame low interest rates. >>KEYNES: No its the animal spirits
Keynes
vs.
Hayek:
Round
2
>>KEYNES: John Maynard Keynes >>HAYEK: FA Hayek >>KEYNES: Round 2 >>HAYEK: Round 2.0 >>KEYNES: Same economists >>HAYEK: Same beliefs >>KEYNES: New microphones >>HAYEK: New Mustaches... >>KEYNES: Here we are... peace out! Great Recession Thanks to me, as you see, were not in a depression Recovery, destiny if you follow my lesson Lord Keynes, here I come, line up for the procession >>HAYEK: We brought out the shovels and were still in a ditch... And still digging. Dont you think that its time for a switch... From that hair of the dog. Friend, the party is over. The long run is here. Its time to get sober! >>KEYNES: Are you kidding? My cure works perfectly fine... Have a look, the Great Recession ended back in '09. I deserve credit. Things would have been worse All the estimates prove itIll quote chapter and verse >>HAYEK: Econometricians, theyre ever so pious Are they doing real science or confirming their bias? Their Keynesian models are tidy and neat But that top down approach is a fatal conceit. Which way should we choose? More bottom up or more top down The fight continues... Keynes and Hayeks second round Its time to weigh in... More from the top or from the ground Lets listen to the greats Keynes and Hayek throwing down >>KEYNES: We could have done better, had we only spent more Too bad that only happens when theres a World War You can carp all you want about stats and regression Do you deny World War II cut short the Depression? >>HAYEK: Wow. One data point and youre jumping for joy The Last time I checked, wars only destroy There was no multiplier, consumption just shrank
As we used scarce resources for every new tank
Pretty perverse to call that prosperity Rationed meat, rationed butter... a life of austerity When that war spending ended your friends cried disaster Yet the economy thrived and grew ever faster >>KEYNES: You too only see what you want to see The spending on war clearly goosed GDP Unemployment was over, almost down to zero Thats why Im the master, thats why Im the hero >>HAYEK: Creating employments a straightforward craft When the nations at war, and theres a draft If every worker was staffed in the army and fleet We'd be at full employment with nothing to eat (Chorus) >>HAYEK: Jobs are the means, not the ends in themselves People work to live better, to put food on the shelves Real growth means production of what people demand Thats entrepreneurship not your central plan >>KEYNES: My solution is simple and easy to handle Its spending that matters, whys that such a scandal? The money sloshes through the pipes and the sluices Revitalizing the economys juices Its just like an engine thats stalled and gone dark To bring it to life, we need a quick spark Spendings the life-blood that gets the flow going Where it goes doesnt matter, just get spending flowing >>HAYEK: You see slack in some sectors as a general glut But some sectors are healthy, and some in a rut So spendings not free - thats the heart of the matter Too much is wasted as cronies get fatter. The economys not a car, theres no engine to stall No expert can fix it, theres no it at all. The economys us, we dont need a mechanic Put away the wrenches, the economys organic. (Chorus) >>KEYNES: So what would you do to help those unemployed? This is the question you seem to avoid When were in a mess, would you just have us wait? Doing nothing until markets equil-i-brate?
>>HAYEK: I dont want to do nothing, theres plenty to do
The question I ponder is who plans for who? Do I plan for myself or leave it to you? I want plans by the many and not by the few. Let's not repeat what created our troubles I want real growth not just a series of bubbles Lets stop bailing out losers and let prices work If we dont try to steer them they wont go berserk >>KEYNES: Come on, are you kidding? Dont Wall Streets gyrations Challenge your worldview of self-regulation? Even you must admit that the lesson weve learned Is more oversights needed or else well get burned >>HAYEK: Oversight? The governments long been in bed With the Wall Street execs and the firms that theyve bled Capitalisms about profit AND loss When you bail out the losers theres no end to the cost The lesson Ive learned? Its how little we know. The world is complex, not some circular flow. The economy's not a class you can master in college To think otherwise is the pretense of knowledge. (Chorus) >>KEYNES: You get on your high horse and youre off to the races I look at the world on a case by case basis When people are suffering I roll up my sleeves And do what I can to cure our disease The future's uncertain, our outlooks are frail Thats why free markets are so prone to fail In a volatile world we need more discretion So state intervention can counter depression >>HAYEK: People aren't chessmen you can move on a board At your whim--their dreams and desires ignored With political incentives, discretion's a joke The dials you're twisting... are just mirrors and smoke We need stable rules and real market prices So prosperity emerges and cuts short the crisis Give us a chance, so we can discover The most valuable ways to serve one another. (Chorus)