Chapter 16 Web Activities
1. Economist Russ Roberts and filmmaker John Papola have created a video of a rap-off between economists John Maynard Keynes and F.A. Hayek. View the video at http://www.econstories.tv/. Read the lyrics on the same page, and then read the line-by-line discussion of the lyrics at the Daily Kos website, accessible at http://www.dailykos.com/story/2010/3/1/8929/21462.
a. Summarize the basic arguments of Keynes.
Keyne's viewpoint on macroeconomic theory is government intervention is the solution, and not the problem, and that it is possible to prevent the massive swings in the economy that are currently the norm with massive swings back and forth from boom and bust rather than staying within a happy medium between the two. Any Keynesian would point to the Great Depression and how the absence of government intervention caused the Great Depression and that a lack of perfection in administering the economy since was the main causes of the late 70's/early 80's recession and the "Great Recession From 2007 to 2009. Keynes believed that the government could be used to steer markets and cause growth.
b. Summarize the basic arguments of Hayek.
Hayek was a supply-side guy in this argument. Rather than be a proponent of government intervention, he said markets should control and police themselves more often than not rather than the government getting involved unnecessarily and thus making things worse. In addition, Hayek argued that government getting involved with steering and moving markets just makes things worse and that the government...
Which arguments (those of Keynes or those of Hayek) does the author at Daily Kos find most convincing?
The DailyKos is a known liberal site and it's no surpise that they come down on the Keynes side of the argument. They do not openly insult Hayek but they are clearly biased for Keynes when they way that Keynesian though "just makes sense" and that Keynes is a so-called god amongst men as it relates to macroeconomic theory.
Even with the clear bias, the DailyKos does make some good points. They note that the full faith and credit of the United States as well as the much more massive resources as far as money and power go make government a much better arbiter and controller of markets when the time calls for it. Even so, the talk about workers refused to take a pay cut when they simply want more is not the viewpoint of many people that will work no matter what the cost rather than just quit work and/or sponge off the government's largesse. Also, government has been proven to be sometimes ineffectual in spurring economic growth as the United States economy has been stuck in low gear since 2009.
Also, the words about Adam Smith and war driving poverty seems to ignore the fact that the economy in the United States did not recover from the Great Depression in the 1930's until WWII happened and then the economy soared.
Even so, the Daily Kos website makes some god points but it is obvious that they are not unbiased and that the Keynes viewpoint is their "dog in the fight" between Keynesian and supply-side economic theory.
