Keynes vs Hayek

Rap Battle Throwdown, Part III ?

Keynes vs Hayek

It's high time for Emergent Order to make a part III but meanwhile, watch this excellent dramatization of the competing economic paradigms rocking our world!

In "Fight of the Century", Keynes and Hayek weigh in on these central questions. Do we need more government spending or less? What's the evidence that government spending promotes prosperity in troubled times? Can war or natural disasters paradoxically be good for an economy in a slump? Should more spending come from the top down or from the bottom up? What are the ultimate sources of prosperity? Keynes and Hayek never agreed on the answers to these questions and they still don't. Let's listen to the greats. See Keynes and Hayek throwing down in "Fight of the Century"!

Oh, you never saw the original Kenyes vs Hayek Rap Battle, part I?

Shame on you :)

Watch it immediately!

This 5 minute masterpiece is singlehandedly responsible for creating more economics majors and Phds than any other video in recent history.

“After watching this 314 times, spread over 9 years, 9 months, and 3 days, I finally understand every single word, sentence, line, verse, and entirety in this rap battle.”

Lyrics:

[Keynes & Hayek]

We’ve been going back and forth for a century

I want to steer markets I want them set free

There’s a boom and bust cycle and good reason to fear it

Blame low interest rates 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, [whoa]

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, all together gets to Y Make sure the total’s growing, watch the economy fly

[Keynes & Hayek] We’ve been going back and forth for a century I want to steer markets I want them set free

There’s a boom and bust cycle and good reason to fear it Blame low interest rates 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, 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 reason to fear its 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 economy’s health And if the Central Bank’s interest rate policy tanks A liquidity trap, that new money’s 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 Theory’s made quite an impression [A revolution] I transformed the econ profession You know me, modesty, still I’m taking a bow Say it loud, say it proud, we’re all Keynesians now [Keynes & Hayek] We’ve been going back and forth for a century I want to steer markets I want them set free There’s a boom and bust cycle and good reason to fear it Blame low interest rates No, it’s the animal spirits [Hayek] I’ll 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 pols with machinations You provide them with cover to sell us a free lunch Then all that we’re left with is debt, and a bunch If you’re living high on that cheap credit hog Don’t 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, it’s your theory that’s dead So sorry there, buddy, if that sounds like invective Prepared to get schooled in my Austrian perspective [Keynes & Hayek] We’ve been going back and forth for a century I want to steer markets I want them set free There’s a boom and bust cycle and good reason to fear it Blame low interest rates No, it’s the animal spirits The place you should study isn’t the bust It’s the boom that should make you feel leery, that’s 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 it’s just inflation that’s driving the ones Who invest in new projects like housing construction The boom plants the seeds for its future destruction The savings aren’t real, consumption’s up too And the grasping for resources reveals there’s 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 that’s a matter of fact Now its devalued capital that makes up the slack Whether it’s the late twenties or two thousand and five Booming bad investments, seems like they’d thrive You must save to invest, don’t use the printing press Or a bust will surely follow, an economy depressed Your so-called “stimulus” will make things even worse It’s just more of the same, more incentives perversed And that credit crunch ain’t a liquidity trap Just a broke banking system, I’m done, that’s a wrap. [Keynes & Hayek] We’ve been going back and forth for a century I want to steer markets I want them set free There’s a boom and bust cycle and good reason to fear it Blame low interest rates No, it’s the animal spirits