Monday, January 30, 2012

EconStories.TV - Economic Edutainment

One nice thing about having a blog is the opportunity to pass on to my readers particularly worthwhile works by others. This Tireless Agorist would like to take the opportunity to promote EconStories.TV as a great resource for those interested in the basic differences between the Keynesian and Hayekian/Austrian schools of economic thought. Let me stress, right up front, that no matter what your impression based on this post, the two videos that are the focus of this column are must-see video entertainment experiences, even if you're not interested in learning economics. They're just plain fun to watch.

Russ Roberts, Professor of Economics at George Mason University (his blog) has teamed up with director and producer John Papola (his blog) to create a series of videos exploring those differences in an entertaining yet educational way.

Even if you have no real interest in economic theory, the short time you'll spend watching these two videos will serve you well whenever you're confronted by political or economic issues.

Although I'll address only two of the videos at EconStories, I highly recommend taking the time to enjoy all the site has to offer. In addition to the two videos discussed here, there are a couple more music videos and a number of entertaining in-depth analyses by top-notch economists exploriing the issues raised in the music videos.

Fear the Boom and Bust

EconStories first hit the WebWorld two years ago with Fear the Boom and Bust, a Hayek vs. Keynes Rap Anthem. Don't groan at "rap;" I'm pushing 60, and it's much more listenable than most of what passes for music to these ears these days. I generally find myself chair-dancing at some point during the performance. The link provided above includes the lyrics, so you can sing-along or reread them to more completely absorb their wisdom.

From their description: "John Maynard Keynes and F. A. Hayek, two of the great economists of the 20th century, come back to life to attend an economics conference on the economic crisis. Before the conference begins, and at the insistence of Lord Keynes, they go out for a night on the town and sing about why there’s a “boom and bust” cycle in modern economies and good reason to fear it." The video extends to the next morning, as Keynes recovers from the hangover of over-indulgence, and Hayek explains why he should stop drinking. The relationship between alcohol and economics, while not readily apparent to the uninitiated, is made blindingly clear in the context of the video. A sampling of the lyrics:
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

A bit of Keynes explanation:

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…

And a bit of Hayek's counterargument:

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

Fight of the Century: Keynes vs. Hayek

A little over a year later, in April 2011, Roberts and Papola followed up with Fight of the Century: Keynes vs. Hayek, this time setting the tale to hip-hop, and again creating an entertaining and engrossing educational experience. This time around, Keynes and Hayek appear before a congressional hearing (and in the boxing ring) to weigh in on questions central to prosperity. 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? Another sampling of the lyrics:
Which way should we choose
more bottom up or more top down
…the fight continues…
Keynes and Hayek’s second round

it’s time to weigh in…
more from the top or from the ground
…lets listen to the greats
Keynes and Hayek throwing down

A bit of Keynes explanation:

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 it—I’ll quote chapter and verse

We could have done better, had we only spent more
Too bad that only happens when there’s a World War
You can carp all you want about stats and regression
Do you deny World War II cut short the Depression?

And a bit of Hayek's counterargument:

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 faster

Creating employment’s a straightforward craft
When the nation’s at war, and there’s a draft
If every worker was staffed in the army and fleet
We’d have full employment and nothing to eat

Nowhere else will you find such a consise and understandable explanation of the differences between the Keynesian school of economics, which most goverments base their economic activities on, and the Austrian school, which actually predicted the Great Depression of the 1920s and the Great Recession we're currently experiencing. By the end of these two videos, you'll understand why the Keynesian school is so attractive to politicians while the Austrian school languishes in relative obscurity, although the predictive powers of the Austrian school are much more accurate.

I'm including the YouTube versions of the two videos here, although the links provided above include the lyrics, which are not available at YouTube. If you watch here and want more detail, be sure to visit the links above.

Fear the Boom and Bust: a Hayek vs. Keynes Rap Anthem

Fight of the Century: Keynes vs. Hayek

...and that's all I have to say about that.

Russ Roberts also blogs at Cafe Hayek, a great source of in-depth analysis of current economic issues from a Hayekian/Austrian perspective.

1 comment:

  1. Very good. It's a anti-Keynesian sort of day all around, huh?

    Mac's gonna think we're riffin off each other, though...