Tuesday, July 16, 2024

As Our Economy Has Tanked, Perhaps It’s Time To Revisit Hayek vs. Keynes

We’re in some different circumstances than we were the last time stupid government policies drove our economy into a lake, but the fundamental problems are always the same. We’re going to perhaps re-learn the lessons we failed to learn from the 2008 economic collapse, and it’s going to be a painful lesson indeed.

There was a terrific YouTube video which popped out of the ether back then. In it, the famous economists John Maynard Keynes and F.A. Hayek are depicted arguing over the strengths and weaknesses of their respective economic approaches in keeping economies out of a recession. If you’ve got any economic understanding at all, you know that Keynes was a proponent of deficit spending to spur demand in an economy, which is something politicians the world over have found to be an indispensable justification for their excesses. Hayek, on the other hand, represents the Austrian school of economics which doesn’t fear recessions, because recessions have the effect of clearing away bad investments and allowing the wealth put into them to be reallocated into better and more fruitful projects.

Austrian economics proves out again and again, but of course the unfortunate thing is it’s terribly difficult for a political leader in a sagging economy to adopt “let it burn” strategy with an election coming. And that’s why you’ve just seen Joe Manchin agree to a trillion-dollar “hair of the dog” stimulus-and-tax-hike plan which is going to be ruinous; it’ll turn what’s likely to be a steep recession into a 3-5 year depression.

So we’ll revisit Hayek vs. Keynes, and of course you know what side we’re on…

There was actually a sequel to that video which is worth passing along as well…