Fear the Boom and Bust:http://www.youtube.com/watch?v=d0nERTFo-Sk
and Part II of the Epic Battle at:
Fight of the Century: http://www.youtube.com/watch?v=GTQnarzmTOc
Identify at least 3 points from either Economist that you agree with. List the point and the video that it came from. Don't copy your classmates responses.
49 comments:
I most identify myself with Hayek. As stated in video one (Fear the Boom and Bust), I believe that Keynes is disregarding the fact that all the money that is being pumped into the population by government is artificial and will eventually crash. Secondly, in video two (Fight of the Century: Keynes vs. Hayek Round Two), pumping money into the economy by government spending will only create artificial bubbles that will eventually burst, resulting in a continuous cycle of recession and instability. Finally, also in video two, bailing out "loser" companies that do not manage money properly goes against the principals of capitalism and will only result in more ruthless practices that will eventually lead the economy back into recession.
If I had to pick between the two I would have to side with Hayek. Both Economists had good points though. It's undeniable that government spending and stimulus can help get us out of a recession or a decline, just like Keynes said. However, as Hayek said, that is not a policy that we should adopt all the time. We are already seeing the effects on continued stimulus right now. Sure, the markets are up with all of this money being pumped into them, but now they are dependent on this money and the moment the government turns off the pump we'll be in big trouble. The other issue with unwavering spending is the debt that we are quickly accumulating. Akin to another one of Hayek's points, we have to save money in order to have money to invest and spend. Blowing everything isn't going to help.
I agree with Keynes despite the short-sightedness behind his theory, and I acknowledge the fact that one day all our spending may come around and bite us. However, spending at the moment is the way to go, and for now we cannot know if halting spending will actually lead to a worse impact than the later effects (video 1). At the moment, we will supposedly be screwed by spending, but if we stop now, we will for sure be screwed. The proof behind the effectiveness in spending is show in times of war (video 2). Furthermore, the people tend to prefer it this way, and as a democracy, we do as the people desire (Both videos). Until something changes the mind of the people, we are stuck.
I affirm the resolution Resolved: Keynesian economics is more advantageous than economic theory based on Hayek's.
I value utilitarianism. The theory that achieves a greater number of the population that is better off with said theory is the superior.
Contention 1: Spending is the solution to ameliorating the economy.
Keynes' claim that the circular model is like dough is understandable. If the dough is hard, we must knead it to stimulate it, in relation to the economy, we must spend to stimulate the economy.
Contention 2: Saving spawns no benefits at all.
Continuous spending is much more beneficial with the idea of utilitarianism in mind. Cross apply Contention 1 and understand that the economy must keep flowing to maintain itself and to allow progress of any sort.
Contention 3: Keynesian theory has proven to be more beneficial than Hayek's theory in the past.
Success in the past warrants success in the future. World War II and the end of the 2009 Recession both had the ideals of stimulating the economy to eventually achieve stability. The economy is a machine. If it slows down, with Keynesian theory in mind, all we have to do is help it start up; we must stimulate through spending!
With these reasons I vote for an affirmative ballot.
If I had to live solely by the economic theory of either Keynes or Hayek, it would most likely be Hayek, because he has a cooler name. Haha nah, it's because although I concur that government stimulus may benefit an economy during though times of recession, Keynesian economics as we see today are slowly leading to the economic downturn of this nation. Hayek made a great point that government bailouts for weak companies ruin things in the long run (ironic, ain't it?). Sure, they may help the workers of that company during that crisis but letting businesses with less than sound business prices continue seems like a recipe for disaster. Plus, I feel like if bailouts do occur, why only to the large, multibillion dollar corporations who's execs fly G650s and not to the small businesses that grow the middle class, who's owners and execs have to foreclose homes and stuff if their business dies? And unlike Keynesian beliefs, continually pumping funds into the economy will never let it "come off the bottle" in the context of Mr. Pye's analogy. Hence my support for Hayek economics. Of course, if I were left to my own beliefs, I'd support no one economist.
I would side with Hayek because by letting the government restrict itself from becoming completely involved in the economy and trying to resolve the problem through full employment and maximum output, prices are only going to gradually increase causing people to spend less and less of their money ensuring a recession.
Hayek mentions in “Fear the Boom and Bust” that if people keep spending, then they will cause inflation. Secondly, from “Fight of the Century,” during the war there was rationed everything, and when war spending ended, the economy thrived and grew faster because there were no longer many supplies being demanded that were causing prices to rise. Lastly, Hayek believes and says in “Fight of the Century” that spending is not free and money gets wasted. The people and government should put away the wrenches and stop trying to fix it, the economy is organic and will fix itself. If the government stops trying to spend money and trying to fix the economy, then the economy will automatically return from a recession because prices will decrease and people will automatically spend more.
I would mostly side with Keynes as I think his statements actually make more sense.
Point 1: In the article Keynes describes that AS is horizontal when AD decreases because in practicality when demand decreases the companies sell their items at the lowest price possible without no loss and AS is vertical when AD increases beyond full employment because as prices increase the demand will deccrease to a point of equilibrium at which price will stop rising.
Point 2: In the video "Fear the Boom and Bust" it argues about whether to let the market be free or allow the government to control it. By letting the market set free I believe that many investors and entrepreneurs will be lead to ruin while few may rise to the very top. While if the government were to control it they may not have as such catastrophic results.
Point 3: In the second video I noticed the comment about WWII and I believe that Hayek had an upper hand in this one as WWII created an enormous demand and suppliers rose up to meet this demand. But when the war was over suppliers were still supplying but there was less demand. The increase in goods prompted depression later on, thus the government would have to continue spending money to increase the economy's well being which would be a complete waste of money and if we would just let the economy free it would fix itself.
I mostly agree with Keynes mostly because of the historical examples of his theory becoming true. In video 1 the 20's Market Crash is recognized as a time period that did not immediately bounce back like most classicist agreed that it would. Hayek's response that spending will cause inflation is good and all but it does not account the fact that spending is the best immediate solution. In video 2 Keynes says that spending matters no matter where it goes because I believe that the market itself is not just a concrete thing but a social system that has value assigned to it on a symbolic level. Both videos show Keynes argument that some sort of central intervention is necessary, I agree with this because game theory dictates that there must exist checks that keep people from choosing the lowest common denominator choice, such as selfishly saving and not keeping the money going.
Although I agree with arguments that both Keynes and Hayek said, I agree most with Keynes. I agree that consumer spending is the most important and saving is a killer. I also believe that lowering interest rates and reducing taxes are good methods for enduing spending from the population. However, I also believe that the government should not always be what is there to bring us out of a recession. I believe at the market has to rely on itself sometimes and not always depend on the government to pump money into the system or something along those lines.
Although I agree with arguments that both Keynes and Hayek said, I agree most with Keynes. I agree that consumer spending is very important and consumer savings is a killer. I also believe that lowering interest rates and reducing taxes are good methods for inducing spending from the population. However, I also believe that the government should not always be what is there to bring us out of a recession. I believe at the market has to rely on itself sometimes and not always depend on the government to pump money into the system or something along those lines.
In the first video, I was leaning towards Keynesian economics, however, after the second video, I chose to side with Hayek.
From a completely analytical perspective, Keynes logic is 100% correct. The correlation between spending and interest is non-existent. And yes, stimulating the economy will boost a country out of recession. This is proven to be true in practice. However, where will these actions take us? Right now we live in a time when government spending has the ability to be "limitless". When an actual government spending "cap" is put into place, the entire economic system will change and all of Keynes assertions will, most entirely, fall flat. Because he has theorized economic principles using an analytical basis, when the economy has changed so much that the standards of the economy during his evaluation are no longer the same, his principles will no long be valid. In the time we live in, I mostly agree with Hayek because most of his principles are universal and unbound by changes in economic norms controlled by time. The idea that people are motivated to create a life for themselves and excel the best they can, while definitely does not apply to all people, does encapsulate the nature of humanity. However, without the incentive of money, of wealth and well-being created through one's own hard work; with the government spending money, supplying those who don't work with money from the working, and controlling the economy and people, the incentive to excel vanishes. And, without the incentive to excel, one of the most important drivers in life, the economy as a whole, will fall into a rut it cannot escape.
In conclusion, I would like to say that from what I have learned this year and from Smith, Ricardo, Malthus, Keynes, and Hayek, is that economics, while a type of science, is very different from the others. A mathematical principal and a physical law will never change. The logical math and physical principles we have learned will be taught and learned in the same or similar way for hundreds of years to come. However, economics is a dynamic science, and as "Hayek" said so eloquently in the rap, "the economy is organic." Humans do not always act logically or follow the laws. Our ways can be trended and predicted, but never known for certain. Economic principles will come and go; the best we can do is pick the one that most applies, and hope for the best.
I would mostly agree with Keynes. in the video "Fear the Boom and Bust" it states that how in order to get out of any recession or depression the consumer must spend their money. The reasoning behind this is that because if we keep saving our money then in the video its says how putting money in banks can mess the economy up that is why we have to spend. Next thing is that the economy has to keep flowing like the cyclical cycle where the government and the consumers must keep spending, in order to remain healthy. In video two "Fight of the Century: Keynes vs. Kayek Round Two" states the third reason of how Keynes policy would dominate. During WWII the government was constantly spending in order to stimulate the economy.
So in the end I side with Keynes.
I agree with Keynes more, although both economists made some convincing, logical arguments. However, I agree with Keynes' points more. In video 1 he points out that if we keep saving, then there would not be money to circulate through our economy. Our economy would then be more stagnant and sink deeper into depression. In video 2 Keynes also argues that government spending will help the economy because the money will start to move within our economy, and once trades starts to gain momentum, the economy will slowly recover. Keynes also argues in video 2 that at least government spending is an initiation to solve the problem, rather than waiting around for the problem to solve itself. In short term, government spending will provide relief, and this will at least cause more positive effects than to do nothing.
If I had to pick who I would side with, i would say keynes. His theory and examples have actually become true back in the 1900's. (Video 1) During the Great Depression, the classicals predicted that the ecomnomy would bounce back immediately, but they were wrong. (Video 2) Keynes says that the goverment should be involoved in the economy, instead of backing off.
I agree mostly with Hayek. In the first video, Hayek claims that he "wants markets set free," and I do believe that economies should be free to grow and expand at their own rate that is independent of the government. I do agree that with Keynes in the second video that "its the governments role to prime the pump." I agree with this point because the only way to fix the economy is to spend money, saving it doesn't help. So when no one wants to save, the government should step up and get things going. But i also think that this intervention should be very short and temporary, because i agree with Hayek in video two when he claims that "too much government spending will lead to an even bigger crash in the future." The government should get things started if things get too bad, but then they should pull out and let it fix itself up. The way i see it, a doctor only sets the broken bone so that it may heal properly, the actual repairs are the job of the patients' body.
I would have to identify with both of the economists. I agree with Keynes in that in times of great depression the government needs to help the economy along by inserting some money into the market, but this should soon be retracted. I agree when Keynes in the first video when he says that you cant "wait for recovery". Perhaps in a small recession this would be fine and the invisible hand would be expected to put things back into place but not in a depression. If the government were to continue to feed money into the market as Hayek stated in the first video, debt would rise because there is no free lunch. Also I agree with Hayek in the second video when he mentions the only way the government typically spends enough to help the economy along in a natural way is during a war. Many argue that WW2 is what got America out of the great depression officially.
I most identify with Keynes because his theories have been proven in situations throughout history, whereas hayek simply pushes theories on what may or may not be true. In the first video, "Fear of Boom and Bust", Keynes explains how boosting government spending will stimulate the economy and thrust it into a running state. Additionally, he talks about how aggregate demand is the chief determinant for whether the supply will be purchased, thus urging consumers to spend instead of saving during a recession. Lastly, Keynes mentioned in the second video that his theory proved true with the Great Depression and the recession in the 2000's, therefore making his beliefs the more tangible option of explaining the economy.
I most identify with Keynes because his theories have been proven in situations throughout history, whereas hayek simply pushes theories on what may or may not be true. In the first video, "Fear of Boom and Bust", Keynes explains how boosting government spending will stimulate the economy and thrust it into a running state. Additionally, he talks about how aggregate demand is the chief determinant for whether the supply will be purchased, thus urging consumers to spend instead of saving during a recession. Lastly, Keynes mentioned in the second video that his theory proved true with the Great Depression and the recession in the 2000's, therefore making his beliefs the more tangible option of explaining the economy.
I believe Keynesian Economics are superior to Hayek's theories.
1. Letting the economy continue on its own will never solve the problem by itself. The only way to fix it is through massive government spending, not hoping that all of the problems will magically disappear.
2. Keynesian Economics has a great track record of success, while letting the economy flounder around has never worked.
3. Hayek's ideal "free economy" is due to fail because of human greed and selfishness. Keynesian Economics takes out some of the self interest that holds the economy down.
Although both sides made great arguments, I mostly agree with Keynes. In the first video, "Fear of Boom and Bust", Keynes points out that the more we spend the better the money would circulate in the economy. In the same video, he also talks about how savings are not a good thing and that you cannot wait for recovery during a time of recession because spending is crucial for the economy to grow. In the second video, "Fight of the Century", Keynes explains that government spending is what boosted the economy and got it out of the Great Depression through spending during World War II.
I side with Keynes only because I disagree with Hayek's theories. His main theory bis being that in an economic recession the people will be able to fix the economy themselves. But, the only way to get out of a recession is through spending and people will not spend when there is no money. But I do agree with Hayek's theory that states the governments intervention is bad for the economy(Fight of the Century). For example, when the government introduces spending in order to alleviate the economy, they borrow, which handicaps us further in the future. In "Fear the Boom and Bust", I agree with the point of increasing aggregate demand in order to alleviate the recession (it increases spending). Also, Keynes point of lower saving makes sense because greater spending decreases the money in the circular flow (Fear Boom and Bust).
I agree with Keynes even though Hayek is a really awesome last name. Increased spending is one of the reasons we escaped depression in the 20's and if increased spending increases inflation, well then so be it (video 1). I agree that government spending will boost the economy by beginning to circulate money, and when trades increase it also helps the economy (video 2). Furthermore, aggregate demand is a main determinant in the amount of supply being purchased, which influences people to spend rather then save (video 1).
I think I would have the same beliefs as Hayek. Too long has the government spent so much money on everything. As we said in a discussion before of how the stock market did good after a bad jobs report, many people don't want the money to stop. Spending more increases dependence on the money that this country doesn't have. President Obama has implemented the same fundamentals as Keynes to help us get out of this recession, but we still have yet to get back to a good economy. There is more money in food stamps and welfare in which most people don't make a lot of effort to get off. Second government spending in the long run is bad. At a certain point, we will have to pay back all of the money we owe. It's ridiculous to have that "shop till you drop" mentality. The stimulus was supposed to bailout a lot of the companies in the U.S. and yet we still have not gotten out of this recession. As our national debt increases, our personal debt owed to pay it off gets to the point where we may not be able to reach. In the long run, government spending will ruin this country and cause it to fall just like the Roman Empire. Thirdly, spending on the consumer part. Without a consumer to spend, a business can not thrive. We must lower interest rates and price things in a way that more people will buy. For example, my dad's old company Noble Energy had their stock go to well over $150 per share. They split their stock to attract new investors. They were able to make some good money off of the split because now consumers could buy more at cheaper prices. We should try to make things better for the consumer so that less people can be a window shopper versus an actual paying customer.
If I had to choose between either Hayek or Keynes,I would probably choose Keynes because throughout history his ideas have come to life. In the first video the example used is how the Great Depression was a time in which the economy instead of shooting back up, continually crashing. Keynes believed we should SPEND SPEND SPEND, which is all we needed, but Hayek believes that spending was going to cause inflation. The second video Keynes talks about how Keynesian Economics helped with the recession in the 2000’s, which shows how his ideas are actually useful. Lastly , aggregate demand helps people spend spend spend!
I agree with Keynes more because through the videos he was able to provide examples of his theory working, versus Hayek who said a lot about his theory, but had no evidence to back it up. First of all, in the first video, Keynes recognized that the great depression was a time period where we needed to keep spending money to get the economy back on track, while Hayek and the other classical economists argued that the economy would bounce back on its own and that more spending would just cause inflation. In the second video, Keynes points out the government spending during World War II is what helped pull us out of the depression. Also in the first video, Keynes argues against saving. As we've learned in Mr. Pye's class and now from Keynes, it's better to keep the money going in the economy rather than saving it. I'm not completely Keynesian, but I'll take his theories over Hayek's.
I think that both economists have valid points; and both of their theories have a place and time. Keynes theory has proven effective at certain times in history, and it has failed in other cases. People become reliant upon government hand holding (the stock market inflation versus actual GDP growth right now) and fear when they will be let off the bottle the government is giving the economy. Instead of looking for ways to make money themselves they just see how long they can get free handouts from the government. High debt not only looks bad, it squeezes out the resources available for other things. When it starts to hit a critical point all the nice things we are used to will be shut down as we are forced to deal with the beast we have created. There is no free lunch; you can't spend and spend and then cry about high taxes in good times. However, Hayek's theory would leave quite a few people in unsustainable situations. Yes, eventually all the unproductive companies would go down, and the consumers would get what they demanded. But as these companies went down so would the wages of the workers meaning they couldn't afford to feed their own families and save for retirement at all. Ideally, it would just transfer to what the public really wanted but ideal situations are not real world. Both theories have some aspects that are true and some that are false.
I agree with Keynes mainly because Hayek’s theory to let the economy fix itself, or laissez faire (as said in the “Fear the Boom and Bust” video) has yet to be proven effective. Hayek is also more focused on low interest rates, as noted in the “Fear the Boom and Bust” video, and caring about after the boom, then trying to fix the economy quickly. Keynes theory of spending to fix the economy during the World War (as he said in the “Fight of the Century” video) actually worked and helped reset the economy, while bringing unemployment down to almost none. Keynes theory also helped the country during the Great Depression, which he noted in the “Fight of the Century” video. Keynes’s theory is so popular because it’s been proven effective, whereas Hayek’s theory has yet to help the economy in a serious crisis.
After watching both videos, I feel like I agree a lot more with Keynes rather than Hayek. In the first video Ke Keynes didn’t think it mattered what the money was being spent on it only mattered that money was spent. Hayek, however, thought that intelligent spending would grow the economy more. We learned in class that the best way to get the economy is by spending as much money as possible not by buying specific things. In the end it just matters how much money was spent and now what it’s spent on. That theory is proven in the second video when Keynes talks about how his tactics ended the “great recession…back in ’09”
The second video also shows how Keynes wanted to help those who were unemployed where Hayek didn’t really care about their situation. Keynes wants to relieve the unemployment rate where Hayek believes that those who have a better job should earn better money and be better of. In general Keynes plans are much more simple to follow rather than Hayek who wants specific savings and specific spending. In the economic state that we are today, Keynes theories would have a better affect than Hayek’s.
I mostly agree with Keynes' view because some of his views are proven true in the past. In the video, Fight of the Century, Keynes said that increase in government spending during wars (such as WWII) causes boost in GDP, proving that increase spending helps the economy. His belief in increasing government spending also helped us out during the recession in 2009. In the video Fear the Boom and Bust, prosperity is derived from a continual circular flow of spending (of consumer spending, government spending, and investments). Also, he points out that saving money leads to destruction. If everyone decides to save up all their money, then it will wreck the economy.
I personally agree with either Economist's policies, but only at the proper scenarios.
For example, I approve of Keynes' logic to promote spending when the economy is suffering losses or inadequate situations in order to lessen the worry from the "Fear the Boom and Bust" video.
However, Hayek's point on how incentives and subsidies do not help motivate or provide companies and people to work harder if they get reimbursed for their lack of productivity ("Fear the Boom and Bust").
Finally, the video "Fight of the Century: Keynes and Hayek Round Two" makes a good outlook under Hayek's interpretation of the economy. Seeing how the economy revolves around the entire global market that includes companies, groups, and individuals that seek to survive. The point that the economy is more complex than just a simple index that must be monitored to ensure growth, but rather it is the interaction with people. There are too many factors that contribute into economic growth and loss, which I believe Hayek makes clear with his approach.
Thus, I agree with Hayek on his interpretation of liberalism though I do respect the impact Keynes' idealogy of aggregate demand has saved the world from an economic catastrophe that would be worse than what the Great Depression was.
I agree with Keynes, because he reminded me of a pimp who liked to spend his money. In Video 1, he makes a statement about how it is good to spend during a recession to keep the money flowing and not stop circulation. In class, we learned about government spending as away to get out of recession and Keyenes points this out in Video 2. Going back to the first video, Keyenes implies that pumping money into the economy is always benefitial when people are willing to spend the money and not save it.
I agree with Keynes because the government will always have economic resources and options that the people don't have.
1.) Keynes says that putting money into the economy in 2009 was the only reason that the economy didn't go into depression and stayed in recession. This allowed the economy to stay above estimates levels. (Video 2)
2.) Hayek says that the Keynesian economic model doesn't account for people's motivations or state of mind. This is true as most economic models do disregard people on a personal level. (First Video)
3.) Keynes wants the stock market to be controlled by manual stimulation in the market to make sure that recession never turns into depression through massive amounts of government spending. (video 1)
Honestly, I would probably side with Hayek. Hayek's theories are not completely incompetent. It is true that the economy will allocate its resources according to the demands of consumers without government interference. Who knows what the economy needs other than the consumer themselves? The hole in Hayekian economics is that the consumers will act in the way that they need to, which is spending their money and not saving it in the bank. This is what compromises Hayek's idea of rational behavior. However, we know that that is not the case. In times of economic hardships, the consumer's first instinct is to place their money in the bank. We have seen this throughout history. Hayek's theories completely fall due to this contention. The result of this is the success of Keyne's theories. Let the government be in charge of ensuring economic stability because the consumers are too insecure of their choices within the economy. But until we become a little more rational at times of conflict, Keyensian economics will reign supreme.
I would mostly identify as a Hayek. In video one it was noted that the more spending that occurs will result in inflation, which is not good for the market. In video two it was noted that as a Keynesian the government is bailing out "loser companies", and that too much government spending will lead to a crash in the future economy. The bailing out of failing companies does not seem beneficial to the economy as a whole. Not all companies will prosper, just like not all companies will fail. The government does not need to take part in running the economy
I really think that the government should just keep its hands to itself. As stated in the first video, government intervention only leads to more debt. Sure, Keynesian policies could have pulled the US out of the Great Depression mess, but I really think that priming the pump isn't exactly the way to go. There's just too many variables, and too many times the money all comes back to us, and we're in a worse off position. Hayek is right - let the invisible hand do its job.
Originally before watching any of the videos, my viewpoint was based on the ideal that when time moves on, one cannot factor in ancient theories of the past as different factors can apply that wasn't accounted for in the past. I still stick highly to that ideal as I don't believe that the economy can be so structured to manifest a workable theory.
Moving on though, looking through the videos and article I do agree with a few points that Keynes and Hayek discussed.
The first I should agree is on the basic understanding that the government should spend money to stimulate the economy out of recession by Keynes.
The second it has been seen that the keynesian theory has helped out more than the hayek in the past. Keynesian followed the situation and devised the theory on that.
third would be the concept of saving and spending. it is much more beneficial to save at certain times and spending when needed
Ervin R.
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Ervin R.
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Below are the three important points I agreed with in the article dealing with Keynes versus Hayek
(1) Both economists saw the world fall into the Great Depression, but each of them formulated their own distinct theory on the best way to deal with the Depression. The episode of Planet Money below goes into some detail about the lives and the theories of these to most influential economists.
(2) Hayek and his disciples, on the other hand (sometimes referred to today as the supply-siders) had a different interpretation of the macroeconomy. Hayek was what many today refer to as a libertarian. He believed that the government’s best strategy for handling an economic downturn was to get out of the way.
(3) Without government intervention, wages and prices rise and fall with the level of demand in the economy, but output remains constant at its full employment level.
Keynes believes spending is the key. He basically lives to fire his cannon on every attractive sight he comes across. With such a cocky attitude, he leaves his stains everywhere, spending here and there as seen in video 1. He doesn't value saving or waiting for the right time to go kaboom, but instead lets that happy smile in his pants unconsciously guide him to all kinds of busts.
Thus, I am with Hayek, because he has his schitz together. As stated in video 1, he prefers saving those thirsty little George Washingtons in order to invest because that's the only way he'll get bigger, financially. To "speak softly and carry a big stick" (TR). And as we can see halfway through video 1, Hayek has his stick all up in Keynes' chicken fingers.
As video 1 states, you shouldn't study the bust, but rather the BOOM, waiting for that perfect time to come on top of and all over that bust. This prevents another depression and keeps the economy fully erect in capital structure.
In video 2, Hayek states that the economy is organic, so it needs real growth, not some promiscuous growth-tease. And as the government keeps injecting artificial money in population, the economy cannot reproduce because its basically getting pumped with a strap on money belt.
I mostly identify myself with Hayek. Although Keynes had many valid points to this side, Hayek provides a more practical aspect on the economy today. Video 1 shows us that mal investment is a big way to hurt the economy which makes a lot of sense as well. Video 2 shows us that Hayek believes that the government must not intervene and must stay out of the economy, providing a more libertarian aspect. Lastly, Hayek believes that the economy can correct itself which is seen through video 2. We even see that in society today that the economy often fixes itself, it has highs and lows.
I mostly agree with Keynes' view of the economy. Consumer spending is the drive that keeps the economy going and like Keynes says, a consumer saving instead of spending would be devastating to the economy. Another point that I agree with is that a government will have to spend to get out of a recession. Just look at World War 2 and the recession that started in 08. Stimulating the economy in both circumstances revived it. The last point that I agree with in the Keynesian view is that an economy will not fix itself. As history shows with nations such as Germany after World Wars 1 and 2, a degree of government intervention is needed to help restart the economy.
Although I agree with arguments that both Keynes and Hayek said, I agree most with Keynes. I believe that consumer spending is the most important and saving is a stopper. I believe that lowering interest rates and reducing taxes are good methods for enduing spending from the population. However, I also believe the government shouldn't always pimp money into the market, because at some point we'll have to pay for it
After watching the videos, I agree with Keynes even though Hayek had points that were valid. First of all, in order to keep the economy flowing, we need to spend more money, and so what Keynes supports is perfectly sensible (Video 1). Secondly, Keynes says that the government should play a part in the economy and I agree because if the country as a whole were to suffer, then the government's spending plan could help the economy as we see happen in the present (Video 1). Finally, Keynes's theories have been proven true through history- during WWII- as spending is what saved the economy (Video 2). Through these reasons, I can affirm that Keynes has an upper hand compared to Hayek.
Between the two people, I would have to lean to Hayek's idealism.
1) I do agree with Hayek though when he says that his theories conceals the mechanics of change said in the rap video.
2) There is too much aggregation and too many factors in the equation and therefor ignores human activity and motivation.
3)Any attempt by the government to influence the allocation of resources through “stimulus projects” would only reduce the private sector‘s ability to quickly and efficienty correct itself.
I agree with Keynes. We must spend to stimulate the economy, making savings have no benefits at all. Also, the people prefer this idea more with them doing as they desire. Lastly, Keynesian economics is more beneficial than Hayek's. In WWWII, stability was found by stimulating the economy. In this, we must spend.
I agree more with Keynes and his ideas about how the economy should be run. In the 1st video, Keynes talks about how the economy didn't automatically fix itself during the Great Depression. When people believe the economy is doing bad, they aren't going to want to invest in it and instead will try and spend less/save more (1st video). This causes the economy to get worse if the government doesn't intervene. Keynes also talks about WW2 and government spending that got the U.S. out of the Great Depression (2nd video).
Both economists had great points it's true that that government spending and stimulus packages help get the economy out of recession, as stated by Keynes, but at what cost? Today the government just pumps in so much money that we the people are so dependent on the government to bail us out of every problem.Also as Hayek stated, one has to save money to invest it later on in life. As the people continue to depend on the government like a child depending on their mother we will never see the economic growth that the country has the potential of reaching.
The economists ideas were very interesting and all their ideas are beneficial to our economy but I identify myself with Keynes because:
1) In video 1 Hayek mentions that he wants to set markets free however this could cause many monopolies in the future as the markets could set any price they want for the products they provide which would bring down our economy. If everything is at a set price then the economy could actually become better faster.
2) Also in video one Keynes said that we need more government spending which would keep the economy stable. I agree with this statement because if we stop spending money and only kept saving it the economy would not progress very well.
3) In the second video however I agree with Hayek in that most of the money spending is wasted on useless things such as fast food which is unhealthy and just makes the individuals of our society bloated or obese. If money was spent on more reliable things, that could help the economy prosper and make it so that individuals are more fit and in shape.
I think I am a pure Keynes man. I believe during a recession the government should pump out money to get out of it. To disregard Hayek supports I agree with government bail-outs and name me one president that was 100% keyenes that was back in a recession Nixon, umm no, FDR definitely NO. With the no really good historical facts that Keynesian economics doesn't work, I like Keynes to run the economy. Lastly, Just like Keynes is a capatilist I am also.
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