Keynes vs. Hayek

These guys are amazing. Round I was better, but this is still great.

Author: Harold Pollack

Harold Pollack is Helen Ross Professor of Social Service Administration at the University of Chicago. He has served on three expert committees of the National Academies of Science. His recent research appears in such journals as Addiction, Journal of the American Medical Association, and American Journal of Public Health. He writes regularly on HIV prevention, crime and drug policy, health reform, and disability policy for American Prospect, tnr.com, and other news outlets. His essay, "Lessons from an Emergency Room Nightmare" was selected for the collection The Best American Medical Writing, 2009. He recently participated, with zero critical acclaim, in the University of Chicago's annual Latke-Hamentaschen debate.

12 thoughts on “Keynes vs. Hayek”

  1. This might be good for a high school civics class.

    What’s sad is, our political debates probably aren’t even this coherent. Bread and circus.

  2. It was really well-done. I just get cranky that everything has to be multimedia now. We are an entire nation with ADHD.

    But it was still much better than my local news.

  3. Interesting that when asked what Hayek would do, he said he would do something, but not what Keynes proposes. But he never says what he would do. If I understand the Austrian position correctly, they wouldn’t “do” anything, so in essence Hayek’s answer is a sham.

  4. I think Benny Lava is right. I sense a reluctance to come right out and say the government should let the economy tank and people go jobless until the market corrects itself. But that as far as I can tell is the position of the extreme free marketeers. I think that’s what he means when he says things like, “Let prices work,” and “If you don’t steer it, it won’t go berserk.” I don’t imagine sophisticated Hayekians would defend that last statement as it would leave them open to ridicule when (inevitably) an unregulated system did go berserk. What the Hayekians seem to be saying is that markets can suck but government regulation and spending can only make matters worse, so however painful it might be to leave markets alone, that’s what we had better do.

  5. Re Dylan’s comment:

    > I think Benny Lava is right. I sense a reluctance to come right out and say the government should let the economy tank and people go jobless until the market corrects itself.

    It’s not that people need to go jobless and just wait around until the market “corrects itself,” but rather that the act of people leaving their previous, unproductive jobs to find work that actually turns a profit IS the corrective process of the market. A person can’t go to do something productive with his time without first ceasing to spend his time on whatever he was doing before.

    That said, the longer market players are encouraged to move in the wrong directions, the more impoverished they become as a whole, limiting the amount of resources available for re-launching themselves in the right directions; so it’s important to correct course as soon as possible.

    > …“If you don’t steer it, it won’t go berserk.” I don’t imagine sophisticated Hayekians would defend that last statement as it would leave them open to ridicule when (inevitably) an unregulated system did go berserk.

    It’s certainly possible for people to make big mistakes in the marketplace (remember, these are human beings we’re talking about), but what you wouldn’t see in a free market is the kind of system-wide errors that you do under a system of governmental regulation. We can tell that these kinds of errors are caused by the government because of the highly unlikely probability that every economic actor would make the same error at the same time by pure coincidence.

    > What the Hayekians seem to be saying is that markets can suck but government regulation and spending can only make matters worse, so however painful it might be to leave markets alone, that’s what we had better do.

    Yes! Remember, markets are just groups of human beings. Each individual human makes mistakes and thus so do humans working in cooperation, but given the freedom to attempt to correct our mistakes, little by little we all have the power to become better.

  6. the act of people leaving their previous, unproductive jobs to find work that actually turns a profit IS the corrective process of the market. A person can’t go to do something productive with his time without first ceasing to spend his time on whatever he was doing before.

    Trouble is, until the agent retrains to a new specialty, the agent is not profiting, nor their family. They may have to move to find work, breaking social ties and job-seeking networks, and who’s buying non-foreclosed houses these days?!?!? And what if – gasp like these days – all kinds of agents are competing for the same few jobs after retraining because corporations aren’t hiring?

    Seems like market failure to me. The market that is made by people is failing to serve people. Sounds like a bad system that needs changing. If I knew what that was, I would be in DC or at the UN, surely…

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