Summary: According to the National Bureau of Economic Research, the Great Recession ended almost two years ago, in the summer of 2009. Yet we’re all uneasy. Job growth has been disappointing. The recovery seems fragile. Where should we head from here? Is that question even meaningful? Can the government steer the economy or have past attempts helped create the mess we’re still in? 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”! And, if you’re interested in learning more about the ideas debated in the video, check out additional content and references that will help you get the story behind “Fight of the Century.” “Fight of the Century” Lyrics Written by John Papola and Russ Roberts KEYNES Here we are… peace out! great recession thanks to me, as you see, we’re not in a depression Recovery, destiny if you follow my lesson Lord Keynes, here I come, line up for the procession HAYEK We brought out the shovels and we’re still in a ditch… And still digging. don’t you think that it’s time for a switch… From that hair of the dog. Friend, the party is over. The long run is here. It’s time to get sober! KEYNES 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 HAYEK Econometricians, they’re ever so pious Are they doing real science or confirming their bias? Their “Keynesian” models are tidy and neat But that top down approach is a fatal conceit REFRAIN 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 KEYNES 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? HAYEK Wow. One data point and you’re jumping for joy the Last time I checked, wars only destroy There was no multiplier, consumption just shrank As we used scarce resources for every new tank 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 KEYNES You too only see what you want to see The spending on war clearly goosed GDP Unemployment was over, almost down to zero That’s why I’m the master, that’s why I’m the hero HAYEK 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 REFRAIN REPEATS HAYEK jobs are a means, not the ends in themselves people work to live better, to put food on the shelves real growth means production of what people demand That’s entrepreneurship not your central plan KEYNES My solution is simple and easy to handle.. its spending that matters, why’s that such a scandal? The money sloshes through the pipes and the sluices revitalizing the economy’s juices it’s just like an engine that’s stalled and gone dark To bring it to life, we need a quick spark Spending’s the life blood that gets the flow going Where it goes doesn’t matter, just get spending flowing HAYEK You see slack in [...]
