Sunday, December 9, 2012

Deck the Halls with Macro Follies: When Economics is Reduced to Farce

... In this video, which, I admit, has some value as humour, though not anywhere near as much as the earlier Keynes versus Hayek song. The trouble is that the producers think they are making some serious points against Keynesianism, when all they do is attack a caricature of it.

Despite what is said, consumption is part of a healthy, expanding economy, but Keynesianism has always been concerned with private investment. As I have said, the major Keynesian method to restore the health of an economy historically has been stimulus programs that take the form of public infrastructure/public investment.


  1. If you want to laugh, take a listen to Russ Roberts' podcast with Fazzari on Keynesian Economics.

    Fazzari explains the 'paradox of thrift' several times, and Roberts never gets it.

  2. I am an austrian and I sort of agree with your comment here.

    I didnt like the video too much. Austrian Business Cycle Theory does invalidate Says Law.

    But Keynesianism has the drawback that the public investment, is supposedly "better" because it is immediate spending.

    That is pretty anti-saving, whether you like it or not.

    1. "That is pretty anti-saving, whether you like it or not."

      Given that anti-saving or something to substitute for money saved and not spent is precisely what is required during recessions, your comment does not refute the Keynesian argument for fiscal stimulus.

  3. I agree. The video is a drop in standard from the earlier ones and much more partisan. I particularly disagreed with the division between consumption and investment, as though they were two completely unrelated topics. An Austrian focus on investment still needs consumption.

    Let me explain. If I take my money and instead of consuming it, I invest in a factory, consumption must rise otherwise the factory won't sell anything and will have been a waste of resources. So Austrian supply side is just as dependent on consumption as the Keynesianism it critiques (which is a caricature)