This past week brought the release of the second in what I hope will be a continuing series of educational music videos from EconStories, the creative collaboration between John Papola of Emergent Order and Russ Roberts of George Mason University. Both of these music videos are brilliantly written, directed, and performed in order to present the basic Keynesian and Hayekian perspectives on the boom-bust cycle still poorly taught in most universities and completely ignored by the mainstream television news. Any economics professor who isn't using these videos, with permission from the copyright holders, to jumpstart a quarter full of reading and discussion about the boom-bust cycle is missing a great opportunity.
The first video, released June 22, 2010, is entitled "Fear the Boom and the Bust: A Hayek vs. Keynes Rap Anthem." From the EconStories video site, which includes lyrics, this is the set-up:
In Fear the Boom and Bust, John Maynard Keynes and F. A. Hayek, two of the great economists of the 20th century, come back to life to attend an economics conference on the economic crisis. Before the conference begins, and at the insistence of Lord Keynes, they go out for a night on the town and sing about why there's a "boom and bust" cycle in modern economies and good reason to fear it.
The second video, released April 28, 2011, is entitled "Fight of the Century: Keynes vs. Hayek Round Two." From the EconStories video site, which includes lyrics, this is the set-up:
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”.
In my own view, the root cause of this economic crisis, and therefore its ultimate cure, cannot be found in the balance of power between market and state as they are currently functioning. Therefore, the debate between Hayek and Keynes, if reduced to the more general debate between market and state in any of its familiar forms is an ideological dead end.
As I introduced nearly a decade ago in A Crisis of Vision, the deeper dysfunction in both market and state is the lack of requisite degrees of transparency, choice, and accountability, which undermines with every single action our mutual pursuit of economic truth, justice, and freedom. Nowhere is this dysfunction more ubiquitious than in the design of the monetary system and the conduct of monetary policy, which remains completely unchanged amidst the political economic theater of the deliberately dramatized debate between market and state. Regardless of how this ideological debate plays out on stage, our economic future will remain dismally uncertain as monetary authorities beholden to neither markets nor states navigate the Debt Trap they created.