In a hilarious, timely and educational rap video, two classical economists, John Maynard Keynes and F. A. Hayek, are shown how they would rap their polar-opposite worldviews if they were still around today. The video was created by producer John Papola and George Mason University economist Russ Roberts.
Keynes, who advocated government intervention to steer and fine-tune the economy, is clearly the darling of a global economics conference that is the setting of the video. As we saw over the past year, many governments turned to the Keynesian approach to address the financial crisis, stimulating markets with additional spending and central bank liquidity. Hayek raps the opposite view, advocating that markets rise or fall and correct themselves in the process.
The video may have a pro-Hayek slant, as Keynes is shown with a hangover from his night of partying and over-indulging, but readers, you decide.
Their opening salvo:
[John Maynard Keynes and F. A. Hayek together] We’ve been going back and forth for a century
[Keynes] I want to steer markets,
[Hayek] I want them set free
[Keynes and Hayek together] There’s a boom and bust cycle and good reason to fear it
[Hayek] Blame low interest rates.
[Keynes] No… it’s the animal spirits
The Keynesian pro-government-intervention rap:
"The monetary and the fiscal, they’re equally correct
Public works, digging ditches, war has the same effect
Even a broken window helps the glass man have some wealth
The multiplier driving higher the economy’s health...
And if the Central Bank’s interest rate policy tanks
A liquidity trap, that new money’s stuck in the banks!
Deficits could be the cure, you been looking for
Let the spending soar, now that you know the score...
"My General Theory’s made quite an impression
[a revolution] I transformed the econ profession
You know me, modesty, still I’m taking a bow
Say it loud, say it proud, we’re all Keynesians now...
The Hayek let-markets-correct-themselves rap:
"I’ll begin in broad strokes, just like my friend Keynes
His theory conceals the mechanics of change,
That simple equation, too much aggregation
Ignores human action and motivation...
"And yet it continues as a justification
For bailouts and payoffs by pols with machinations
You provide them with cover to sell us a free lunch
Then all that we’re left with is debt, and a bunch...
"If you’re living high on that cheap credit hog
Don’t look for cure from the hair of the dog
Real savings come first if you want to invest
The market coordinates time with interest...."