This is a fun post and not so serious (although the issues behind them are!)
Yesterday I was listening to an EconTalk podcast hosted by Russ Roberts from February 1, 2010 when he interviewed Larry White on F.A. Hayek and Money (Hayek was an American Austrian economist who lived from 1899-1992; he wrote the best selling book The Road to Serfdom) (see the podcast here).
It was a great interview and very insightful about fiscal and monetary policy in America in the 20th century, especially the creation of the Federal Reserve in 1913 under Woodrow Wilson, Depression economics during the FDR years, the response to the shrinking economy in the 1970s, and the most recent recession in 2008 to the present. At the end of the interview Russ played “Fear the Boom and Bust” rap that he and some of his colleagues wrote to reflect the competing economic theories of John Maynard Keynes (wrote The General Theory of Employment, Interest, And Money) and F.A. Hayek. I had heard this rap before and loved it, but I had no idea that it was the brainchild of Roberts and others at George Mason University and the Library of Economics and Liberty. There are actually two rap songs: the boom and bust, but also a follow up rap called “Fight of the Century.” I’ve embedded them below. Take a listen and see if you can follow what they are debating about.
Fear the Boom and Bust
Fight of the Century
The first few times I heard them I didn’t really understand, but the more I’ve studied economic theories I’ve come to see that Keynes and Hayek embody the two major economic policies followed in the United States in the 20th century. Austrian economics dominated for centuries before Keynes’ ideas prevailed during the 1930s and 1940s. Today, we see Keynesian economics ruling the day through the likes of massive government debt spending (Obama’s Recovery Act – stimulus bill – of $787 billion in 2009), intervention and regulation. New York Times columnist and economist Paul Krugman is a major proponent of Keynesian economics.
Personally, I believe the Keynesian economic theory is faulty and has only made things worse in the economy, not better. In fact, there are strong arguments that Keynes’ ideas have abjectly failed. Austrian economics promoted by the like of Hayek, Ludwig von Mises, Milton Friedman, Thomas Sowell, and Walter Williams has made a great comeback in the past few decades. I can only hope and pray that the U.S. government will adopt such prudent economic policies before it crashes our economy through reckless spending.