Business & Finance4 mins ago
Keynes v Hayek
6 Answers
Not sure where to put his, on balance it'd more of an economic/societal/political discussion that a one about a TV program. Anyway After part 2 of "Masters of Money" - do you think Hayek had a point that governments intervening only ever sew the seeds for future problems? It seems that any intervention produces and exponential sized problem at some point in the future. How bad will the next financial meltdown be?
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Sorry I don't buy the Hayek philosophy.
Market forces are just as capable of instilling instabilities and indeed persuing them.
Look at the dot com bubble in the late 90s - what Government action triggered that? None at all it was all down to wild market speculation on internet companies.
The other thing that's not being brought out is that if you're a trader be it in shares or tulips it still makes sense for you to continue to fuel a bubble even if you know it's a bubble that will burst.
Markets are inherently short sighted if a bubble is inflated and you don't ride it you're going to miss out on making money and provided you can react fast enough and you're not the one without a chair when the music stops it makes sense to feed the bubble.
The people who get caught holding the tab are people like you and I who can't watch the market and sell as soon as the bubble starts to burst.
Keynesian economics has been shown to work not just in the new deal but also in the Marshall plan but that was a long time ago and the amount of control that governments had over markets was much stronger then.
Whether Keynesian economics can still work today is open for debate.
Hayekian economics doesn't work - every Tory prime minister since McMillan has lead us into a recession and all the Heyakians say is "you weren't radical enough"
It's like driving towards a broken bridge with someone sitting beside you screaming that if you'd only go faster you'd be bound to make it
Market forces are just as capable of instilling instabilities and indeed persuing them.
Look at the dot com bubble in the late 90s - what Government action triggered that? None at all it was all down to wild market speculation on internet companies.
The other thing that's not being brought out is that if you're a trader be it in shares or tulips it still makes sense for you to continue to fuel a bubble even if you know it's a bubble that will burst.
Markets are inherently short sighted if a bubble is inflated and you don't ride it you're going to miss out on making money and provided you can react fast enough and you're not the one without a chair when the music stops it makes sense to feed the bubble.
The people who get caught holding the tab are people like you and I who can't watch the market and sell as soon as the bubble starts to burst.
Keynesian economics has been shown to work not just in the new deal but also in the Marshall plan but that was a long time ago and the amount of control that governments had over markets was much stronger then.
Whether Keynesian economics can still work today is open for debate.
Hayekian economics doesn't work - every Tory prime minister since McMillan has lead us into a recession and all the Heyakians say is "you weren't radical enough"
It's like driving towards a broken bridge with someone sitting beside you screaming that if you'd only go faster you'd be bound to make it
Yes, Jake but I think the Hayek approach is just to let the bubbles burst, let them fail. Ultimately behaviour evolves. The last big failure was with the banks and no governement can let the banks fail well not the hight st part anyway but the gambling side should be allowed to fail. Can they be separated? Is they Keynes approach just a manifestation of previous smaller Keynesian activities? Where would we be if no governement ever intervened in history, if currency was indeed still represented by gold or equivalent? What about QE, are goverments just doing what is illegal for the rest of us? There's a chap in the US facing 25 years for the "Liberty dollar"! Makes a facinating debate don't you think?
It is a fascinating debate,no question, and we do appear to have the worst of both worlds at the moment - This approach of "light -touch" regulation, coupled with a desire by successive governments to introduce "free-market thinking" into social care and national infrastructure programmes.
Robert Peston has a new book out soon, and he is bigging it up in the Guardian today with an interesting article, The basis of which is that you cannot regulate global capital using many and different national regulatory schemes.
http://
Robert Peston has a new book out soon, and he is bigging it up in the Guardian today with an interesting article, The basis of which is that you cannot regulate global capital using many and different national regulatory schemes.
http://
No I don't. I think providing the framework is vital but it needs monitoring to ensure it is as good as it can be during changing conditions. I think it is easy to blame intervention for any subsequent problem as one can not prove what would have occurred otherwise. And the markets are too chaotic to make hard & fast rules.
Are the Governments doing what is illegal for the rest of us?
Well governments do lots of things that would be illegal for the rest of us
Run armed forces
Decide on drugs or firearms policy
Enforce taxation
etc etc etc
There is an obvious difference between an individual and a nation state and not acknowledging that difference in this context is at best disingenuous.
I don't think anyone doubts the banks can be separated - I do think it's time the Goverment started to acknowledge that we're in this mess because of a failure of the fiscal system and not because the last government wen't on a spending spree for a bit of fun
Well governments do lots of things that would be illegal for the rest of us
Run armed forces
Decide on drugs or firearms policy
Enforce taxation
etc etc etc
There is an obvious difference between an individual and a nation state and not acknowledging that difference in this context is at best disingenuous.
I don't think anyone doubts the banks can be separated - I do think it's time the Goverment started to acknowledge that we're in this mess because of a failure of the fiscal system and not because the last government wen't on a spending spree for a bit of fun
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