Austrian vs Keynesian

Keynesianism is about repairing shit caused by free market worship

>Keynesianism; cherry picking "facts" about the suffering of those poor bankers.
>Austrian economics: muh markets and gold fetish vs evil statists.

Why ancraps are so attached to the individual profit, is a jew trait?

>hayek
sraffalaughing.jpg

Keynesianism was adopted into mainstream economics.
Austrian school was relegated to the fringes of economics, only kept alive by a small group of crackpot cultists.

Draw your own conclusions.

This how I understand them

Keynesian economics is the short game. It calls for an active role of government to intervene in the market to protect it from itself. It was popularized during and after the great depression.

Austrian economics is the long game. It asserts that the market is more efficient than any central planning, and is essentially the modernization of laissez-fare idea of economics. i was developed in austria before the anschluss.

Keynesianism give politicians something to do rather than, lets wait for the recesion to end because that would be bad for votes. An idea's popularity is not a measure of it's merit.

Sraffa obliterated Hayek's ass so hard the guy dropped out from writing on economics to do philosophy.

The business cycle is boom-bust, not bust-boom. It is always caused by monetary policy.

Reminder that if you're a Keynesian, you support central banking, which is your enslavement.

The price of future money, namely interest, is just as important as any other price in the economy. Only commies and Keynesians believe you can fix prices without causing shortages and surpluses.

Keynesians are centralists
Austrians are decentralists

decentralization > centralization. as can be seen with any society throughout history.

>Sraffa
yes, absolutely destroyed him by stating that with perfect information one could expand the monetary supply in a neutral way.

except that has nothing to do with the reality of the world, and exemplifies the fatal conceit of most economists.

Like from 1950-1970, amirite

>decentralization > centralization. as can be seen with any society throughout history.
That's a pretty fucking bold claim, Rome arguably fell due to excessive decentralization meaning they couldn't effectively levy taxes or raise armies without resorting to hiring barbarians.

It's more like they fell due to elite rent seeking.

romans were masters of decentralization in the republican days. naturally it all started to unravel as emperors became more and more the sole decision makers. they were big proponents of local power managing their territories.

>Muh evil goverment.
>Muh market god take care of everithing.
>Taxes are theft
>plublic expending is a waste.
>glorify greed over common good

You ancaps only care about profits, you even advocate for voluntary slavery.

Hayek, as reality show us.

I tried liking Austrian theory, but the whole "Well... We can't tell if your economic policy is working because our theory can't use empirical evidence to back it up." sort of made me sour on it.

as is almost always the case, it depends.
if done correctly, Keynesian economics will almost always improve the economy and, til now, it is the absolute best recourse any theory has in terms of economics. Of course, it is pretty much impossible to do so correctly as there are so many moving parts. The best example of this is the great recession. The stimulus package allowed the US to get out of the recession more quickly than if we were to follow the free market, but it still is extremely recent and we will be unable to know if Bernanke and the Fed did the right amount of quantitative easing for quite a while. What we do know is that the Fed did not do too little.
Here comes the value judgement.... if you look at the economy through a thoroughly objective lens, then Hayek and the Austrians are right, almost by necessity. The market will correct itself necessarily - shitty businesses will fail and well-run businesses will prosper when shit hits the fan in a self-correcting mechanism to restore normality. However, there is absolutely no timetable which determines the rate at which the economy will return to normality and it is possible that it could take a long, long time. Naturally, politicials have adopted keynesian policies because it helps keep the status quo and therefore keeps the people in line to an extent. It's plain to see that Austrian economics would be preferable in a world that didn't have to deal with human fickleness, but Keynesian theory is very powerful if done well
Keynesian economics was not used at all during the great depression which is exactly why it was so bad for so long. The war also helped move the economy along and there is no telling how long the recovery would have taken were there no war

>"A great crash is coming"
>Every austrian "economist" - Every year

Fucking this.

I should also mention that the issue with austrian and classical economics is the many assumptions that are taken as given. It just is not realistic in the modern age to assume that the assumptions will hold. Perfect information is found nowhere (the stock markets are the closest possible thing, but even then, there is insider information) while things such as no barriers to entry is essentially prohibited by governments/politics
to summarize, I would say that Keynes is the man to follow if only because he is the closest economist I know to one who is a realist and proposed ways to stabilized the economy as it is.
In a "perfect world" the Austrian system would not only be ideal but would be necessary, but that is not possible if only because politics and economics are in bed with one another
let's stray away from memes. Not every/many Austrian's are always predicting impending doom. At the same time, von Mises saying that is meaningless without context. The left and right hate to hear it, but the fact is that sensationalism will prevail and convince their followers that they are correct when it is entirely possible that they are talking out of their (not entirely without reasoned) asses.

>lewrockwell.com/2010/12/walter-e-block/who-predicted-the-housing-bubble/

Expect a crash around the completion of the Jeddah Tower.

youtube.com/watch?v=d0nERTFo-Sk

Boom and bust.

Keynes obviously

>Not being an ordoliberal with a couple of other measures on top.

Hayek
>Great Depression
>"Let's wait for the market to fix it."
>people lose their jobs
>people have no money to spend on anything
>people stop buying products because no money
>people start starving because no money
>more companies go out of business due to lower demand
>more people lose their jobs, start starving
>repeat until the population becomes angry enough to elect someone who does something
>"B-BUT YOU DIDN'T LET THE MARKET CORRECT ITSELF"
no shit, can't lose decades of economic growth and thousands of lives to see if your autistic game even has a win state

also, I laugh when Hayekaboos who think that this vicious downward cycle would make more efficient businesses. I can guarantee you that if things get bad enough, people would stop buying anything that's not food, clothes, or shelter. Say goodbye to every single one of your precious consumer products companies, no matter how efficient they are. That's literally the opposite of efficiency, when the companies that have been selected for by the decades of competition leading up to the economic crash all die out due to the severity of the crash.

tl;dr Hayekians can neither imagine how bad things could get nor envision themselves being fucked over by a crash, so they support a philosophy that only works in relative prosperity

The only reason business cycles happen in the first place, the only reason it becomes RATIONAL TO THE INDIVIDUAL to contribute to a bubble is low interest rates caused by central bankers.

Low interest rates fundamentally change the sorts of investments that allow people to preserve their prosperity. Turns out they're the wrong investments for lasting prosperity.

Since you've bought into the standard incorrect narrative hook, line, and sinker, you should read Murray Rothbard's book. At the very least, it would make you better at showing us silly Austrians the errors of our ways.
pdf here
>mises.org/library/americas-great-depression

>muh your thinking is a narrative!
>muh read this book that justifies my narrative!
at least give me a summary nigga

Suck my dick

>muh profits

Prostitute yourself ancrap fag.

>romans were masters of decentralization in the republican days. naturally it all started to unravel as emperors became more and more the sole decision makers.
That began unraveling well earlier, around the time of the Marian reforms

Neither.

retarded
that ''''explanation''' of keynes isn't correct at all

>t. the "economist"

t. Schlomo Glassensteinowitz

...

Nice meme ancrap, they need to use cheap child slaves to pick this crane.

>The only reason business cycles happen in the first place (...) is low interest rates caused by central bankers.

Ahh, the Austrian cultist is blindly preaching his religion sermon again, despite the huge amount of work in economic theory against this fringe view. But no, of course a mises link of a half century old book settles the case, silly me!

>Goes into thread about economics expecting decent discussion
>full of strawmen, autistic "memes" and non-rebuttals
It's my thought for expecting more, desu

>at least give me a summary
muh summary

>Ahh, the Austrian cultist is blindly preaching his religion sermon again
If simply believing in cause and effect means you're a blind cultist, then I plead guilty.

>huge amount of work in economic theory against this fringe view
If citing a huge amount of work constitutes an argument, then pointing out the large body of Austrian research over the past several decades surely constitutes a rebuttal.

full employment caused an inflationary spiral. That's the reason why that policy crashed like a stone shortly thereafter

>thinking the postwar wasn't a special time uniquely suited to floats all boats gdp growth

unicef subsidizes overpopulation thereby prolonging africa's suffering. your pink eye must be itching

you ever stop to think that certain things matter more than the economy?

>Profit over people

Nice philosophy do you have edgy ancap boy. maybe they need kill the kids to to end their suffering imrite?

>africans
>people
go back to /leftypol/

Capitalist type of helping:
>trade with someone so you gain something and give money in return, and therefore help him to improve, build his economy, and make him no longer need your help
Marxist type of "helping":
>OMG WE MUST GIVE THEM 100000 BILLION SHECKLES SO THEY NOW CAN HAVE MORE KIDS AND THEY NEED MORE SHECKLES TO SPEND ON KIDS SO WE MUST GIVE THEM EVEN MORE SHECKLES, AND THEY HAVE MORE CHILDREN AND THEY DON'T WORK BECAUSE THEY DON'T HAVE TO BECAUSE WE GIVE THEM FREE MONEY LOOL LOOK HOW OPEN-HEARTED AND GENEROUS WE ARE

What an in depth analysis of marx's writings, thanks for your invaluable contribution to the board.

>hahaha niggers
>muh good merchants will solve your social problems with privatization.

Go and suck your jewish burgoise dick Ancrap.

kek can't argue with this

>You'll always predict the great crash if you predict it every year

There's literally no such thing as a monopoly.

A bad definition of monopoly is "having close to 100% market share." There is absolutely no problem with such a "monopolist" because he's threatened by /potential/ competition and abuses his privilege at his peril, keeping prices down. Stiglitz et al. only offer internally inconsistent arguments against this, and history itself shows they're wrong.

A better definition is "having an unthreatened market share." The only way this is possible is by use of state force. Potential competition can only be made impossible through initiation of force.

Furthermore, even this type of "monopolist" only controls one sector of the market, and each sector is in competition with each other sector. Even if you have a cookie "monopoly", you're still competing with donuts. Even if you have a TV "monopoly", you're still competing with beds. Even if you have a food "monopoly", you're still competing with subsistence farming.

Even further, even you accept the legitimacy of state-granted "monopolies" all the time because you accept the legitimacy of patents.

As usual, I'm noticing a stark lack of valid and coherent argumentation from the leftists in this thread.

do you seriously believe that in a free market without any regulation cartels wouldn't form?
both the far left and far right are retarded

>A better definition is "having an unthreatened market share." The only way this is possible is by use of state force.

Or.....by controlling so much of the market that nobody else could possibly compete with you.

of course, and this is policy is causing Africa's suffering to be prolonged by creating Malthusian overpopulation. We had a great discussion about this a week ago

samefag now has to use memes because he thinks I'm an ancap. Go home kid

>there's literally no such thing as a monopoly.
>There is absolutely no problem with such a "monopolist" because he's threatened by /potential/ competition and abuses his privilege at his peril, keeping prices down.

And is no more easier for him destroy the competence with private army and maintain the monopoly? remember, there is no limitation but the good will of the monopolist
,

the slums of jakarta are peak-laissez faire, invisible hand at its finest

>he thinks I'm an ancap.

No, you only are a edgy asshole.

>do you seriously believe that in a free market without any regulation cartels wouldn't form?
Cartels would certainly form, but there's always an economic incentive for everyone to secretly defect. You can either read DiLorenzo's book or watch this clip from Rothbard youtube.com/watch?v=H6Opvlmy8i8

Obamacare is a medical cartel. Now the providers and insurance companies can hold prices at any level without having to worry about defection. You probably support this cartel.

>Or.....by controlling so much of the market that nobody else could possibly compete with you.
What are you even talking about? You ignored all my points. This isn't remotely possible without force.

>with private army and maintain the monopoly
If your argument hinges on the infeasibility of private defense, then that's a different discussion we can certainly have, but only if every one of your other criticisms have been addressed, otherwise you'll just pivot back with a gotcha. If private defense is neither necessary nor sufficient to convince you about monopolies, then there's no reason to get into it.

Hayek was right about fiscal policy, Keynes was right about monetary policy. Countercyclical policies are a useless pipe dream that have never worked in practice, and the gold standard is fucking retarded and backwards.

Why would any insurance company contribute to actual defence? If one company does, the market allows a second company to undercut that one. The second company can insure the customers with a cheaper cost and neglect contributing to defence spending.

I'm not even that guy but good lord
> but there's always an economic incentive for everyone to secretly defect
But there's also the economic incentive for the cartel to control prices, driving them down when they need to drive competitors out of the market, and then raising them again when their market share is secure.

Virtually every organized system in human history was a type of conspiratorial oligarchy. A privileged class always emerges which hijacks the government and turns it into their own private enforcement agency. Thinking that this problem will go away if we get rid of the government is like thinking that free ranging your chickens will protect them better from foxes instead of fixing the holes in your chicken coop.

>Obamacare is a medical cartel.
No, Obamacare is a state-sanctioned monopoly. It's the government requiring everybody to be the customer of insurance companies, aka institutions which aren't held accountable to anybody but its shareholders. It's a bastardized compromise between a free market and a state-managed system, meant to enrich the people at the top at the expense of the consumer.

>If your argument hinges on the infeasibility of private defense
It's totally infeasible. The 2nd amendment is security theater. The more organized force always crushes an unorganized force through simple application of divide and conquer tactics. There're are always going to be losers in society; the question is what are you going to do when a foreign power projects a vastly larger amount of force and capital getting those losers to side with them over you.

4chens not the place for econ discussion. Veeky Forums is filled with cryptohacks /pol/ is filled with naxis and Veeky Forums is filled with ancapistan/commieland returds

The study of economics is overwhelmingly baloney hogwash pseudoscience, so it shouldn't be too surprising

eCONomists ain't real hurrr durrrr

If I understand the question, it's because of the general principal that the wisest companies survive.

More specifically, your counter-insurer will cut you a discount if you have good defense.
A company's record of security will be a valuable marketing point.
The free-rider problem is easy to solve with contracts that penalize people who miss payments. People who sign such contracts will get huge discounts in insurance so they're more likely to sign.
Maybe I'm getting too specific but you get the idea.

>there's also the economic incentive for the cartel to control prices
Like I said, cartels are unstable without a government mandate and will not be a problem.
>driving them down when they need to drive competitors out of the market, and then raising them again when their market share is secure.
This is only a problem if you sell at below the production costs, which is unsustainable.
1. You have to exhaust your company's savings to do this. This "returns the excess value" to the consumer, so there's no problem.
2. Stockholders will protest this.
3. Speculators will buy up your cheap goods to sell at a later date. This will exhaust your savings even faster.
>hijacks the government
You and Marx are correct about this.
>like thinking that free ranging your chickens will protect them better from foxes instead of fixing the holes in your chicken coop
It's like getting rid of the foxes and getting a guard dog.
>No, Obamacare is a state-sanctioned monopoly
As I said, a cartel requires the state to punish defectors and potential competition. It is a state-sanctioned cartel.
>It's totally infeasible.
I don't want to debate this because it's always takes too much effort for too little payoff, but you can read Hoppe's book. The gist is that defense is always much cheaper than offense. Massive land armies are so expensive, any nation that goes to war has to take out huge loans or inflate its currency severely. Private invasions are not cost effective.

I'm not sure if we are on the same page here. I'm talking about national security. My point is that whichever company starts actually investing in defense has higher expenditures, and thus there can arise companies that offer cheaper policies, since national defense is a public good. If you want do defend some block of flats in Upper East Side, it's pretty obvious that concentrating troops on a small swathe of land isn't going to result in any credible defense, you have to defend the entire NYC. The companies free-riding on this public good provided by other companies will outcompete them in a free market, for their lower expenditures result in cheaper policies. These policies will enjoy the same security but at a cheaper cost. The result: no defense

>Like I said, cartels are unstable without a government mandate and will not be a problem.
This is deliberately weasely language though: ALL large scale societies have a government, it's not something that you can make go away: If your government collapses it gets bought out by somebody else's government. Even if you privatize every single function of government, all you did was decide that an oligarchic state proportioned by income was preferable to a democratic one. All the essential functions are still there, you've just made them accountable to nobody but their shareholders, plus you entrenched them as a permanent ruling minority.

>This is only a problem if you sell at below the production costs, which is unsustainable.
Yes and that's exactly the point: it's much harder for the smaller guy to sustain himself because in that kind of situation, the larger cartel has access to lending institutions and can leverage their market share to simply outlast their competitors. Or you can simply buy them outright or threaten a hostile take-over the moment they go public.

>It's like getting rid of the foxes and getting a guard dog.
Oh, and I guess the chickens are the one who go out and buy, raise, train, feed, and house the guard dog, right?
>As I said, a cartel requires the state to punish defectors and potential competition. It is a state-sanctioned cartel.
But the point is that it's not a true state-managed system, it's a "worst of all worlds" compromise. And in order for any commerce to take place, you need a state which is going to back up and enforce property claims.
>he gist is that defense is always much cheaper than offense.
Correction: organized defense is cheaper than organized offense. Unorganized defense is asking for your enemy to use divide and conquer tactics to pick your society to pieces one disgruntled member at a time.
>Private invasions are not cost effective.
That's why oligarchies prefer economic colonialism rather than military conquest.

Keynesian economics doesn't work.

Verdict: true

Basically ruined Japan, didn't pull the US out of the great recession ("b-but it would have worked if it had been bigger!" Yeah, sure thing bud), and didn't help during the great depression either (unemployment didn't drop because of government military stimulus spending, it dropped because the entire labor force was sent overseas)

now wait a minute, Japan has a high rate of savings and a much more risk-averse public. If you ask me, their GDP valuation is so above the water mark of where they should actually be able to hit that it's impossible to go higher- what they are doing is treading water with debt to try and maintain an inherent unsustainable valuation. That isn't "keynes wuz wrong", because their situation is not the same as the great depression. Japan did not lose market share in the same way

second, you're a fucking idiot if you think Keynesian wasn't politically required to maintain a stable society during the great depression. The major damage had already been done from protectionism and improper financing, mitigation is an acceptable policy when the damage is too hard for the general public to bear

>Basically ruined Japan,
Japan's problems are related to demographics, not economics.
> didn't pull the US out of the great recession
If you think we've had anything resembling Keynesianism since the early 1980s you're sorely mistaken. Every professional economist not following a meme school agrees that A: Obama's stimulus did the job of kickstarting the economy out of recession, and B: was a paltry fraction of what it should have been.
But make no mistake, from the early 1980's until 2008, neoclassical economics dominated policy. Alan Greenspan flat out said that the 2008 crash exposed deep theoretical flaws in the belief of a market to self-regulate.

>unemployment didn't drop because of government military stimulus spending, it dropped because the entire labor force was sent overseas
The New Deal had a mixed but generally positive results. What got us out of the great depression was WWII. In economic terms, a mandatory government employment program creating conditions of artificial labor scarcity, driving up wages while the 800% increase in government spending in the economy drove demand to insane heights.

The reason why the Walt Disney Company didn't go bankrupt in the late 1930's and throughout the 1940's was because of the work that he was selling war time propaganda to the department of defense, and then doing outreach movies for the state department after the war.

Japan has nothing to do with keynesians, and the great recession wasn't addressed with keynesian policies (they used monetary, not fiscal, stimuli). It certainly did help during the great depression, although calling that keynesianism is sort of ahistorical.

>japan has nothing to do with Keynesians
Explicit Keynesian policy was the approach used throughout the 90s in Japan to try and float the economy.

>great recession wasn't addressed with Keynesian policy
Lmao. So there was no stimulus bill? News to me.

>Lmao. So there was no stimulus bill? News to me.
Your again using squirrely language again.

Obama was NOT a Keynesian president. He was a Clintonian Democrat, which at its core is reinforced by neoclassical economics, and all his policies reflected that. His responses to the great recession were limited in scope compared to what every Keynesian recommended, and virtually all of his policy was vigorously opposed after the Tea Party swept into the house in 2010.

But even still found success: his cash for clunkers program was a big success despite its limited scope. All three car manufacturers are still in business, keeping a 5th of the economy productive. His stimulus did the job of actually staunching the bleeding that the economy was doing after decades of disastrous neoclassical "hey, lets privatize everything and let the free market figure it out".

I'm interested in what you say, but don't know the specifics. What exactly were the policies that reflected his neoclassical leanings? If he wasn't Keynesian, why did he bail out the banks? Isn't that stimulus?

> What exactly were the policies that reflected his neoclassical leanings? If he wasn't Keynesian, why did he bail out the banks? Isn't that stimulus?
No, what he should have done is prosecuted people who were responsible for the toxic lending conditions which lead to the 2008 crash, and then partition the banks and bring back laws which would prevent lending banks and investment banks from merging into a single bank.

Instead, he simply bailed them out, let them continue to function more or less as they once did, seizing ever larger portions of the economy. All those banks were even more powerful at the end of his presidency than they were at the beginning of it

>Explicit Keynesian policy
Keynesian policies were almost immediately abandoned by Hashimoto in favor of austerity. It's pretty much impossible to have a deflationary economy if your government is actually pushing aggregate demand.

>Lmao. So there was no stimulus bill?
The stimulus bill did manage to reduce unemployment, but was relatively minor, especially compared to the QE efforts.

>prosecuted people who were responsible for toxic lending conditions

The federal government?

>le glass-steagall meme

Glass-Steagall would do literally and absolutely nothing to prevent recessions. At all. Full stop. Even Elizabeth Warren admitted in an interview that it's just red meat for the base that would have no effect.

keynesian economics died in the 1970s. then chicago took over until 2008.

>The federal government?
inside and out of it. Full purge
>Glass-Steagall would do literally and absolutely nothing to prevent recessions.
The whole reason we needed to bail out the banks is because they are "too big to fail". There are such a small number of banks that when they take risks, they put entire segments of the economy at huge risk, and when they fail they start a chain reaction taking the other few banks with them, a financial Armageddon which would cripple the economy for a generation, like it did in the crippling depression this country experienced after Andrew Jackson gimped high finance in the United States.

Too big to fail is too big to exist

> Even Elizabeth Warren admitted in an interview that it's just red meat for the base that would have no effect.
And Alan Greenspan testified before congress that the 2008 crash exposed deep theoretical flaws in the free market ideology, that it was something totally unprecedented in economics the way he understood it and should not have happened.

>The federal government?
Not that guy but it's really boring when austrians get dogmatic. Every financial institution was dealing with garbage securities (which hasn't really changed). What the point of pretending the government is the source of all evil when it's objectively not what happened?

keynesian ,of course.

This nigga knows.

>having this little knowledge of what happened

both have made contributions, though to be honest hayek is more interesting on the political economy side of things rather than proper economics

keynes is basically the foundation of modern economics (i don't count smith or ricardo as truly modern), so him as modern econ is basically a mixture of his foundations and monetarism

ignore all austrians otherwise, they are complete retards

also ignore all vulgar keynesians who don't understand keynes or econ past 1930

>2008
>free market

ayy lmao

austrians deny empiricism in the use of understanding economics

when most people talk of keynes they talk of government spending to get out of a recession, but most will fail to understand how now that is only really shown to work when monetary policy has also done much of the heavy lifting and we're at the ZLB

keynes work goes far beyond all of this of course and is important to the modern study of economics - both micro and macro

good econ books:

tim harford's undercover economist (there are two of them) broadly covers micro and macro
there are various pop econ books in various areas, i like thaler's misbehaving for behavioral econ

then read a textbook like mankiw's principles

>ayy lmao

Austrian """economics""" is a prior bullshit, it's provable false but Austrians don't care because they reject facts. Let that sin in: This """school""" of """economics""" outright REJECTS facts, they LITERALLY don't care what the facts are.

>Hitchen's Razor: That which is asserted without evidence, can be rejected without evidence.

There are good reasons for banks being large and also how that wouldn't have changed anything about 2008.