United Liberty

Written by Daniel J. Mitchell, a senior fellow at the Cato Institute. Posted with permission from Cato @ Liberty.

I’m understandably partial to my video debunking Keynesian economics, and I think this Econ 101 video from the Center for Freedom and Prosperity does a great job of showing why consumer spending is a consequence of growth, not the driver.

But for entertainment value, this very funny video from EconStories.tv puts them to shame while also making important points about what causes economic growth.

Growing up in a religious home and later dabbling in Christian apologetics, I developed affinity for C.S. Lewis, author of several novels and books — including the Chronicles of Narnia series, The Screwtape Letters, and Mere Christianity.

Whether call yourself a Christian or an atheist, Lewis was indeed a great writer who didn’t simply ground his beliefs in faith. Unlike many who simply follow their beliefs based on Sunday school teachings, Lewis developed the modern view of Christian apologetics, laying the ground for future thinkers, including William Lane Craig and others.

One of my favorite books by Lewis is Mere Christianity. In this book, Lewis presents a case for Christianity and also breaks down the Christian worldview on society and morality. In the book, Lewis notes that a pure Christian society would closely resemble socialism, a suggestion that isn’t too far off-base if one reads the Book of Acts, which explains that early Christians lived together and “had everything in common.” This was likely due to the persecution endured by early believers at the hands of Jews and Roman rulers. They kept together in what were very unaccepting times for followers of Jesus Christ.

On this day in 1899, Friedrich August (F.A.) Hayek was born in Vienna, Austria. Over the course of his long life, Hayek, along with others, brought a new way of thinking to economics, challenging statists that sought more debt and spending.

Hayek laid down his economic beliefs in his book, The Road to Serfdom (1944), explaining that the predominant views of the day were essentially fascism. Hayek won the Nobel Prize for economics in 1974 and was awarded Presidential Medal of Freedom by President George H.W. Bush in 1991.

He went head-to-head against John Maynard Keynes, whose economic theories were anathema to the free market. And while both economists have been gone for some time, we’re are still waging war over their views today. This battle was the focus of two videos put out by Econstories; the first being “Fear the Boom and Bust”:

And the latter being “Fight of the Century,” which focused on the after-effects and failures of economic stimulus and bailouts:

On Monday evening, saw a battle of two schools of economic thought — Keynesianism and the Austrian school — in a brief battle between Paul Krugman and Rep. Ron Paul (R-TX).

While it wasn’t the educational videos put out by Econstories that have actors playing the parts of John Maynard Keynes and F.A. Hayek giving a defense of these schools of thought, it’s among the closest thing we’ll see to a real debate between the ideals of statism and economic liberty.

H/T: Club for Growth

Just in time for Christmas, EconStories, the folks that brought us the Hayek/Keynes rap videos (“Fear the Boom and Bust” and “Fight of the Century: Keynes vs. Hayek Round Two”), have finally rolled out some swag, including t-shirts and coffee mugs:

I’ve already picked up a couple t-shirts (I went with “Austrian Perspective” and “Fight of the Century”). From what I understand, supplies are limited, so buy quickly.

Fed Chairman Ben Bernanke is puzzled by the pace of the economic wreckovery:

The economy’s continuing struggles aren’t just confounding ordinary Americans. They’ve also stumped the head of the Federal Reserve.

Fed Chairman Ben Bernanke told reporters Wednesday that the central bank had been caught off guard by recent signs of deterioration in the economy. And he said the troubles could continue into next year.

“We don’t have a precise read on why this slower pace of growth is persisting,” Bernanke said. He said the weak housing market and problems in the banking system might be “more persistent than we thought.”

The is the folly of central planning. They believe they can create an economy and make it do what they want it to do or “stimulate” it when it struggles. The shocking revelation, at least to The Ben Bernank, that central planners may have not been able to revive a struggling economy, despite bailouts to rent-seeking businesses deemed “too big to fail,” including financial institutions and automakers, massive spending; I’m reminded of truism from F.A. Hayek, a Nobel Prize winning economist, from his book, The Fatal Conceit:

The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.

If you enjoyed the video for “Fear the Boom and Bust,” which explains the decades old battle between ideas of F.A. Hayek and John Maynard Keynes, the guys at EconStories - Russ Roberts and John Papola - are looking for donations for their follow-up video.

They discussed the plans a couple of months ago at The Economist’s Buttonwood Gathering, So, if you want to see this happen, send them a few bucks.

In case you haven’t seen it, here is “Fear the Boom and Bust”:

“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.” - John Maynard Keynes

With the election of Barack Obama and large majorities in the Congress, many commentators were playing up the resurgence of Keynesian economic theories.

In reality, George W. Bush was a Keynesian. As Bruce Bartlett has pointed out, the 2001 and 2003 tax cuts were passed under the guise of “stimulating the economy,” and the deficits were certainly there not too long after the cuts passed (and they’ve stayed with us). And certainly the bailouts were driven by that same misguided belief that government could “rescue” by spending taxpayer dollars.

But as there is increased skepticism on the Federal Reserve and the Keynesian-style economic policies advanced by the Obama Administration, it seems that the demise of the free market has been greatly exaggerated.

Even Newsweek, which last year declared that “we are all socialists now,” is noting the rise of the Austrian economic views of Friedrich Hayek, the Nobel Prize winning economist: