Consumers are acting too responsibly

Why is the economy faltering?  Robert Samuelson blames consumers, who are saving more and paying down their debt instead of spending:

“Consumers are deleveraging (reducing debt) . . . and rebuilding saving faster than expected,” writes economist Richard Berner of Morgan Stanley. In 2007, the personal savings rate (the share of after-tax income devoted to saving) was 2 percent. Now it’s about 6 percent. Temporarily, this hurts buying. Declines in consumer spending in 2008 and 2009 were the first back-to-back annual drops since the 1930s. Since World War II, annual consumption spending had fallen only twice (1974 and 1980). . . .

Household debt has already dropped $800 billion from its peak of $11.7 trillion, estimates economist Mark Zandi of Moody’s Analytics. The Federal Reserve reports that debt service — the share of income going to interest and principal payment — has decreased from almost 14 percent in early 2008 to about 12.5 percent, the lowest since 2000.

via Robert J. Samuelson – The saving mentality is hurting the economy’s recovery.

And what has economists in a panic is the prospect of people continuing these good habits!

About Gene Veith

Professor of Literature at Patrick Henry College, the Director of the Cranach Institute at Concordia Theological Seminary, a columnist for World Magazine and TableTalk, and the author of 18 books on different facets of Christianity & Culture.

  • http://debsueknit.blogspot.com DebbieQ

    How rude of us!

  • http://debsueknit.blogspot.com DebbieQ

    How rude of us!

  • Joe

    it is short sighted to complain about this. Once the debt is paid down and the savings is built up people will begin purchasing things. But even better is that they will realize that they have accumulated wealth and they will put that wealth to work via investments (stocks, bonds, etc.) and that infusion of capital ought to spur the economy.

    I would rather have a slower recovery that includes consumer spending and new investment – instead of immediate spending and a faster, shallow recovery.

  • Joe

    it is short sighted to complain about this. Once the debt is paid down and the savings is built up people will begin purchasing things. But even better is that they will realize that they have accumulated wealth and they will put that wealth to work via investments (stocks, bonds, etc.) and that infusion of capital ought to spur the economy.

    I would rather have a slower recovery that includes consumer spending and new investment – instead of immediate spending and a faster, shallow recovery.

  • WebMonk

    Congratulations on managing to almost completely mangle the point of that article. The slower economic recovery affected by the higher savings rate is completely temporary (as mentioned in the article) and is a good thing with an unfortunate (again, temporary) side effect.

    But, sure, let’s take a reporter’s article completely out of context and then exaggerate them wildly and claim that economists are in a panic about people saving money. It makes things ever so much more interesting to toss out specious and extreme statements regardless of accuracy.

  • WebMonk

    Congratulations on managing to almost completely mangle the point of that article. The slower economic recovery affected by the higher savings rate is completely temporary (as mentioned in the article) and is a good thing with an unfortunate (again, temporary) side effect.

    But, sure, let’s take a reporter’s article completely out of context and then exaggerate them wildly and claim that economists are in a panic about people saving money. It makes things ever so much more interesting to toss out specious and extreme statements regardless of accuracy.

  • Econ Jeff

    Well, this economist is happy about any change away from blatant consumerism. Unless we follow the Japanese path (high saving, low growth), increased savings should lead to higher investment and higher rates of growth in the future.

  • Econ Jeff

    Well, this economist is happy about any change away from blatant consumerism. Unless we follow the Japanese path (high saving, low growth), increased savings should lead to higher investment and higher rates of growth in the future.

  • http://www.bikebubba.blogspot.com Bike Bubba

    I’m not, strictly speaking, an economist, but I must point out that it is BAD economists–those who have not read and understood their Bastiat–who talk about nonsense like the “paradox of thrift.”

    That is, if you save a dollar or pay back debt with it, that dollar goes into capital formation, which produces jobs just as surely as spending it on a can of Mountain Dew or whatever. In fact, since saving increases productivity, it actually is more powerful at stimulating the economy than spending–which is why our economy has gone into the tank as our goverment and other entities push consumer spending over investment.

  • http://www.bikebubba.blogspot.com Bike Bubba

    I’m not, strictly speaking, an economist, but I must point out that it is BAD economists–those who have not read and understood their Bastiat–who talk about nonsense like the “paradox of thrift.”

    That is, if you save a dollar or pay back debt with it, that dollar goes into capital formation, which produces jobs just as surely as spending it on a can of Mountain Dew or whatever. In fact, since saving increases productivity, it actually is more powerful at stimulating the economy than spending–which is why our economy has gone into the tank as our goverment and other entities push consumer spending over investment.

  • http://facebook.com/mesamike Mike Westfall

    I’d say “Cart before the Horse” or “Tail Wagging the Dog.” Something like that. This “economist” has confused cause with effect.

  • http://facebook.com/mesamike Mike Westfall

    I’d say “Cart before the Horse” or “Tail Wagging the Dog.” Something like that. This “economist” has confused cause with effect.

  • http://www.geneveith.com Gene Veith

    Yes, Webmonk, as you are always informing us, I don’t know anything about science, but you do. But you need to take some literature courses to recognize the trope of IRONY. I am not trying to make Samuelson’s point but rather one of my own. The situation is IRONIC. Let me spell out my point for your admirably literal mind: What are traditionally held to be economic virtues–thrift, savings, not going into debt–are said to be holding back our economic growth. The irony is that we have a “consumer” economy that, over the last decades, actually has depended on people going into debt, spending more than they take in, which does inflate the economy. This is part of the current problem, since bubbles like that tend to burst, as we saw in the housing industry. Yes, in the long run, a return to fiscal responsibility that this collapse is forcing on us, will be good for everyone.

  • http://www.geneveith.com Gene Veith

    Yes, Webmonk, as you are always informing us, I don’t know anything about science, but you do. But you need to take some literature courses to recognize the trope of IRONY. I am not trying to make Samuelson’s point but rather one of my own. The situation is IRONIC. Let me spell out my point for your admirably literal mind: What are traditionally held to be economic virtues–thrift, savings, not going into debt–are said to be holding back our economic growth. The irony is that we have a “consumer” economy that, over the last decades, actually has depended on people going into debt, spending more than they take in, which does inflate the economy. This is part of the current problem, since bubbles like that tend to burst, as we saw in the housing industry. Yes, in the long run, a return to fiscal responsibility that this collapse is forcing on us, will be good for everyone.

  • WebMonk

    The effects of saving, and their temporary effect on a recovery are widely known – when people start saving at a drastically changed rate, it affects spending which has an effect on the economy. I fail to grasp anything ironic about it – it’s a standard, basic fact of life.

    The economist wasn’t saying it was a bad thing, and if you pay attention to what the economist said and what the reporter wrote, the economist was saying it is a good thing and has run most of its course. The reporter was doing his best to dramatize it, and tried to toss out a “scary” what-if scenario.

    Economists aren’t in a panic. Economists hold that this additional savings is a good thing with predictable results.

    Saying “what has economists in a panic is the prospect of people continuing these good habits!” isn’t pointing out something ironic – it’s just a completely false, incorrect, and wrong statement.

    I recognize the trope of irony quite well. Making something up that is completely false isn’t irony. Perhaps you should be more careful when trying to generate irony where there isn’t any.

  • WebMonk

    The effects of saving, and their temporary effect on a recovery are widely known – when people start saving at a drastically changed rate, it affects spending which has an effect on the economy. I fail to grasp anything ironic about it – it’s a standard, basic fact of life.

    The economist wasn’t saying it was a bad thing, and if you pay attention to what the economist said and what the reporter wrote, the economist was saying it is a good thing and has run most of its course. The reporter was doing his best to dramatize it, and tried to toss out a “scary” what-if scenario.

    Economists aren’t in a panic. Economists hold that this additional savings is a good thing with predictable results.

    Saying “what has economists in a panic is the prospect of people continuing these good habits!” isn’t pointing out something ironic – it’s just a completely false, incorrect, and wrong statement.

    I recognize the trope of irony quite well. Making something up that is completely false isn’t irony. Perhaps you should be more careful when trying to generate irony where there isn’t any.

  • WebMonk

    IF economists were saying savings is bad for the economy, and IF they were worried about it, and IF they thought the saving rate was a problem, and IF, and IF, and IF….

    THEN it would have been a valid bit of irony to point out.

    As it is, none of those IF’s are accurate, and claiming them to be is just plain false, not ironic.

  • WebMonk

    IF economists were saying savings is bad for the economy, and IF they were worried about it, and IF they thought the saving rate was a problem, and IF, and IF, and IF….

    THEN it would have been a valid bit of irony to point out.

    As it is, none of those IF’s are accurate, and claiming them to be is just plain false, not ironic.

  • Steven Peterson

    The irony is that Samuelson has changed his tune to some extent. He used to believe everything WebMonk listed in #9. When the economics profession abandoned this notion, the paradox of thrift was eliminated from serious discussion by almost every economist except Paul Krugman.

    The other ironic thing is that even though the paradox of thrift has effectively died as economic dogma, the government policymakers still operate as if it was a real and present danger.

  • Steven Peterson

    The irony is that Samuelson has changed his tune to some extent. He used to believe everything WebMonk listed in #9. When the economics profession abandoned this notion, the paradox of thrift was eliminated from serious discussion by almost every economist except Paul Krugman.

    The other ironic thing is that even though the paradox of thrift has effectively died as economic dogma, the government policymakers still operate as if it was a real and present danger.

  • libertas

    My understanding is that the changes in private debt/savings are only one peice of the pie. Japan used a lot of their private savings to fund the secular shift of corperate debt onto the governments shoulders. I think it’s interesting that this private source of funding for Japans gov. debt is starting to show some weakness with the private savings rate falling from the upper teens to ~3% in recent years, while goverment debt continues to expand upward past 170% of GDP. Logic and experience tell me that all this debt is no path to prosperity. But so does Gods’s revelation. One example of this is God’s threatened curse upon the nation of Isreal for disobedience to the covenant, Deuteronomy 28:44 “He (the alien in your midst) shall lend to you, and you shall not lend to him. He shall be the head, and you shall be the tail.”

  • libertas

    My understanding is that the changes in private debt/savings are only one peice of the pie. Japan used a lot of their private savings to fund the secular shift of corperate debt onto the governments shoulders. I think it’s interesting that this private source of funding for Japans gov. debt is starting to show some weakness with the private savings rate falling from the upper teens to ~3% in recent years, while goverment debt continues to expand upward past 170% of GDP. Logic and experience tell me that all this debt is no path to prosperity. But so does Gods’s revelation. One example of this is God’s threatened curse upon the nation of Isreal for disobedience to the covenant, Deuteronomy 28:44 “He (the alien in your midst) shall lend to you, and you shall not lend to him. He shall be the head, and you shall be the tail.”

  • http://facebook.com/mesamike Mike Westfall

    Question for anyone who is better acquainted with economics than me (and that could be all of you): Since people don’t save their money by physically retaining it and thus removing it from circulation these days, were does the money go when significant numbers of people are saving instead of spending?

  • http://facebook.com/mesamike Mike Westfall

    Question for anyone who is better acquainted with economics than me (and that could be all of you): Since people don’t save their money by physically retaining it and thus removing it from circulation these days, were does the money go when significant numbers of people are saving instead of spending?

  • http://www.bikebubba.blogspot.com Bike Bubba

    Mike; when you save money, it can go into a bank, or you can invest it in stocks or bonds. In the latter case, it always goes directly to capital formation. In the former, it is lent out to others for various uses–spending, capital formation, etc.. Finally, you can “save” by paying off debt–and your repaid funds are available to the lender for other uses.

    No matter what, someone gets to use the money for his preferred purpose. Hence, there is no paradox of thrift.

    Even removing if from circulation (say by buying gold and putting it in the safe) sends an economic signal; I will take my money out of the safe when prices come to a point where I value the goods more than my real money. Until the Federal Reserve identified deflation as an “enemy”, deflation usually ended economic problems within a year.

  • http://www.bikebubba.blogspot.com Bike Bubba

    Mike; when you save money, it can go into a bank, or you can invest it in stocks or bonds. In the latter case, it always goes directly to capital formation. In the former, it is lent out to others for various uses–spending, capital formation, etc.. Finally, you can “save” by paying off debt–and your repaid funds are available to the lender for other uses.

    No matter what, someone gets to use the money for his preferred purpose. Hence, there is no paradox of thrift.

    Even removing if from circulation (say by buying gold and putting it in the safe) sends an economic signal; I will take my money out of the safe when prices come to a point where I value the goods more than my real money. Until the Federal Reserve identified deflation as an “enemy”, deflation usually ended economic problems within a year.

  • http://www.utah-lutheran.blogspot.com Bror Erickson

    Good question Mike. It really sets up how stupid this saving is bad thing is.
    Webmonk can continue to believe that saving money is bad and spending money on credit cards is good. I imagine one only holds that theory for a short amount of time and then begins to see the wisdom of Veith’s irony. Kind of like learning when I was twenty one, that my dad was the smartest man in the world after thinking him stupid for the seven years prior.

  • http://www.utah-lutheran.blogspot.com Bror Erickson

    Good question Mike. It really sets up how stupid this saving is bad thing is.
    Webmonk can continue to believe that saving money is bad and spending money on credit cards is good. I imagine one only holds that theory for a short amount of time and then begins to see the wisdom of Veith’s irony. Kind of like learning when I was twenty one, that my dad was the smartest man in the world after thinking him stupid for the seven years prior.

  • WebMonk

    Bror, are you trying to be as wrong as possible just for the heck of it? Did it suddenly become opposite day?

    Did I not state it clearly enough that economists DO NOT think saving is a bad thing?!? I didn’t specifically state my opinion in any of the posts, but I’ll put it down here that I agree with them that saving is a very good thing.

    Where you came up with your nonsensical statement, claiming I think saving money is bad and spending money on credit cards is good, I have no idea.

    What is being stated here is really basic – any time that there is a sudden shift in economic habits (in this case savings is increasing, which is a very good thing, allow me to state that again for the reading-comprehension-impaired) there are effects, both long and short-term. One of the short-term effects of increased saving (again, that’s a GOOD thing) is lower spending, which means that an economy that is recovering will have a slower short-term recovery than it might be otherwise.

    No one (except possibly the reporter trying to make a sensational story) is saying saving is a bad thing. No one is in a panic. Saving is a good thing.

    Do I need to say it again just so there can’t possibly be any misunderstanding? Do I need to type it more slowly? Use all caps or something?

  • WebMonk

    Bror, are you trying to be as wrong as possible just for the heck of it? Did it suddenly become opposite day?

    Did I not state it clearly enough that economists DO NOT think saving is a bad thing?!? I didn’t specifically state my opinion in any of the posts, but I’ll put it down here that I agree with them that saving is a very good thing.

    Where you came up with your nonsensical statement, claiming I think saving money is bad and spending money on credit cards is good, I have no idea.

    What is being stated here is really basic – any time that there is a sudden shift in economic habits (in this case savings is increasing, which is a very good thing, allow me to state that again for the reading-comprehension-impaired) there are effects, both long and short-term. One of the short-term effects of increased saving (again, that’s a GOOD thing) is lower spending, which means that an economy that is recovering will have a slower short-term recovery than it might be otherwise.

    No one (except possibly the reporter trying to make a sensational story) is saying saving is a bad thing. No one is in a panic. Saving is a good thing.

    Do I need to say it again just so there can’t possibly be any misunderstanding? Do I need to type it more slowly? Use all caps or something?

  • http://www.toddstadler.com/ tODD

    WebMonk (@15), I really don’t understand your animosity towards saving — for instance, when you say “I think saving money is bad and spending money on credit cards is good”. I understand that if nobody spent any money at all ever, that would be reason to panic, but can’t you even agree that urging people to reduce some of their debt and save just a little money is a relatively good thing? Why do you insist that massive debt and frenzied consumerism are the only way?

    ;) Just trying to drive you mad. Can’t speak for others’ motives.

  • http://www.toddstadler.com/ tODD

    WebMonk (@15), I really don’t understand your animosity towards saving — for instance, when you say “I think saving money is bad and spending money on credit cards is good”. I understand that if nobody spent any money at all ever, that would be reason to panic, but can’t you even agree that urging people to reduce some of their debt and save just a little money is a relatively good thing? Why do you insist that massive debt and frenzied consumerism are the only way?

    ;) Just trying to drive you mad. Can’t speak for others’ motives.

  • Grace

    Thank you Dr. Veith, well stated. My husband is in banking, the net result of spending, over and above what one can afford, has brought about the situation the people of this country must adjust to.

    The spending of the last decade is now creating a new reality to appreciate what we need, rather than what we want for the future.

  • Grace

    Thank you Dr. Veith, well stated. My husband is in banking, the net result of spending, over and above what one can afford, has brought about the situation the people of this country must adjust to.

    The spending of the last decade is now creating a new reality to appreciate what we need, rather than what we want for the future.

  • http://www.utah-lutheran.blogspot.com Bror Erickson

    Well Webmonk, are you not defending the article?
    Sorry from the title of the piece all they way through the article is blaming consumers for not spending. We aren’t spending and this is hurting the economies recovery. sure it mentions it as temporary, but no where in reading that article does it say it has its benefits for the economy.
    I’m sorry I may have misread your first post or two due to a hasty skim. But I still think it is you and not Veith who has misread the main point of the article, which in Newspapers is generally made by the headline.
    Now you can read between the lines and behind the lines and find some information that goes contrary to the main point of the article, but that doesn’t mean it is the main point of the article.

  • http://www.utah-lutheran.blogspot.com Bror Erickson

    Well Webmonk, are you not defending the article?
    Sorry from the title of the piece all they way through the article is blaming consumers for not spending. We aren’t spending and this is hurting the economies recovery. sure it mentions it as temporary, but no where in reading that article does it say it has its benefits for the economy.
    I’m sorry I may have misread your first post or two due to a hasty skim. But I still think it is you and not Veith who has misread the main point of the article, which in Newspapers is generally made by the headline.
    Now you can read between the lines and behind the lines and find some information that goes contrary to the main point of the article, but that doesn’t mean it is the main point of the article.

  • WebMonk

    Et tu, tODD?! Aaaaahhhhhh!!!!!!! *pulls hair out* *smashes things*
    :-D

  • WebMonk

    Et tu, tODD?! Aaaaahhhhhh!!!!!!! *pulls hair out* *smashes things*
    :-D

  • WebMonk

    Ok, Bror, you need to go back and read the article and pay attention to what the economist is saying and what the columnist is saying. The two are WILDLY different.

    The economist is saying saving a good thing with a short-term effect of slowing the economic recovery. (note he never says that’s a bad thing! most economists hold that effect to be a GOOD thing.)

    The columnist is throwing out the scary and horribly exaggerated what-if scenarios, and using the dramatic and worrying headlines and catch-phrases.

    But, never mind minor things like who actually says what. Let’s just claim economists are panicking over people saving money. That’s a lot more entertaining.

  • WebMonk

    Ok, Bror, you need to go back and read the article and pay attention to what the economist is saying and what the columnist is saying. The two are WILDLY different.

    The economist is saying saving a good thing with a short-term effect of slowing the economic recovery. (note he never says that’s a bad thing! most economists hold that effect to be a GOOD thing.)

    The columnist is throwing out the scary and horribly exaggerated what-if scenarios, and using the dramatic and worrying headlines and catch-phrases.

    But, never mind minor things like who actually says what. Let’s just claim economists are panicking over people saving money. That’s a lot more entertaining.

  • WebMonk

    To be valid, the last line in the post would have been:

    “And what has columnists in a panic is the prospect of people continuing these good habits!”

    That would have pointed out some accurate irony – this columnist rejects the benefits and value of saving, is promoting the nutty spending levels that contributed to the recession, and is blaming people saving money on the slow economic recovery.

    But, that’s not nearly as exciting and dramatic as saying economists are panicking and saying saving money is hurting the economy.

  • WebMonk

    To be valid, the last line in the post would have been:

    “And what has columnists in a panic is the prospect of people continuing these good habits!”

    That would have pointed out some accurate irony – this columnist rejects the benefits and value of saving, is promoting the nutty spending levels that contributed to the recession, and is blaming people saving money on the slow economic recovery.

    But, that’s not nearly as exciting and dramatic as saying economists are panicking and saying saving money is hurting the economy.

  • Joe

    Well lets take a break from this column and watch this instead:

  • Joe

    Well lets take a break from this column and watch this instead:

  • http://www.utah-lutheran.blogspot.com Bror Erickson

    Webmonk,
    At best the economist was being a bit more nuanced then the columnist. I don’t think he was saying anything “wildly different.” he may have not hyped his anti saving bit as much as the columnist did, but in the end he was saying we need to spend more than we are at some point for the economy to recover.
    Columnists may hype the news a bit. But without reading the entire interview verbatim I can give the columnist the benefit of the doubt and say that he was representing the economist with at least some integrity. And the main point of the article would be exactly what the head line read, even if the columnist misrepresented his source, which I’m not at all sure he did.
    You may disagree with this columnist, and maybe perhaps even this economist. But then I’m willing to bet there are economists out there saying exactly what this columnist has written.

  • http://www.utah-lutheran.blogspot.com Bror Erickson

    Webmonk,
    At best the economist was being a bit more nuanced then the columnist. I don’t think he was saying anything “wildly different.” he may have not hyped his anti saving bit as much as the columnist did, but in the end he was saying we need to spend more than we are at some point for the economy to recover.
    Columnists may hype the news a bit. But without reading the entire interview verbatim I can give the columnist the benefit of the doubt and say that he was representing the economist with at least some integrity. And the main point of the article would be exactly what the head line read, even if the columnist misrepresented his source, which I’m not at all sure he did.
    You may disagree with this columnist, and maybe perhaps even this economist. But then I’m willing to bet there are economists out there saying exactly what this columnist has written.

  • WebMonk

    Sure, there are thousands of economists out there, and I don’t doubt that SOMEWHERE you can find one who agree with the columnist.

    Richard Berner, the one quoted most frequently in the article, most assuredly does NOT agree with the columnist. Perhaps you haven’t heard of him, but he is quite well known in economic and policy circles. He has always been an advocate of more reasonable consumer spending and greater savings.

    Pay attention to precisely what the economists say and what Samuelson writes. The quotes are minuscule and generally just relaying bits of data. The one quote that goes beyond stating a piece of information is Berner’s, and it is the one that the author immediately disagrees with when he runs his what-if scenario.

    Samuelson used Berner quotes just to extract basic facts, and then mixes them with his own mish-mash of data and reasonings along with a fanciful what-if scenario and comes up with an opinion opposite that of Berner.

    No, Berner is quite adamantly against spending that outpaces income and too-tiny savings.

    Sorry for coming off so strongly there. Your assumption that the author was validly representing the larger views of those he used for minor quotes is naive but not ridiculous, I guess. I forgot that everyone isn’t familiar with Berner. Suffice it to say the author is pulling bunches of nonsense out of his … hat, and passing it off as serious opinions backed up by respected economists.

    Saying that economists (I’m sure there are exceptions somewhere) are panicked and believe savings are too high and threatening the recover is ridiculous nonsense.

  • WebMonk

    Sure, there are thousands of economists out there, and I don’t doubt that SOMEWHERE you can find one who agree with the columnist.

    Richard Berner, the one quoted most frequently in the article, most assuredly does NOT agree with the columnist. Perhaps you haven’t heard of him, but he is quite well known in economic and policy circles. He has always been an advocate of more reasonable consumer spending and greater savings.

    Pay attention to precisely what the economists say and what Samuelson writes. The quotes are minuscule and generally just relaying bits of data. The one quote that goes beyond stating a piece of information is Berner’s, and it is the one that the author immediately disagrees with when he runs his what-if scenario.

    Samuelson used Berner quotes just to extract basic facts, and then mixes them with his own mish-mash of data and reasonings along with a fanciful what-if scenario and comes up with an opinion opposite that of Berner.

    No, Berner is quite adamantly against spending that outpaces income and too-tiny savings.

    Sorry for coming off so strongly there. Your assumption that the author was validly representing the larger views of those he used for minor quotes is naive but not ridiculous, I guess. I forgot that everyone isn’t familiar with Berner. Suffice it to say the author is pulling bunches of nonsense out of his … hat, and passing it off as serious opinions backed up by respected economists.

    Saying that economists (I’m sure there are exceptions somewhere) are panicked and believe savings are too high and threatening the recover is ridiculous nonsense.

  • http://www.toddstadler.com/ tODD

    I think Joe (@22) is right to redirect our energies elsewhere. And if you haven’t clicked on his video link yet, I suggest you do.

    Joe, that video is amazingly well done. I’m not all that up on economics (honestly, I probably learned something from the video, as I, too, was ignorant of Hayek), but I had to laugh when Hayek found Keynes’ book in the bedside table.

  • http://www.toddstadler.com/ tODD

    I think Joe (@22) is right to redirect our energies elsewhere. And if you haven’t clicked on his video link yet, I suggest you do.

    Joe, that video is amazingly well done. I’m not all that up on economics (honestly, I probably learned something from the video, as I, too, was ignorant of Hayek), but I had to laugh when Hayek found Keynes’ book in the bedside table.

  • Joe

    I love that video. I would like to hear Webmonk and EconJeff’s take on it. To my lawyer’s ear it seems fairly accurate. I have read a bit of Hayek and Kaynes (why? because a friend of mine told me Road to Serfdom by Hayek is one of his go to books).

    A guy at the DailyKos did this analysis of it and found it to be pretty accurate and found that the minor inaccuracies were due to the need to make the lyrics work.

    http://www.dailykos.com/storyonly/2010/3/1/837337/-Smackdown:-Keynes-vs.-Hayek-With-Poll

  • Joe

    I love that video. I would like to hear Webmonk and EconJeff’s take on it. To my lawyer’s ear it seems fairly accurate. I have read a bit of Hayek and Kaynes (why? because a friend of mine told me Road to Serfdom by Hayek is one of his go to books).

    A guy at the DailyKos did this analysis of it and found it to be pretty accurate and found that the minor inaccuracies were due to the need to make the lyrics work.

    http://www.dailykos.com/storyonly/2010/3/1/837337/-Smackdown:-Keynes-vs.-Hayek-With-Poll

  • WebMonk

    I thoroughly enjoyed the video, but I couldn’t catch the words enough to remember the details of what they were saying. I had to watch it twice – first just enjoying the flow and visuals, second time to try to catch the verses. There were a number of oversimplifications and fudging things to make them sound right, but aside from that it seemed spot on. I’m afraid people might get the Keynes side better since it is less technical, but frankly the Hayek side of things kicked Keynes’ butt even though it’s hard to tell with all the jargon and summarized arguments in the Hayek half of the rap.

    I just followed that dailykos link you put up, Joe, and it’s an excellent summary/description. I tend to come down on the Austrian/Hayek side of things (though not entirely, especially with some of the more “strident” Austrian-school economists).

    I just erased about three paragraphs of stuff. Just go read the link, it does a very excellent summary.

  • WebMonk

    I thoroughly enjoyed the video, but I couldn’t catch the words enough to remember the details of what they were saying. I had to watch it twice – first just enjoying the flow and visuals, second time to try to catch the verses. There were a number of oversimplifications and fudging things to make them sound right, but aside from that it seemed spot on. I’m afraid people might get the Keynes side better since it is less technical, but frankly the Hayek side of things kicked Keynes’ butt even though it’s hard to tell with all the jargon and summarized arguments in the Hayek half of the rap.

    I just followed that dailykos link you put up, Joe, and it’s an excellent summary/description. I tend to come down on the Austrian/Hayek side of things (though not entirely, especially with some of the more “strident” Austrian-school economists).

    I just erased about three paragraphs of stuff. Just go read the link, it does a very excellent summary.


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