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Keynesianism says that spending money on anything is good, no matter what. War is good, make work projects that do nothing are good, spending money on frivolou

Keynesianism says that spending money on anything is good, no matter what. War is good, make work projects that do nothing are good, spending money on frivolous consumer goods is good, etc. Austrian school recognizes that investing in productive capital that lowers the cost of production and resources consumed in production is actual real economic progress. For example, let's say you have an island with coconuts. If you pay everybody $100 to go out and buy coconuts, the price is going to just go up. If you pay them $100 to plant more coconut trees or make tools to harvest them more efficiently, there are going to be more coconuts and the price is going to go down. Keynesianism would say the two are equivalent economically because AD = C + I + G + (X-M) and in this equation C and I are perfectly interchangeable. If you want to read the long version of that I'd suggest Hayek's critique of the paradox of savings: https://mises.org/library/hayek-paradox-saving https://mises.org/library/hayek-paradox-saving

TheOtherHobbes 10y ago
Hayek is one of the reasons we're in this mess, so - coconuts or no - it's hard to believe that more Hayek is a solution. I don't recall Keynes saying any of the things you claim he said. He actually said this: "If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing." Perceptive readers may notice a certain hint of irony in the above, which Austrian economists - being literally minded, on the whole - may have missed.
- shitgoose 10y ago
  I am also missing on the irony here. Could you, please, elaborate?
  - hx87 10y ago
    What Keynes is saying is that during economic contractions, Make-work > nothing Which is a sentiment he does hold, but it misses his real, implicit message, which is Productive government stimulus > handing out money > make-work > nothing
    - shitgoose 10y ago
      So something > nothing. But where is the irony? Borrow/confiscate money from non-struggling groups and hand out to struggling groups. Might work in some cases, but hardly a long term solution. Besides, how is current economical fragility Hayek's fault? Edit: re-read the original comment. Seems like the irony, or rather sarcasm is in Keynes's suggestion to organise note-digging as a form of free enterprise with tenders and competition for digging rights. (Sounds like Bitcoin by the way.) If that is the hidden message, it looks rather pointless.
      - hx87 10y ago
        The irony is that people look only at the first inequality and think that Keynes advocates for make-work, whereas if one looks at the implicit inequality, Keynes is actually advocating for productive stimulus, or failing that, handing out money without wasteful, feel-good conditions such as requiring people to break rocks (or dig for notes).
- taneq 10y ago
  This seems very broken-window-fallacy-ish. What am I missing?
- narrator 10y ago
  Hayek is NOT one of the reasons we're in this. He has been largely ignored as an economist, unless one makes the assumption that Satoshi was influenced by Hayek's "The Denationalization of Money". As a political theorist he has had a fair amount of impact with the "Road to Serfdom", which he worked on after Keynes was mysteriously elevated to Sainthood after his death and Hayek largely ended his pure economics writing. There's a great interview with Hayek where he bemoans his lack of impact: https://www.youtube.com/watch?v=Oqhe4K1Jz-8 https://www.youtube.com/watch?v=Oqhe4K1Jz-8
- pbowyer 10y ago
  > Hayek is one of the reasons we're in this mess Why? Here in Europe he's bandied around as our saviour, so curious why he's also responsible.

TheOtherHobbes 10y ago

Hayek is one of the reasons we're in this mess, so - coconuts or no - it's hard to believe that more Hayek is a solution. I don't recall Keynes saying any of the things you claim he said. He actually said this: "If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing." Perceptive readers may notice a certain hint of irony in the above, which Austrian economists - being literally minded, on the whole - may have missed.

shitgoose 10y ago
I am also missing on the irony here. Could you, please, elaborate?
- hx87 10y ago
  What Keynes is saying is that during economic contractions, Make-work > nothing Which is a sentiment he does hold, but it misses his real, implicit message, which is Productive government stimulus > handing out money > make-work > nothing
  - shitgoose 10y ago
    So something > nothing. But where is the irony? Borrow/confiscate money from non-struggling groups and hand out to struggling groups. Might work in some cases, but hardly a long term solution. Besides, how is current economical fragility Hayek's fault? Edit: re-read the original comment. Seems like the irony, or rather sarcasm is in Keynes's suggestion to organise note-digging as a form of free enterprise with tenders and competition for digging rights. (Sounds like Bitcoin by the way.) If that is the hidden message, it looks rather pointless.
    - hx87 10y ago
      The irony is that people look only at the first inequality and think that Keynes advocates for make-work, whereas if one looks at the implicit inequality, Keynes is actually advocating for productive stimulus, or failing that, handing out money without wasteful, feel-good conditions such as requiring people to break rocks (or dig for notes).
taneq 10y ago
This seems very broken-window-fallacy-ish. What am I missing?
narrator 10y ago
Hayek is NOT one of the reasons we're in this. He has been largely ignored as an economist, unless one makes the assumption that Satoshi was influenced by Hayek's "The Denationalization of Money". As a political theorist he has had a fair amount of impact with the "Road to Serfdom", which he worked on after Keynes was mysteriously elevated to Sainthood after his death and Hayek largely ended his pure economics writing. There's a great interview with Hayek where he bemoans his lack of impact: https://www.youtube.com/watch?v=Oqhe4K1Jz-8 https://www.youtube.com/watch?v=Oqhe4K1Jz-8
pbowyer 10y ago
> Hayek is one of the reasons we're in this mess Why? Here in Europe he's bandied around as our saviour, so curious why he's also responsible.