Kai Ryssdal: When you talk the broad sweep of bad-blood rivalries, there’s David and Goliath. Lakers versus the Celtics; Luke Skywalker and Darth Vader, too.
None of those, though, are as relevant to us right now as the feud between two dead economists: John Maynard Keynes and Friedrich Hayek. Their ideas helped shaped the debates we’re having right now about financial regulation, stimulus spending and reducing the deficit. Thing is, they can be a bit dry.
Enter television producer John Papola, George Mason University economist Russ Roberts — and rap music.
“Fight of the Century” clip: Here we are, peace out Great Recession, thanks to me, as you see, we’re not in a depression. Recovery, destiny, if you follow my lesson, Lord Keynes, here I come, line up for the procession. We Brought out the shovels but we’re still in a ditch, and still digging. Don’t you think that it’s time for a switch, From that hair of the dog. Friend, the party is over. The long run is here. It’s time to get sober!
Their “Fight of the Century” is out today. Russ, John, good to have you with us.
John Papola: Good to be here.
Russ Roberts: Good to be here.
Ryssdal: So this is, Russ, a follow-up to your video last year, “Fear of the Boom and Bust,” Keynes and Hayek rapping it out. It was immensely successful, but why do we need another one?
Roberts: The economy is still struggling. People are still concerned about what we’re going to do next. And John and I thought, we’ve got to bring the debate back about which way should we go, which way should we choose? More from the top or from the ground? More out of Washington or more out of the rest of the country and individual choices?
Ryssdal: It is also, sadly, sort of dull policy. This whole debate is thrilling to economists, but not necessarily to the general public, which I guess is the vessel for this whole thing.
Roberts: Well I think there’s a lot at stake, and I think people realize it. Whether the economy is going to recover or not, how big government’s going to be relative to the private sector — these are important issues and I think people are pretty engaged.
Ryssdal: John, I get where Russ is coming from: he’s the economics professor and this is kind of his gig. You’re a TV guy — what’s with the econ from you?
Papola: You know, it’s a funny thing. I started getting into these ideas because I have a long commute into the city, and had to fill it with something other than Angry Birds. And then when the crisis sort of unraveled in 2008 and 2009 and 2010, it sparked my interest like nothing before. And I was listening to Russ’s “EconTalk” —
Ryssdal: His podcast.
Papola: Yeah, so basically I taught myself the economics — or Russ taught me economics — through podcasts.
Ryssdal: So we’re going to play a little bit of it, Russ, and then I want to talk about the actual economics of this debate. This little thing we’re going to play here is Hayek and Keynes arguing about jobs.
“The Fight of the Century” clip: Jobs are the means, not the ends in themselves. People work to live better, to put food on the shelves. Real growth means production of what people demand. That’s entrepreneurship not your central plan. My solution is simple and easy to handle. It’s spending that matters, why’s that such a scandal? Money sloshes through the pipes and the sluices revitalizing the economy’s juices.
Ryssdal: So you get spending from Keynes there at the very end, Russ, and we saw it in the Fed chairman’s press conference yesterday, talking about what we can do to get jobs into this economy. Lay out the economic argument for us, the differences between Keynes and Hayek — give us the primer.
Roberts: Well the Keynesian view is that spending of any kind is helpful. Keynes famously wrote that you could dig holes and fill them back in, and that would stimulate the economy. The Hayekian view is you can create jobs by paying people to do stuff, but the key is you’ve got to do something that people value, otherwise you’re just pretending; you’re not creating true value.
Ryssdal: There’s actually a verse that goes, “Let’s not repeat what created our troubles.”
“The Fight of the Century” clip: I want real growth not just a series of bubbles. Let’s stop bailing out losers and let prices work. If we don’t try to steer them, they won’t go berserk. Come on, Are you kidding? Don’t Wall Street’s gyrations challenge your world view of self-regulation? Even you must admit that the lesson we’ve learned, is more oversight’s needed or else we’ll get burned.
Ryssdal: John, this looks like — and is — a professional, high-quality video. How do you finance something like this? Did you guys go out and do this on your credit cards?
Papola: No, we didn’t. I’m not a big fan of debt.
Papola: As a Hayekian. It creates a fragile situation for us. We have a website, EconStories.tv, which we created with the first video, which was done on a shoestring. And you can donate to us on that site, and that’s how this video got funded.
Ryssdal: Have you heard from your professional colleagues in academia about your dabbling in rap and video?
Roberts: They get a kick out of it. Economics tends to be taught as a pretty dry activity, and John and I are so passionate about bringing a livelier approach, which is what this is all about.
Ryssdal: Russ Roberts and John Papola. Their video is called “Fight of the Century: Keynes and Hayek Round Two.” Their website is called EconStories.tv, you ought to check it out. Guys, thanks a lot.
Papola: Thank you Kai.
Roberts: Thank you.
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