Keynes vs Hayek

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Well, yes, but that doesn't mean that this is a major part of practicing Keynesianism. It is just a major part of practicing Keynesianism sustainably. There's a difference.


Right, but if you've noticed how much spending Keynesians have tended to do, I doubt that this would be sufficient if one wants to practice what they think is needed.


Milton Friedman does have theoretical attacks. He was the founder of monetarism after all, but this was just one of the problems he cited. I only mentioned this as background on what I've heard on the matter.


I know a theory that does not correspond to reality is useless, but the issue is that falsification and verification aren't the real issues at hand, only the issue of providing better models for reality.


Exactly, I am a big picture kind of guy, because in reality nothing exists but everything!

Orwell:

Do you agree with the Austrian theory just in principle at least?
Like, wouldn't it be good to have a truly free market where people decide what to do with their money and how, where, when to work?

It's terrific irony that an economic cult rejecting empricism ("positivism") and advocating apriorism has rank and file so unaware of themselves that they claim others accept magical thinking.

There are Austrians in academia, and some have gotten increasing success, such as Peter Leeson who is currently temporarily lecturing at the University of Chicago, and who has guest authored a few posts on the Freakonomics blog. http://freakonomics.blogs.nytimes.com/a ... er-leeson/ Additionally, Hayek has gotten a lot of attention during the past century, and even though he is less notable than Keynes, it is hard to just dismiss him as just a matter of cultistry.

In any case, Austrians also aren't anti-empirical, they just aren't positivists. They see positivism as undercutting the value of theories and economic intuition. Austrians are willing to study past events and cite facts and so on, but they are skeptical towards cranking out statistical correlations given that they seek to understand causation.

That being said, most "rank and file" Austrians are adherents of the Mises Institute, which is considered the fringe of Austrian economics. This can lead to extremism on apriorism, as well as dogmatism on questions rather than mental flexibility. There are more moderate Austrian organizations. Now, such organizations still tend towards libertarianism and even anarchism, but they are moderate in that they are more intellectually open and tentative on their conclusions.

I find the Austrian ideas interesting, but I would need to spend more time studying economics before really making an informed judgment.

Umm.... how do you agree with a theory in principle without thinking that the practice is good? Not only that, but who says that a "truly free market" would allow for good capital accumulation or even not have problems with risk? I am not saying that a free market cannot be good at both, so I doubt that I have a deficit on the matter of theory, but practice is important.

Theories : Everything looks fine on paper. Not quite so in practice. ^.-

I said this because certain people do agree with the theory but refuse supporting the theory. Sometimes saying "it wont work", like they were some wise sages who can even see into the future.

Well, the main objection to Austrian thought is that their distrust of central banks and insistence on the gold standard could lead to a disastrous deflationary spiral.

To respond more clearly to your original question: all else being equal, more freedom is usually better than less freedom. There are exceptions to the "usually," and quite often all else is not equal.

That also depends on the Austrian in question. I think the Austrians closer to the mainstream instead want a competitive banking system where gold(or whatever other valuable have you) constitutes the base, while the entire structure is just built on credit supported by the underlying valuable assets. They have their own theory they call Monetary Equilibrium theory. The best resource I can find at the moment is a talk given by Steve Horwitz. http://fee.org/media/audio/monetary-equ ... -theory-2/ (I usually prefer written sources)

I thought the main objection was their excessive distrust of statistics - to the point of insulating themselves from real world data.

No, the main objection is really theoretical, as Austrians have their own set of theories that they put more trust in and devalue the neoclassical theories.(particularly the Keynesian theories)

However, it isn't an "excessive distrust of statistics". Even some non-Austrians have become cynical to the use of statistics, mostly because statistics often don't prove a lot, particularly in macroeconomics. That being said, there are Austrians who are willing to use statistics, in fact, I would bet that most do in some form or fashion. The ones that tend to hate statistics the most though are on the Austrian fringe. So, if you're looking at mises.org for your knowledge on Austrian economics, let me give you the awareness that it is more of a fringe and isolationist site rather than one that is trying to engage the academic mainstream. Some of the writings on mises are even laughable. I am not saying that mises.org isn't Austrian, or even that Austrians don't tend towards being ideologues, only that mises.org isn't one of the best showings.

This writing is perhaps the best example of the kind of thinking that mises.org has that seems relatively stupid.
http://mises.org/story/2944 Too much of the objection is outcomes, not something more substantive.

From an engineering p.o.v. Keynes is advocating a theory of dynamic equilibrium. This is similar to pumping ballast in a ship to keep its oscillations under control. So there is no a priori objection to Keynes.

Where things go wrong is when the politician use only one half of Keynes proposal. Pump the economy when it is lagging. But Keynes taught that when the economy is in growth phase, the balancing inputs must be taken out or "paid back". But the politicians, looking to be re-elected want to let "the good times roll". And so we get into a pickle like the recent melt-down of the financial markets. Keynes never would have approved of that.

ruveyn

Lack of Goverment interference is a form of that self same interference.

The banks lobbied for , and got a repeal of the glass steagall act, then they could use all their money for gambling, sub prime mortgages.

they were able to get their way by giving generously to the politicians on the relevent committees.

because they had more favorable new laws they either bought or drove out of business all their more cautious rivals.

Larry Summers, advisor to the current president did an exceptionally poor job of reforming the Russian economy in the 1990's (they got Oligarchs, hyperinflation to show for it ). Who selected him for that job? why George H.W Bush. During the 1980's Presidential primary he denounced Reaganomics as "voodoo" economics. Bush 41 would later become a one term president because the economy flopped on his watch, a Large number of Bank failures occured then.

NEVER vote a Texan in as president,Google all candidates for higher office, vote for the candidate who advertised the least, for he/she is less likely to be on someone's payroll.

So the problem IS the govt.
Anyone with money can influence or control it to gain more money and more control until total domination is achieved and that complete domination comes in the form of a fascist world govt.

That "govt is supposed to be good" is a fallacy. Its very nature leaves the door open for corruption.

So because gangsters succeed in bribing the police, the answer is to eliminate police and laws. Isn't that right?