A rap battle between two economists, Keynes vs. Hayek. You might think "Meh, more boring economics" but these videos are very well done and accessible. Metalheads! please don't hate me.

The first one is called "Fear the Boom and Bust"
http://www.youtube.com/watch?v=d0nERTFo-Sk&feature=player_embedded#at=442

The latest one is "Fight of the Century"
http://www.youtube.com/watch?v=GTQnarzmTOc&feature=player_embedded

Thoughts?

Not hating. :)
Thoughts? Well, no wonder i don't get economics, they're rap. ;P
When's the metal version coming out? With efficent guitar work, ergonomic riffs and solo sprees?;P

Heh, nice! I actually enjoyed it, but a rock'n'roll, a metal and a classical version would be neat too ^_^

I hear you guys. I don't mind them trying to reach more of the masses though. Maybe it will pique someone's interest enough that they will actually look up some of the material. There were a lot of terms that they were able to get in there. They even got in the broken window fallacy! Anyway, I thought they were better than "Don't copy that floppy."

I'm a huge fan of these videos.

I love the subtle suggestion that the Keynes position wins in the popular mindset by default, no matter how rational or sober the opposition points are. Keynesian economic models have proven over the long run to be effective, but not foolproof. People want to believe in the easy cure so badly that they'll run to the Keynes side of the debate in every situation, even when the cure may prove to be worse than the disease.

It's good to know others like these as well. I thought it might seem to some people pretentious or preachy to post them, but I think they are really good. It brought both sides of the debate. This.

I think that so many people accept Keynesian economics because, like Bastiat already explained so well in his works before Keynes' time, they don't see directly that these "cures" are actually worse for society's economy. It is that which is not seen, so it is swept aside. I would like to believe that our government is filled with incompetent people who could be shown their errors and then fix them, but I know that there are many very smart people in the government, even if it doesn't seem like it most times. Keynesian economics gives not only the government, but the companies they favor, immunity from the randomness of the free market. In fact, applying Keynesian economics allows them to get fatter when they should have failed, all at the expense of the taxpayers money that the taxpayer could have spent somewhere else.

So, I shouldn't accuse people I don't of this, but it seems like they are acting so egotistical that they think they should not be allowed to lose, like some divine right. It's like adding a touchdown to the New England Patriot's score every quarter so they are most likely to win, because that's who the NFL deemed to win.

That's my take on it anyway.

This, again :-)

Most recently, we've seen two major stimulus packages. The first, from former President Bush, handed out billions upon billions in cash to the very institutions that broke the economy in the first place, without having any actual accountability for the money once it was dispersed.

The second, issued under President Obama, was aimed in the right direction but was too scattered and unfocused (and in fact, too small). I get the promoting alternative energy is a good thing, and pouring money into shovel ready projects like bridge and highway maintenance in probably a responsible way to spend, but rather than creating new jobs and bootstrapping new businesses, it seems to me that it only prevented more losses (which has value, but doesn't address the issue)

The point of government spending of this type is twofold. One, you spend on projects that create not only new jobs, but new infrastructure, and two, you spend so that the newly employed will pump their new earnings back into the economy. There is only one thing that creates demand for goods and services and that is lower and middle class employees having money to spend.

I believe we never should have bailed out the banks. For a fraction of the price, we could have just paid off every mortgage in America and been done with it... but even that wouldn't solve the bigger issue. If the big banks fail, and you really believe in a capitalist market, then smaller, more efficient, fleet footed businesses should have been able to pick up the business that was lost by the big banks. Those who are better able to compete should win where the bigger, slower, outmoded institutions lose.

Finally, I'm all for spending all that stim money. But it all should have gone directly into infrastructure projects that have a direct impact on economic growth. High speed rail is the obvious choice, though surely not the only thing. Surely, every upgrade to a nation's transportation infrastructure has a direct benefit to every other kind of business we have. And Obama is right to invest in energy, especially wind and solar, but not exclusively wind and solar because while these technologies will be huge in our future, they are not ready to replace our current infrastructure, which is also in need of repair.

But I am gratified to hear you say "I would like to believe that our government is filled with incompetent people who could be shown their errors and then fix them, but I know that there are many very smart people in the government, even if it doesn't seem like it most times."

You are right. We focus so easily on the dumb (or seemingly dumb, meaning things we think we understand more than we do) that we often fail to see all the smart that happens. Running a nation is complex beyond any individual's capacity, and because it is a human endeavor, it will be fraught with mistakes and inefficiencies, but there is so much more going on.

I don't really agree concerning the infrastructure spending, and specifically high-speed rail.

I completely agree that we DO need a solid infrastructure, and that it needs to be maintained. What I don't buy is that dumping $250 billion or so into it at one time, much of it on new projects, is a particularly good idea. For one, if we'd been taking care of these things all along instead of letting maintenance funds be transferred out of those budgets, a massive infusion of new debt to repair big problems would have been a moot point. Second, we'll create a temporary spike in this type of work, which will then lead to a trough. Third, we've shown our unwillingness to maintain what we already have, so throwing more projects at the budget process isn't going to make things better down the road.

With regards to high-speed rail specifically, it was a particularly bad idea in our state. The arguments for spending the money were quite flimsy and were not at all helped by the fact that the system would have gotten one from point A to point B in the same amount of time as driving. The system was planned in three speed stages, the first starting at about 115 MPH top speed, then a bump to 150 MPH, and a final rebuild to 210 MPH. We already couldn't afford the relatively easy 115 MPH stage, with ticket revenue not able to support the annual operating costs, let alone pay for building the thing in the first place. Given that, we were looking at a huge expenditure to upgrade twice more after that initial billion $, with the 210 MPH step being really expensive since it would require a complete rebuild of the track and replacement of the rolling stock, plus probably reconfiguring the new stations to be compatible with the new track system.

the ongoing operation cost was going to be sucked up by the vast majority of state residents who would not likely use the system since it only connected two metro areas. We have some 6+ million people here and projections showed ridership at somewhere less than 3,000 per day. Surely, one wouldn't drive four hours to then board a car-speed rail system for the remaining 70-mile trip.

Some argued that our state needed this new technology to help spur job growth. The problem is, none of it is new technology. Maybe new to our state and this region, but it's old hat elsewhere in the world. Worse, we ignored our local, regional, even our national, rail providers and looked overseas for the rolling stock. That definitely does not provide a boost to the technological base of the state.

What it would have done was created a large budget hole for several years while the project was built, and then also made a constant annual drag as the taxpayer ate over 50% of the cost of each rider's fare. And then we'd repeat the huge building costs twice more with the planned speed expansions. Meanwhile, a privately-owned bus service already operates between those two metro areas, is already a part of the AMTRAK service, and is actually a bit faster than the "high-speed" rail system; this last was confirmed by looking at the proposed timetable for the rail plan, along with the actual timetable and service records of the bus company. Converting the bus service to "green technology" (like LP gas) would be magnitudes cheaper, and the money not spent on rail could be used to maintain the roads that the buses, along with billions worth of other daily transport, already use. Oh, and the bus passenger fare, not subsidized by taxpayers, is about half what a rail passenger would pay.

Now, it may very well work in other areas of the country but it was a really dumb idea for us here. We don't have the population and demand to support it, even when connecting our two largest metro areas. It wouldn't be particularly green, given the amount of real estate it requires versus ridership levels. It wouldn't be particularly fast. It wouldn't be cost-effective, what with the perpetual need for taxpayer subsidies. It wouldn't bring any new technology to the state. It wouldn't have a large ridership with regards to capacity, according to government studies. It wouldn't become a viable alternative for business travel. given that door-to-door travel for this stretch is quicker by car - and cheaper, with 2 or more passengers per vehicle. Even with subsidies, proposed ticket prices were too high for frequent leisure travel.

Given all of the data that showed it was a poor idea for our area, our state government bought into the plan and the federal government was going to throw a large chunk of money at it. Basically, we had 330 million people around the nation funding a rail plan that would have had less than 1 million riders per year, operating at a loss from Day One, so it could run at about the same speed as a bus line or POV.

It would be a big drain to us here, but other, larger projects are being pushed by the federal government elsewhere in the nation. One in particular is slated to cost over 10x more to build, but I'll admit that the ridership potential is much higher. High enough to fund itself? Well, does AMTRAK fund itself?

I also don't agree that HS rail benefits every other kind of business; for instance, I can't think of one long-term way that it helps the industry I work in. Other alt energy plans might be beneficial (though maybe not yet cost-effective) but passenger rail just isn't very alluring as a major US project, with the cons greatly outnumbering the pros. Regional might work, but it requires a population and ridership base that can support it with minimal taxpayer subsidies. And then we go back to our poor record of maintaining our existing infrastructure and it just doesn't look promising. We haven't taken particularly good care of the existing passenger rail system, AMTRAK, and adding more to the maintenance burden is an unwise move.

I claim no expertise... I just want to travel from Chicago to New York in five hours without getting strip searched or shoved into the middle seat on coach.

I'll easily concede that high speed rail isn't a panacea, and it is a complex issue. And I'll admit up front that I typically conflate the issues of urban public transit with regional or national transit issues, and I'd do well to separate out those issues.

To me, the bigger issue is that we need to ween ourselves off of this culture of fetishistic car worship. I'm from Chicago, and it can take an hour to drive 12 blocks. That's why when I lived in the city (and Oh God do I ever miss the city) I sold my car and became 100% public transit. When you factor in car payments, gas, maintenance, parking, tolls, insurance, plates and city stickers, against the cost of an L pass, I gave myself a $750 a month raise and ended up spending half the time I'd normally have spent commuting. Not to mention, the time I did spend was productive... reading, catching up on email, enjoying my life, checking out women...

That's me, though... and that's someone who lives in a major city. The majority of America lives in cities, but most cities are like Dayton, OH or Nashville, TN or Kansas City, MO or Portland, OR... not New York, Chicago, Los Angeles ( btw, I hate LA ( not that it matters, I just never miss an opportunity to say it :-) ) so the issues are different in most of these places.

But the bulk of your argument against rail, it seems to me, rests in the fact that Americans are stubbornly resistant to public transit, and that attitude is costly, unhealthy, and inefficient. I wouldn't live on a cattle ranch in Montana without owning a pick up truck but I cannot imagine any good reason for an accountant in Shaumburg, IL to own a Ford F-450 just to haul his briefcase to the Loop every morning... yet that's kinda how we live.

I think we need to work toward a cultural shift in attitude toward transit... toward smarter urban planning... to ween ourselves off this obsession with cars.

Today, I live in a little suburb in NW Indiana. I can rattle off a litany of things I hate about it, but work and school and my partner's job has me planted here for at least the next few years. But my top reason for hating it is that I own a car again. I'm a slave to that goddamn car and the $4.35 a gallon I pump into it. And I'm trapped in the gridlock with the other hundred thousand people willingly forgoing efficient travel in favor of driving their cars everywhere, all the time.

----

Now I will add one little thing about your argument that I really think is without much merit. You said that rail draws tax dollars from everyone despite only of fraction of the taxpayers using it. Fair enough. But my tax dollars pay for the Securities and Exchange Commission, public schools, the DEA, the Coast Guard, and thousands of other things that I don't use. But I think that all these things are important to a healthy nation (except maybe the DEA) and I'm happy to pony up my share. I'm paying for tax rebates paid to Exxon Mobile (the most profitable company in the US) (and, to be fair, I am complaining about that). We all pay for things that don't have a direct impact on our lives. None of us are gonna get to ride a spaceship anytime soon, but we all paid for the Space Shuttle.

Rail... if we actually use it... can have a profound and positive impact on our collective lives even for those who may never ride it.

But, your larger points remain. And since you've put so much effort into making reasoned and sober points about it... you know, so I'd know that you know what you are talking about... then I'm going to assume that while you don't see rail as a viable solution, that you do see the much bigger problems and do want to find effective solutions to address them. I'm happy to know you are out there giving real thought to the issues and not just parroting the sound bites spouted off by whatever political pundit we happen to, individually, most agree with.

It is good to hear you say this, to claim otherwise is the pretence of knowledge :P

Sorry, couldn't help myself when Hayek is part of the topic.

I had this long reply typed up about the stimulus spending you mentioned and deleted it. I thought I could save time providing a link. I can't argue that the spending on infrastructure can give people jobs and that the infrastructure can benefit us. This is what we see. But, I'm of the opinion that had the government never interfered with the electricity industry, renewable energy would be much more prevalent today, without the need for the government to make jobs or infrastructure. It is what is unseen. Renewable energy such as wind turbines and biomass were around before the New Deal. Instead of subsidizing electrical utilities, the people could have spent the money that was taken from them on renewable energy themselves (including newer technologies that have come about), giving people jobs to provide it. This was the main thing I was going to type a long reply about, but if you know the concepts, you can probably understand why I think this.

So, have you ever heard of I, Pencil? It is not a very long read.

I also keep referring to this. That Which is Seen, and That Which is Not Seen. The Broken Window is great, and I especially like the Frugality and Luxury section, since I hear so often that saving money hurts the economy. "Get out to the malls and spend to save the economy!" What?

The point about tax dollars going there even though most won't use it, yeah, that's true what you say. I would counter that just because we do it with all of these other things doesn't mean we should continue to pile on with something else that also won't be used.

I don't know if the low ridership comes because of a resistance to public transit (gotta figure Madison is the one place of its size in the Midwest that will have the largest amount of public support for public transit) or if its based on the simple realities of how much commuter traffic already uses the full length of that corridor and what percentage of that traffic would transition to rail. My own experience shows that the particular stretch of highway paralleled by the proposed rail system simply does not have a traffic problem until one reaches metro Milwaukee. In that case, a Milwaukee regional system would appear to be a more sensible project. A recent study of a proposed light rail system within Madison showed that the street traffic problems caused by the light rail crossings and right-of-ways would actually increase the use of fuels and lengthen the commute times.

As you say, "Rail... if we actually use it..." And that's an important thing to take into account. Whatever the reason, the projections say it won't be used much, at least not for this project. Some would like to follow the notion of "If we build it, they will come", but that's not the case here. Building public transit doesn't automatically lead to a change in the psyche of American mobility, and you're right, that is something that needs to be dealt with in order for any type of overall transit plan to succeed. My own viewpoint is shaped by having lived for a long time not in areas where public transit is located within walking distance of our home, and also by having a job where public transit simply will not work for my travel requirements.

Your driving experience in Chicago metro... yeah. Two weeks ago I went through there to do some work in Elk Grove Village, South Bend, Defiance, Grand Rapids, Elkhart, and then back home again. Lucky me, I left the final stop, Elkhart, at about 2:30 pm Friday afternoon. I was doing everything I could to get out by noon but the machine gods were thwarting me. It took three hours to go from the SE corner of the metro Chicago area up to the NW corner where I-90 goes back to 4-lane. It sucked out loud and I'm quite glad I rented an automatic for the trip instead of taking my manual. As I was parked on I-90 near, umm, where the Sox play, I was watching Metra come and go and secretly wishing I could put my rental car in a backpack and take the train to get out of the mess for a while.

Anyway, what is bothersome is that there is a lot of projection data coming from DOT and other state and federal sources that showed HS rail between Madison and Milwaukee was not going to live up to any of the hype and promises even with the rosiest of outlooks, but the plan was approved anyway. To me, that's a large waste of resources better used elsewhere (or simply not spent at all). Basically, gov't was trying to fix a problem that didn't exist. If these projects are to be undertaken, then let's do them in places where we get the most bang for the buck, not where political favors are being sought. One worry is that our nation will undertake these projects as a sort of "busy work", not bothering to consider the actual usage and necessities but instead doing so simply because it sounds cool, works reasonably well in other nations with highly-centralized populations (which only exists in specific regions in the US), and we want to look like we're 'doing something'.

In the meantime, that unspent $1 billion or so could go a long way toward refilling the transportation fund that our state has been robbing for years, the one intended for maintenance and expansion of our transport infrastructure but instead spent on completely unrelated programs. As a road warrior by necessity (and an admitted driving junkie), I see there are a lot of more basic transport needs around here that should be tackled first. If one of the arguments is job creation then it should be considered that it takes wage-earning manpower to maintain what we already have.