Keynes Versus Hayek

935 Words Jan 1st, 2013 4 Pages
Keynes versus Hayek

There are differences between Keynes and Hayek on the role of savings in the economy.
Keynes believed that it was a waste to save money, it only lead to destruction and prevent economic growth. He didn’t agree with private investment. He felt by keeping money in your pocket is senseless because soon we will all be dead. You can’t take the money with you. He also felt that the government should increase spending during times of recessions.
In contrast, Hayek believed that you must save money so that you could later invest the money wisely. He felt time would multiply your interest. He felt that time did not matter. He believed the same principles of the economy that applied in the 1920 still applied in 2005.
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Hayek disagreed with war. He felt that war should not be a tool to stimulate the economy. He felt that it only destroyed other economies leaving them in despair. He felt that Keynes did not address the true issues. He stated that consumption shrank and scarce resources were misused. Keynes stated that people were taken off production jobs to be employed by the military. He felt the investment made in wars would not correct market failures and would not assure an equitable distribution of income. He felt more damage was done that good.
[Keynes] Are you kidding? My cure works perfectly fine.
Have a look. The recession ended in ’09.
I deserve credit. Things would have been worse. All the estimates prove it. I’ll go chapter and verse. We could have done better if we’d only spent more. Too bad that only happens when there’s a world war.
You can carp all you want about stats and regression. Do you deny that world war cut short the depression?
[Hayek] Wow. One data point and you’re jumping for joy. The last time I checked wars only destroy. There was no multiplier. Consumption just shrank
As we used scarce resources for every new tank. Pretty perverse to call that prosperity.
Ration meat. Ration butter. A life of austerity. When that war spending ended, your friends cried disaster.
Yet the economy thrived and grew faster. Creating employment is a straight forward craft
When the nation’s at war and