Thomas Oliver: Crisis makes students of us all

By Thomas Oliver

The Atlanta Journal-Constitution

There is nothing like an economic crisis to stimulate interest in economists and their theories.

When the Financial Panic of ‘08 hit full force, Fed Chairman Ben Bernanke proposed spending more money than we knew existed. He was relying on Milton Friedman’s ghost to direct him. Bernanke wasn’t about to make the same mistake that Milton Friedman and Anna Schwartz had long ago demonstrated the Fed had made in what some say turned a recession into the Great Depression.

Following Obama’s election, the interest shifted to John Maynard Keynes, as it became clear we were going to throttle up the fiscal pumping station as never seen before. Keynes provided the rationale for government spending that rivaled the Fed's pedal-to-the-metal monetary policy. The father of macroeconomics also provided cover for those who believe they are smart enough to manage the economy.

It eventually became apparent that the Fed’s monetary policy and the fiscal policies of the federal government were really just opposite sides of the same coin. Both emanated from the realm of government -- and a powerful, centralized government at that.

For those who grew appalled at the rate of spending and the overreaching for control, there was F.A. Hayek, a Nobel Prize winning economist who is considered a founding father of libertarianism.

Hayek equated centralized planning with dictatorships. He saw an economy from the micro level, where individuals who know their needs far better than any bureaucrat make millions of decisions every day.

Those decisions can’t be planned or controlled or precisely accounted for – and this is good.

Hayek worried that too many economists believed only in that which could be measured, when perhaps the more dynamic aspects of an economy couldn’t be measured.

Perhaps nothing shows the unexpected popularity of economics more than the current viral video, “Fear the Boom and Bust.” It has been viewed more than 850,000 times on YouTube.

That it is a rap portrayal of a debate between Hayek and Keynes makes it all the more remarkable.

It is the offspring of George Mason University economics professor Russell Roberts and creative director John Papola.

“We wanted to create something visually exciting that would give you a reason to think about economics,” Roberts said.

Both Keynes and Hayek strike a chord with our present situation, Roberts said. Keynes first became popular during the Great Depression. As we worried about whether we were about to enter a second one, it made sense that many returned to Keynes.

Conversely, the professor says Hayek speaks to those who worry, as Hayek did, that when government gets too big it takes away your liberty.

Roberts admits the lyrics to the rap video are dense with economic theory. But “we hoped it would appeal to teachers who might want to get their students excited about the subject.”

After all, as Roberts says: “It’s an extraordinary time to learn about economics.”

To view the video, go to http://www.econstories.tv/home.html .

For additional reading: Hayek’s “The Road to Serfdom,” Keynes’ “The General Theory of Employment Interest and Money” and Friedman’s “Free to Choose.”

Thomas Oliver writes the Sunday business column. He can be reached at toliver.writeright@gmail.com