Fiverr Community Forum

Economics: Keynesian vs Hayek (Poll)

I have been bitten by the Curiosity bug.
What basic school of economic theory do you follow?

  • What’s ‘economics’?
  • John Maynard Keynes
  • Friedrich August Hayek
  • Both?
  • Neither

0 voters

Well, there are good points to take from both. But I would mostly support Keynes theory. And actually your topic might prove his theory that average person is not well enough informed to make economic decisions for themselves. (Let’s even see how many people from all of those on this forum will be able to vote and make their choice on whom they support)

4 Likes

Huh, I hadn’t thought about it that deeply, but you’re completely right.

I would love a brief synopsis of those.

Brief synopsis? Bit of a can of worms, fair warning. And I’ll outright admit I’m bias.
Heyek versus Keynes is basically

… there’s actually a fairly good ‘rap battle’ video on 'em.

1 Like

Apparently most real life economists, who have been taught that - and base their theories on - the idea that people make rational decisions, are beginning to understand that actually they don’t. Economics, as a result, is beginning to explore different ways of looking at economic activity …

2 Likes

Interesting video although he over generalizes too much.

The economists are wrong as much as right. They come up with theories about how things work and then are married to them no matter what it seems like.

In our recently booming economy people are suffering greatly. Things cost too much. Rent, food, people are one paycheck away from disaster.
And going bankrupt due to their medical bills.

1 Like

Like I said. Can-o-worms. There’s a reason it’s still considered ‘theory’.

Economics is complicated. It almost can’t be easily summarized. I had to take a few semesters in college studying micro- and macro- for my degree, and it’s fascinating, but definitely complicated.

1 Like

I took those two classes in college too. I remember talking a lot about coffee and supply and demand, with the charts. It was fascinating. My best friend is an economist with an important job. She writes in depth reports on various countries.

Capitalism with a socialist system of medical care seems to work well in general. I read that people in Denmark are extremely happy with their system. I was just reading about someone in Canada diagnosed with cancer who needed a huge amount of expensive medical services and never saw a bill for any of it.

1 Like

To be honest, I don’t care for economics. The economy for more than the past decade has been a case of who can print the most money and when. Neither is the current economy democratic in any way. This is something people need to dive into first, before going into socialism vs. capitalism arguments.

The simple fact is, it isn’t theory.

You have three types of money. These are:

Commodity money (where money is a tangible asset like gold or another precious metal, or a thing in-demand like a cocoa bean, that you can hold in your hand.)

Then you have representative money. This is money in paper or coin form that represents an amount of the aforementioned commodities. You use this because it is easier to transact than say a billion cocoa beans when you buy a car.

Then there is fiat money. Fiat money has no commodity or representative value. It is essentially belief money. It gets its value on what other people perceive as the worth of your economy, your ability to pay your debts, or your political sway, etc. As such, you can print as much of it as you like, whenever you like.

As a basic rule, societies flourish when they use commodity money. During the golden era of the Roman Empire, the average citizen had to work for an average of 2-days a year to pay their annual taxes. All the money they earned every other 363 days of the year was theirs.

When society starts using representative money, things get more complicated. Money can be forged and all kinds of checks need to be put in place as a result. This results in transaction fees and the beginning of the birth of your financial services industry. All these things start making everyday people poorer.

Later, when societies switch to just using fiat cash, you get the proverbial poo hitting the fan and the suspension of democracy. This is because you need to trust someone with the power to create the cash you use. This ultimately turns out to be your representative money-born financial service industry. As soon as that happens, the worth of everything becomes purely psychological, speculative, and political.

To demonstrate, counties like Chile and Venezuela are vastly more wealthy than the U.S. when it comes to basic natural resources. Things like that matter, as you can’t have your fancy hybrid Prius or fully electric Tesla roadster in the U.S., without Chile’s lithium and rare Earth metals. However, America still has enough political sway to make people believe that the USD is worth a lot more than the Chilian Peso.

peso

This allows the U.S. to buy things like Lithium cheap from chile to service what is perversely an economy in the U.S. that is based 100% on service and consumerism. I say this, as when you break it down, the U.S. relies on raw material imports to have its own export market. They even leverage the USD to buy crude oil from Canada and sell it back to Canada, all because the USD is perceived as stronger than the CAD.

(I’m not picking on the U.S. here. All of Europe and the UK do the same thing. I’m just using the U.S. as an example.)

Historically, fiat cash monetary systems always result in the same pretty massive wealth disparities. They then fail when they start printing too much money and the supposed poor countries they exploit start getting better deals from someone else. This is why countries like China already have more of a presence monetarily in Africa and Eastern Europe than the U.S.

Of course, China uses a fiat currency too. However, China is America’s factory. Their fiat cash is, therefore, starting to be perceived as superior, because they get the fiat cash from the U.S and turn it into things that are sold all over the world.

If you want to be a lazy macroeconomist, all you need to do to gauge the health of an economy, is look at who is importing and exporting what where and when.

As it is, the importing of high-equity goods into the U.S. started flatlining last year. Conversely, China is currently exporting Covod-19 health equipment everywhere, and in many cases, is giving it away for free.

In the meantime, the U.S. is printing money to pay people’s bills and bail out ‘too big to fail’ corporations.

Internally, some micro-economists in the U.S. celebrate the fact that free money is coming as a sign that things like socialist initiatives like a minimum basic income for all can work. Whoopie! However, as progressive as some of these monetary adventures might seem, they actually signal the fact that society is effectively looking to cannibalize itself.

They mean that society is looking to survive off higher internally collected taxes to keep a currency afloat that only those within the society can now be convinced is worth something because of things like patriotism. That will work for a while. However, ultimately, this gives rise to communism and all the goodies that go with that. AKA Life in a work camp supporting the state until that system breaks.

It doesn’t have to be like this, though. America only started using fiat (as opposed to representative money) in the 1970s. (Which, by the way, is when China began its current rise.)

You can also have all the goodies of things like free health care when you use representative money, thanks to the fact that inflation is always negligible and governments need to collect less in the way of taxation in the first place.

All that said, sorry for rambling. However, I hate it when people try and condense economics down to a case of one theorem or another. There is no theorem. There is only maths and logic. (Great topic, though :slight_smile: .)

2 Likes

credit goes to visualcapitalist dot com

Published on February 5, 2020 By Nick Routley

Countries by GDP and Economic Components (1970-2017)

While looking at the top countries by GDP is a useful big picture measure, it can also be informative to look at the components that make up an economy as well.

Examining a country’s economic building blocks can tell us a lot about what stage of development the country is in, and where competitive advantages may exist.

Analyzing GDP by Sector

Today’s “horse race” bar chart, by Number Story, is an entertaining historical look at the ranking of top countries by GDP, including the parts that make up the whole.

Here is the latest data as of 2018, as well as the largest sector according to data from the United Nations’ industry classification database:

Rank Country GDP (2018) Top Sector (% of total) 2nd Largest Sector (% of total)
1 United States $20.6T Other (55%) Mining/Manufacturing/Utilities (15%)
2 China $13.6T Other (36%) Mining/Manufacturing/Utilities (33%)
3 Japan $4.9T Other (43%) Mining/Manufacturing/Utilities (23%)
4 Germany $3.6T Other (48%) Mining/Manufacturing/Utilities (25%)
5 UK $2.5T Other (55%) Retail/Restaurant/Hotels (14%)
6 India $2.5T Other (36%) Mining/Manufacturing/Utilities (22%)
7 France $2.5T Other (56%) Mining/Manufacturing/Utilities (13%)
8 Italy $1.9T Other (49%) Mining/Manufacturing/Utilities (20%)
9 Brazil $1.6T Other (50%) Mining/Manufacturing/Utilities (16%)
10 Canada $1.6T Other (52%) Mining/Manufacturing/Utilities (18%)
11 South Korea $1.6T Other (42%) Mining/Manufacturing/Utilities (31%)
12 Russia $1.5T Other (36%) Mining/Manufacturing/Utilities (28%)
13 Australia $1.4T Other (53%) Mining/Manufacturing/Utilities (17%)
14 Spain $1.3T Other (47%) Retail/Restaurant/Hotels (19%)
15 Mexico $1.2T Other (34%) Mining/Manufacturing/Utiliti

(Our lack of responsiveness to the corona virus compared to China’s will effect our economy for a long time.)

1 Like

Yup, that’s exactly what I meant. It’s complicated. Logical, yes, but still complicated. It’s college level stuff, but needs to be simplified for better general-population understanding.

“It’s not rocket science.” Eh… it’s up there.

And it’s because of this complication, and the fact that (in general) humans are irrational and stubborn, with cognitive biases on the level of children, that it isn’t yet accepted as law. I’m in agreement that it should be considered a fully realized law.

But’s it’s not my job to educate the masses. This thread was more a curiosity for ‘as is’ data.

@coerdelion Nice icon update!

2 Likes

I’ll never forget the first thing our teacher started talking about was coffee as a basic human necessity as an example of supply and demand, and me disagreeing since I didn’t drink it. It was then that I learned coffee is needed for human life.

I also learned to understand economics as something interesting, but having no real solid applications to what actually goes on. Some economists admit that. My friend the economist laughs about it and agrees. But she enjoys it anyway and earns a fantastic salary.

1 Like

*Glances at coffee cup.
Uuuuh, might have to agree with your professor on that one. But he might have made a better argument with TP. :grin:

Silliness aside, yes, it’s something that studies the past and uses it to make guesses to future trends, but because humans don’t have the ‘perfect information’ needed for perfect equilibrium, and are oft plain illogical, it usually doesn’t work as guessed. (Plus outside forces throw everything out of wack.)

I’m really interested in seeing the studies that come out of this crisis, once it’s over.

Hoping to get a few more votes. Twenty is hardly an acceptable sample size.

1 Like

It might be that most don’t know what those mean. I took two economics classes in college and didn’t know or remember them.

Exactly! Which is why I put the other options into the poll.

1 Like

You could put an option where you say I don’t know what those mean or something similar. I can’t find one of the choices that apply to my situation.

I did put “neither” but it’s based on not knowing the difference between the two, so I guess that’s the correct option for me although If I understood the two choices better I might have a different answer.

If you know of an article that explains the two options it would help or I could do my own research because I do find this interesting. I’m lazy and feeling time crunches today so don’t have time to research this any time soon.

Valid point, though that’s sort of what the ‘economics?’ option was for. I guess I did word it poorly. I’m not sure I can add something to the poll without resetting it, though. Eh, I’ll leave it for now, but I’ll keep that in mind if I make any future polls.

Having the option to type a response also allows for alternative answers.

Actually drinking coffee makes you more stressful, irritated and it have very bad effect on sleep quality. In long term you are less energetic on coffee than you was without coffee when you started. It’s not really needed for human life, many people stopped using it and noticed spike in their productivity.

Im currently drinking 3 cups daily and just yesterday decided to set my goal as quitting caffeine forever. I think everyone needs to try this. Tried it few times in lifetime but too short term goals and I always go back to drinking too much coffee.

It’s hard I would say and I hope I will manage with deadlines :tired_face: