F A Hayek - Unemployment And The Free Market

Nobel Laureate F A Hayek is interviewed by Firing Line's William F. Buckley Jr regarding unemployment, inflation and John Maynard Keynes. www.LibertyPen.com

[@namirahmad]

such a genius, he even speaks so coherently and beautifully much like his writing. Most academics fail to do so.

[@periechontology]

+Namir Ahmad yeah, and in a second language.

[@bonkersdonkers7381]

Namir Ahmad yeah, true. he speaks plainly, honestly. I've always known that smart people speak clearly, because they know which words to use.

[@VitorGomes_]

yet very humble (so he sounded)

[@chloeagnew1]

Hayek is the Einstein in economics. His book explains everything that had happened in China's modern history, including the land reform, great leap forward and cultural revolution.

[@MP-if2kf]

which book do you mean?

[@brotherbig4651]

Are you sure you know about China's history?

[@giovannibalestrieri9723]

Yes, he is a real genius

[@saihtama]

@@brotherbig4651 i think he is talking what china has become and the threat that the state is to its own people

[@brotherbig4651]

Blackagar Blocagon The truth is China is growing so fast and is taking over the US as the strongest country in the world.

[@MrLibertyFighter]

Beautiful display of truth, freedom, and some dang hard work and research!

[@Ashurbanipal7446]

Hayek was a genius, I really wish i could have met him.

[@panushjo]

I did. I served him at a restaurant. Only gave me 10 percent. SHocking

[@Josh-bf6sk]

@@panushjo lol...

[@individual5021]

@@panushjo lmao

[@bingeltube]

Recommendable! The General Theory of Keynes was not general, but an excuse for career politicians!

[@Tidoublemy]

The last 2 minutes are absolutely fascinating insights!

[@1554coltsfan]

Hayek is bae

[@kaewonf8]

So true: Keynes' "general" theory was anything but. Thanks for uploading.

[@xxcrysad3000xx]

Prior to FDR's intervention the unemployment rate had never exceeded 10%, and was infact on a downward trend. It is factually incorrect to say that the policies of Roosevelt got us out of the Depression, or that charitable giving "dried up" (just as unemployment can't be explained by sudden mass laziness, people don't become uncharitable). One man's crisis is another man's opportunity, and FDR seized the opportunity for a massive executive power grab, altering the balance of power ever after.

[@xxcrysad3000xx]

@@ericrodwell8706 Oh man is it ever embarassing going back and looking at old, ignorant comments of mine. Go to college, people. KZbin will make you stupid.

[@anthonywalton3264]

But your comment was right brother. Sorry the woke virus got to you in college.

[@xxcrysad3000xx]

@@anthonywalton3264 I'm not. Fat, drunk and stupid is no way to go through life, son.

[@countchocula2169]

8:00 Hayek calls Keynes bicurious

[@Igneshto]

Brilliant man... Thanks for the video!

[@tomghzel]

Amazing story about Hayek's encounter with Keynes.

[@SpatiumRenascentia]

Hi liberty pen, i love your new intro, so beautifull.

[@MrDanAustin]

In what year was that episode recorded?

[@xxcrysad3000xx]

A good rule of thumb for determining whether you're living in a free society or not is whether you're allowed to leave. Historically, the direction the guns are facing on your country's borders can tell you alot about the regime within... if they're directed at you, that is a bad sign. East Germany, North Korea, Cuba, USSR, all forced labor camps that kept what they considered the collective property of society in bounds with propaganda and the often realized threat of grave personal injury.

[@TheBest-ff8zz]

The pragmatic geneious of Hayek is indispensable!!

[@lancesteinke3732]

Keynes was worried about the wages being too high comparatively to the market. Now we have inflationary policy with governments raising the minimum wage. Where's the market?

[@lukepurse9042]

+Lance Steinke Failing.

[@walperstyle]

+Luke Purse where exactly?

[@walperstyle]

The market goes to the countries in the world that are not regulated to death. The countries that don't have bylaw officers shutting down lemonade stands. The countries that don't protect monopolies with higher wages and regulations that kill the little guy. Merica, you've been socialist for a while, and that is what the problem is.

[@lukepurse9042]

America, socialist? Hahaha. No It is called crony capitialism.

[@walperstyle]

Crony Capitalism is actually corporatism, and it is manipulated by government regulation and subsidies.... aka, the redistribution of wealth...aka, socialism.

[@LIB3RTARIAN1337]

Yes and the bank failures were due to the Federal Reserve Banks refusing to bail out the banks at that time. The lead up to the bank failures was also a massive supply of cheap credit by the central bank. That is what caused the massive boom of the '20s. When banks started failing after the boom ended, people stopped saving in banks and credit was sharply contracted which caused the deflation. But the lead up to the crisis was highly inflationary.

[@cristianion2056]

No it was because some states did not aloud branches bank. Only local banks

[@Godzilla52]

(final) and private sectors as well as individuals buying goods and services etc. Saw the Economy grow faster in a short period of time than it had in any other point in human history, ever.

[@assomeoneelse2275]

I'm going to be reviewing more of his books, He's one of the best the economists in the world

[@libertyeconomics]

Also, I do agree with you that the economy can't be fragmented into airtight compartments, where one part can be destroyed without impacting another part. What I'm saying here is that inflation engenders consumption spending more so than investment spending, which is even worse.

[@Max-nc4zn]

Keynesianism is the first step on the road to serfdom.

[@nomos6508]

oh yeah so many totalitarian countries in the west LOL. this Hayek's idea was really the stupidest.

[@zackerycooper1206]

​@@nomos6508 Um you ever read anything about South American history?

[@alexer52]

@@zackerycooper1206 Worry not, Mr. Cooper. This poor sot is but a demoralization agent, the product of the indoctrination that we've seen in Western Academia for the last few decades. He will not reason, he will not question his own academic doctrines... not until he sees them backfire when revolution comes and he isn't put in charge of the 'utopia' wanted - and or is put to death by said utopia, which ever comes first.

[@billmelater6470]

@@nomos6508 LOL, you think we're actually free here.

[@nomos6508]

@@billmelater6470 what do you mean?

[@RockieRacoon]

So which system do you prefer? Here's a hint though - you are "free" to type in anything you want.

[@LIB3RTARIAN1337]

cont. In a free market, loanable funds would be supplied through actual specie and private market actors, not the central bank. Banks also would either be prevented from engaging in FRB or at least be afraid to do it (because they wouldn't be bailed out if they failed). This market supply of credit reduces the possibility of savings gluts occurring, because bank failure would be more spread out and not concentrated. Banks would make poor decisions at different times, rather than all at once.

[@xxcrysad3000xx]

Well what we had at the time was massive deflation, right? So people decided to forgo spending today because technically a dollar saved today would be worth more tomorrow in real purchasing power. Not only that but people were feeling very uncertain about what was coming around the corner for them, so saving made sense... problem was they weren't saving in banks that could lend the money for productive new investment, but under their mattress thanks to all the bank failures.

[@Astbruchgefahr]

Low interest rates encourage the borrowing of money. Since this borrowed money is only partially held in reserve, the same dollar is lent out multiple times to multiple people. This is an increase in the total amount of money in circulation. So it is the same as printing money.

[@Godzilla52]

I think I'd have to disagree with you about the reason for the economic boom being mass spending cuts by the government. the boom started because of WW2 which was a mass mobilization of international government spending due to the war effort, as well as stimulus programs such as the Marshall plan which greatly grew the European economy, also in the 50s if I'm not mistaken, the U.S still spent significant amounts of money on the Korean war and the the new Interstate highway system etc.

[@xxcrysad3000xx]

Its not incompatible with "social darwinism" that compassion could be the adaptive trait that allows the fit to survive... that's the whole idea behind the theory, noone knows the traits that will enable individuals in a society to flourish beforehand, they emerge as the times change and social conditions evolve. In other words "progress" isn't something that can be designed through something as clumsy as public policy, it is organic and tomorrow's fittest won't necessarily resemble today's.

[@32peartree]

Actually the crisis in Europe is not a sovereign debt crisis - it was due to a banking crisis and a recession. The PIIGS were within EU borrowing limits. In a recession you can either put up taxes or cut public spending - or do a combination of both. The EU has instructed the PIIGS to make deep cuts in exchange for bailout packages. The bailouts were to plug deficits in public spending - caused by refinancing banks. Moreover, the Euro has took away the PIIGS option of devaluation.

[@78g476]

I wasn't aware of this theory until you brought it to my notice. Thanks. I need to learn about it. Can you recommend any videos or sources that sheds light on this theory?

[@anthonychesery3841]

Try the book The road to serfdom. :)

[@geekonomist]

Thanks for confirming my opening 8 word sentence with a 5 line comment.

[@Ednily]

It's the Adam Smith tie. The interviewer has one on too. And so does the other fella.

[@2rooms19]

with a job guarantee, proposed by people like L. Randall Wray or Pavlina Tcherneva, there would be no trade-off between full employment and inflation.

[@BarrySlisk]

And in a free market interest payments go down as more and more people save thus decreasing the incentives to save. This does not happen in the current semi-planned economy.

[@spanieaj]

If only Keynes would have lived longer. Maybe things would have been different for the better. Excellent video!!!

[@libertyeconomics]

Where Hayek was wrong was saying that inflation engenders malinvestment in capital goods. From what I can tell, it stimulates consumption spending more than investment spending.

[@FyterianTV]

well if people save, then the free market interest rate drops and that incentiveces [sic] people to invest or spend

[@Edzje007]

Hayek portrays himself as the fighter for middleclass working people but what he fails to understand is that a company in a free market will always try to maximize profits. The problem with this is the easiest way to maximize these profits is to cut the highest cost any company has. The highest cost any company has is people. So to portray as if the free market will protect working people is insane. It will do the opposite. The free market will find ways to make people obsolote. And that is what happened in the auto industry in the USA partially. Imo there are 2 factors that destroyed that market in the USA for low/middle class working people. 1 is automation and 2 is the growth in wellbeing in the nation. Automation makes people obsolete and the richer people get the more salary they demand.

[@Issafreecrunch]

I love Hayak and I wish it worked that way but a Complete free market is as insane as communism, neither take into consideration the nature of human predatory evolutionary totalitarianism traits lol

[@mns8732]

Whatvwould Hayak say about Greenspan and interest rates?

[@Godzilla52]

(continued) they do need to have better regulations, especially in the U.S where the banking system suffered severe deregulations in the 80s and 90s (leading to the great recession etc.), but banks hundreds of years ago as well as now increased their profit through spending the money of their clients, not just saving it. Plus look at the largest 20 years of growth in economic history (40s-60s) Argueably the most prosperous economic point in human history, mass spending from both the public

[@xxcrysad3000xx]

Social Darwinism is used more often as a cudgel than it is understood by those who use the term. Human beings must adapt in order to survive, this has always been true. The "fittest" are those that adapt best to the conditions of their environment... this doesn't preclude being compassionate--infact it might demand it--it merely states that to exist in the world one must make use of oneself and the gifts of nature, cooperate with others, and that person is "fittest" to survive.

[@kenchoie3593]

If the Keynesian precept of increasing the aggregate demand by increasing the government spending to reduce unemployment is valid, then the government should increase the public payroll until there is no one left unemployed. Clearly, such a maneuver is not sustainable in the long run. You might just well drink beer to satisfy your hunger/need for food.

[@jamesbonde9488]

What is that necktie he wears? Milton Friedman always had that same one on, too.

[@marinhopduarte]

I know what you mean. I have seen the same in The Netherlands, Germany, Portugal, France and Greece.

[@zvi303]

So with equality we are all equally misrable.

[@driver8M3]

"In fact, central banking was introduced in the USA, so that the frequent panics of period would be resolved, and they were resolved for around a century." How do you square your statement with the 1930s?

[@Olyrous]

This is exactly the situation in Greece also. It seems that in Mediterranean countries there is a misguided perception that to be a creditable intellectual you have to be a Marxist. It is sad because the regular people in these countries very rarely get to hear both sides of the argument on economic matters.

[@libertyeconomics]

Okay, first, let's stop for a moment. I do not support inflationary policies. Hayek is absolutely right in his opposition to inflation. My complaint over his comments is relatively small in context. All I'm saying is that it is mistaken to believe the malinvestment occurs in capital goods. The malinvestment is mainly in consumption spending. I believe reality proves me correct. Look at the current bubble (i.e. treasury bills, notes and bonds). Before then, real estate.

[@32peartree]

Yeah 1775-1821 was a great time for the poor.

[@Edzje007]

Exactly😂. People believe in freedom untill their children get beheaded by another tribe. Its insane.

[@32peartree]

Unemployment happened before Keynesianism. It caused a lot of trouble - wars, simplistic strongmen coming to power. Unemployment benefits should manage fluxations in the labour market. Some people will take advantage - but that's a price worth paying. Number crunchers don't understand sociology.

[@astat1]

Have you done anything about that?

[@JaySee5]

No it doesn't. Low interest doesn't necessarily lead to the printing of new money. You need fractional reserve banking, a bank to loan the money, and someone to borrow the money that pays it back. Or of course the Fed can just literally print it or type a few extra zeros into a bank's account. With FR banking, inflation happens even with high interest rates, just slower.

[@geekonomist]

Investment spending is a function of ONLY savings. When one invests, one HOPES for consumers, but one necessarily needs someone's savings. If inflation kills savings, it thus kills investments. Inflation may benefit the banking sector, but only because this sector touches the printed money first, and feeds the hungriest most lucrative sectors first, and makes money off of the margins in the most volatile times. As for Hayek, he openly encourages a minimum wage. Why?

[@LIB3RTARIAN1337]

cont. The decision by people to no longer save in those failing banks was what was needed to destroy the system. But Hoover and FDR stepped in and intervened in the economy and prevented the natural solution, bank liquidation, and fueled AD through public works and eventually war. Then we got stuck with the same central banking system today, which still causes the business cycle. Today the FRS makes sure to keep interest rates low during a recession to try to fuel more "consumption."

[@jgoldsteincanada]

It is the same in Toronto and New York...funny tho, I was able to snag "The Fatal Conceit" in Boston. I only frequent used bookstores so I look at it this way. People get rid of books that they have little or no use for (ie Marxist economics) and then they keep the gems like Hayek!

[@xbreachedthetosx7591]

"Unemployment compensation must not be higher than that of the market." - If only the U.S listened to Hayek. As he had said, it was much more tempting for young people to stay on unemployment than work for minimum wage. Which is part of the reason why we fail. Another point for Hayek.

[@21dolphin123]

This was tried in the 18 century and led to a race to the bottom for wages. Employers will pay the least they can

[@austinbyrd1703]

Government deficit spending & artificially cheap credit is inherently inefficient. Even when it isn't for some time, when it inevitably is, the only way to deal with malinvestment is liquidation. In which case you face a 'deflationary death spiral' of even your somewhat sound investments. So it's either you endure the recession, or through time you build up so many malinvestments your productive capacity is relatively sh&t. It's either you endure a credit crunch now, or something much much worse in the future. Currency collapse. Wealth isn't spending in undemanded/lesser demanded ventures. Wealth isn't over consumption. Wealth isn't distorted price signals. Wealth isn't having a job. Wealth is demanded production. It's having more & better goods/services.

[@Willsturd]

While other countries were getting out of the great depression, we stayed in it for 10 more years until WW2. How was it exactly that FDR helped us get back on our feet? It sure didn't look like it. And please explain why even though we had a surplus of food, we had so many people starve? You can thank FDR for that.

[@Chronicator10101]

You know our system is fucked up when people would rather collect unemployment than work a minimum wage job. We need to get rid of the minimum wage and decrease welfare simultaneously. This will decrease unemployment and make the system more efficient because people would no longer be supporting those without jobs.

[@mlawson84]

Oh I agree.. I was just joking. Rothbard, Hoppe etc I prefer as economists. In terms of Hayek and statism I won't disagree whilst he did have some contribution to the classical liberal movement in the 20th century from an economic perspective, I have no idea why Mises isn't seen as more prominent.

[@taubstumm]

Inflation means comes from artificially low interest rates, which makes in turn makes people borrow more and put into long term investments such as housing or risky investments, because they are desperately looking for yield. This is what happened in the housing bubble. I recommend the talk by Peter Schiff on youtube "Why the meltdown should have surprised no one"

[@zvi303]

I cannot make out the accent, and the auto-captionsare just humerous. They need to add real captions.

[@LIB3RTARIAN1337]

The problem with the "paradox" of thrift is that it is not achievable in a real economy. Production only exists to fuel some sort of consumption, and people must consume at some point (or they will die of lack of basic necessities). The idea that everyone at any point could be saving so much of their money that the economy has some sort of demand shock is ridiculous. If everyone is saving their money then an increase in investment spending simply offsets the decrease in consumer spending.

[@21dolphin123]

So what happened in the Great Depression when nobody wanted to spend

[@78g476]

This is not surprising. In Capitalism and Freedom, Friedman warns exactly this. It's very difficult to fund and spread free market, capitalist ideas in socialist countries precisely because of the hurdles you would face in such a system. E.g. get a permit from the govt. to rent a hall in order to voice your opinions. However, in free market, capitalist economies, funding and spreading socialist, Marxist or ANY other ideas is relatively easier precisely because people are free to buy and sell.

[@mns8732]

Buckley would cry if he saw what his Firing Line has become .

[@marinhopduarte]

Honestly I didn't do anything, but I thought "Thank you Lord, for giving us Amazon!".

[@32peartree]

Governments that kept lending regulations in place did not suffer a crash - namely France, Holland, Belgium, Finland and Germany. There's also the failure of the 'ownership society' to consider - in that are low income families better off with social housing than mortgages. Especially when Bush takes away mortgage relief and lets manufacturing jobs ship out to China.

[@evanr00]

The reason for the economic boom in the 40's and 50's was a result of govt slashing spending when WWII was over, it left more money in hte private sector. But as far as saving, yes, saving money in a bank is better for an economy because that money is loaned to businesses to help them start, when it would otherwise not be possible.

[@21dolphin123]

No it was he start of the social spending

[@cyrusol]

So fucking relevant in 2020/21.

[@mns8732]

Did I just hear Hayak say hes in favor of a minimum salary? @ 4:50?

[@jeronimotamayolopera4834]

SET THE MARKETS FREE.

[@vals4207]

How is that profitable?

[@michaforsgrengronvalls3623]

Wow

[@TheTubbtubb]

It does. Investment spending is a function of what consumer spending. If you fuck screw with one, you'll screw with the other.

[@michaeldavis243]

Hayek is the 🐐

[@shamgar001]

You're talking about libertarianism as a philosophy, though. Hayek made huge strides in economics specifically, far more than Rand, but that's because Rand was a philosopher, not an economist.

[@Timasion]

1977.

[@romeomax101]

I can't really understand xD the accent is too strong for me to handle. I'll just read his books lmao

[@blankerhans9659]

Good German accent

[@zvi303]

Jealosy is a base emotion. You should get over it.

[@Clitorisaurus]

adorable

[@Godzilla52]

Read into the paradox of thrift, it turns to Austrian perspective on it's head. Saving maybe good for individuals, but if everybody saves their money instead of spending then the GDP shrinks and the economy suffers.

[@npSylarpp]

it doesnt turn anything on the austrian prespective everyone knows the bloody paradox of thrift but its mere statement doesnt make it correct , bhom-bawerks capital theory later refined by hayek is a direct blow on the keynesian paradox , firstly savings have an intertemporal relation with future investment, the increase in savings also increases the supply of loanable funds and therefore a downward pressure on interest rates , wich makes the price of investment in capital goods higher in opposition to consumer goods wich by becoming less profitable and less appealing in the market , and therefore a change in the structure of capital goods is required , saving is also a market signal , the keynesian solution only makes it so that the price signals of intertemporal preference of the consumers for an adjustment of the production process to their demand become inflated and therefore create an illusion that those same business who are not longer profitable or in accordance with market demand , now seem to be. Secoundly when this process occurs naturaly in the market without monetary interference a drop in the demand for consumer goods is offset by an increase in intermidiate consumption or business expenditures wich GDP has to be subtracted from "to avoid double counting" since the value of those expenditures are assumed to be included in the value of the product in later periods

[@Godzilla52]

How do banks make money? Yes they do save your money in the banks, but simply saving it does not ensure it's growth, spending is necessary to ensure that growth. By the logic that saving money is the best solution then it would make sense to just put your money under your mattress instead of putting it in a bank. Banks spend you money in investments to make you money. Modern Economic growth and standard of living would be impossible to sustain without banks and the extension of credit,perhaps

[@32peartree]

Germany and France's exposure was manageable - nowhere near as devastating hAS the Anglo/Saxon countries. The problem is German banks are exposed to the PIIGS who had a Anglo/Saxon party. The Keynesians are winning the argument. Britain's triple dip will decide the issue.

[@Warum.2439]

So even Keynes wasn’t a fan of his own policy if it got out of hand. If he was alive for long enough to take his words back, everything would be different

[@Thunder9987999]

Ha, good point! What do you think about Joseph's Strumpeter's theory that capitalism will produce an intellectual class that would oppose capitalism, and ultimately cause its destruction?

[@evanr00]

Businesses can't begin, or grow, without capital and capital is a result of savings. Only spending, would make the economy incapable of growing.

[@Arvanitarius]

Hey, Catalan, its hopeless to discuss any such issues with a few certain people from there from over the Atlantic. They think Europe is 'socialist' and say the US Democrats is a 'post-communist' party. Some even suggest the Libertarians aren't anarchist or socialist anymore and they think of them be equals to the Far Rights and Neo-Cons in the US. I mean, they still think it there that football is a game you play it with hands, what more to expect! ;-)

[@taubstumm]

Must've misread it somewhere.

[@xxcrysad3000xx]

Hayek and Friedman both believed there was a role for government in providing for the basic welfare of its citizens. The social-darwinist epithet doesn't apply to either of them, but then the term has been misapplied ever since Hofstadter misused and abused it the 40's.

[@thiagorisingforce]

best review I've ever read (sarcasm).

[@JaySee5]

No. Inflation comes from printing money. Even Peter Schiff says so.

[@neonschaf]

Funny, he has a German Accent, wow!

[@taubstumm]

Yea sure, low interest rates mean lots of new money.

[@91Eschaton]

"are you people suggesting we abandon central banking"- money is a commodity it must arrise from barter in order to function optimally in an economy they are also much cheaper to give to banks since they do not need to hire thousands of crackpot economists in order to keep fiat currency afloat. Your missing the point. We don't want a gold backed dollar. We want precious metals to be our dollars and to be controlled by private enterprises who are much more accountable to practices of inflation

[@sangitapersad9112]

He estado pensando y no phone pñpo

[@vdhklove7638]

why some right people care so much about spending money on education, health but no on wars?????

[@andread9899]

I never liked economics because I don't get to what degree economic decision making affect lives in a good or bad way. He look so sure when he talks but I don't know if he gets it. A man with a family is not a good. if my comment is poor some explanation is welcomed

[@balearicsoundwave89]

morals,lacking of.

[@austinbyrd1703]

We cut government expenditures by 70% after ww2. The 60s & 70s experienced great stagnation & led us into unprecedented inflation, capital flight, terrible productivity, & higher unemployment. It *necessitated* us to increase rates up to *20%* under paul volcker & subsequently experience a doubledip recession. The recession is the cure to the misallocation of resources in the economy.

[@myguitardetective5961]

Stagnation in the 60s? You're out of your mind...NO....

[@austinbyrd1703]

@@myguitardetective5961 The sixties started off fine. All bubbles do. Then we had the 70s & 80s

[@myguitardetective5961]

@@austinbyrd1703 The 60s ended fine too. I was there cupcake. There was ZERO stagnation in the 1960s. The BLS numbers prove this point. For your information, the the 1950s and the 1960 were America's best two decades EVER. It has all been all been downhill since then. Hayek was a fraud and wrong on almost ever point in Economics. Keynes OWNED him; and, he always will because his Economics is based upon past performance and mathematics operating in the real world. Hayek simply recycled the tired armchair philosophy and psychological musings of others (as did Mises...). They weren't Economists. Read Keynes Hayek: The Clash that Defined Modern Economics by Nicholas Wapshott. It's the best book on this subject.

[@PetStuBa]

I agree that the free market is the best starting position, but it can NOT stand on its own... look who need to save the banks (and the crisis) .... it was the government with us, we..the citizens ... with taxes... and even in a free market it's possible that the economy gets out of the corridor ... or with other words, thanks to the free market mechanism you get the general reality we're moving away more and more all together from the equilibrium (solution) ...

[@jeronimotamayolopera4834]

GREED IS GOOD.