Hayek vs Keynes Rap - For Geeks Only..
Khanan Grauer // I'm the founder of Investio and once in a blue moon, I post my thoughts here. You can reach me at kgrauer@gmail.com
Khanan Grauer // I'm the founder of Investio and once in a blue moon, I post my thoughts here. You can reach me at kgrauer@gmail.com
I have been reading Ayn Rand "Capitalism: The Unknown Ideal" and while it's fascinating, there are two fundamental arguments that it fails to answer. (These are two that I see, there may very well be more)
The argument that the world should be left to laissez faire economics is a fine one, however:
1. How will laissez faire work to resolve negative externalities? An externality is an outcome of an economic transaction where there is an impact on a third factor that is not directly involved. For example, a power plant that deals with supply and demand of its business negatively affects pollution of the air. While say, unregulated, power plants compete for business: figure out the cheapest way to produce most power - what is the incentive for them not to pollute the air? More on economic externalities here.
2. While I'm a huge believer in free, unregulated markets: how does this hold up in third world countries, specifically where there is a high death rate from malaria? Bill Gates interestingly said that more money is being invested in R&D of male pattern hair loss vs. curing malaria victims in poor countries. After all, people in those countries do not have the money to afford drugs - hence what is the incentive to invest in producing drugs to those countries from a free market perspective? Free markets thrive on only one factor: markets. This, among other reasons, is why Bill Gates formed the philanthropic foundation: address those where free markets fail. I cannot find the link, however remember reading where Bill Gates & Warren Buffet talk of 'creative capitalism' to address these failures in great detail.
I wonder how fans of Ayn would approach these two points. Overall, I highly recommend reading the book as it's super thoughtful and stimulating.
Below are videos I found posted by Brad Feld. It's a fascinating interview of Ayn Rand by Mike Wallace on Objectivism in 1959:
I think this will be a very tough battle: http://www.nytimes.com/2010/01/21/business/21volcker.html?hp
