Tuesday 25 September 2012

Masters of Money - Hayek

If you ever trawled through my old blog posts (not recommended), then you would not BBC bias being something that frequently comes up. But I was pleasantly surprised last night watching the second episode of Masters of Money by Stephanie Flanders. This episode, based on Hayek, did miss out quite a few details which I think I would have got in, was fair to him. It gives credit to him having predicted the Great Depression and it suggests that his followers predicted the current one (although not making it too obvious).

Hayek's concept of the Fatal Conceit was explained fairly, as was the complication of the market, although the price mechanism explanation was rushed through, meaning that the viewer wouldn't understand the point unless they were already aware of it. The program was also fair when it came to government interventions in the market, and their distorting effects, with money being singled out both by Hayek and by Flanders as the most important. It was great to see. Seeing Ron Paul being listened to without derision or spin on the BBC was marvellous. OUtlining the differences between Hayek and Friedman was also great to see, as the left usually lumps all right-wingers together.I hope to see more like this in the future.

There were of course some typical howlers, like declaring Bush to be a free marketeer (the state growing in size and increasing tariffs are somewhat different to free market positions). Hayek was also described as the most extreme free marketeer, something clearly not true. Rothbard, anyone? The lack of any mention of Mises and the fact that Hayek was a socialist until he read Mises' work as possibly the most disappointing part of the program. The program also resorted to talking to both Mervyn King and Paul Krugman, possibly two of the least useful people to talk to with regards to Hayek and Austrian economics - Krugman probably being the worst economist for mis-characterising the school. Krugman talked about the nineteenth century US as if it was in a state of free banking in an attempt to refute Hayek. Of course Krugman is completely wrong here, with both the First and Second Banks of the US (government chartered quasi-central banks) playing their part early on, government green-backs during the civil war era, the ban on branch banking, and many, many other examples utterly destroying his point. Whilst examples of successful, stable free banking periods abound (Canada during this same period into the twentieth century being a prime example).

Ignoring Krugman, we did get an admission from Merv that economic models are often quite badly wrong. He, and the makers of the program didn't quite connect up the dots on this one for current circumstances, neither were the dots connected for modern QE and Austro-Hungarian money printing (in both cases to buy government bonds).

Overall, there was plenty wrong with the program, but by BBC standards it was pretty fair, and it was a surprise that it was even broadcast in between the Keynes and Marx sessions of the series. I hope to see more like it in the future, perhaps with more in-depth explanation of problems. However, for now, I'll brace myself for Marx next week.

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