I've been recently doing a deep dive into the Austrian School with one of my classes. We've talked in-depth about one of the central problems of Keynesian theories: The notion that economics is a hard science -like chemistry or physics- where you can always predict the outcome based on certain hard and fast rules, formulas, and calculations. That is, so long as you produce the right input of data and/or policies.
The central problem with this idea is that economics is, at its core, a study of the choices individuals make when it comes to the production, distribution, and consumption of goods. The word economy is literally derived from the Greek word "oikos" which means household, and the the Greek word "nomos", which means law or custom. Economics starts, therefore, with the ordering of household customs. Consequently, central planning is doomed to failure as it is impossible to accurately weigh all the variables necessary to ensure the most flourishing outcome for an entire population. The bigger the population, the more impossible such a feat becomes. If anyone of us jumps off the Empire State building, the results will be the same no matter who we are. Gravity is a fact of hard science. The same cannot be said of depositing $100,000 into the bank accounts of as few as 25 people, let alone 300 million! The results will vary quite widely.
All of this is a lead up to a very old episode of the Phil Donahue Show from 1979 or 1980, featuring the Nobel Prize-winning economist, Milton Friedman. I had my students watch this today, as we rapidly approaching the end of the school year. The coherent and articulate expression of the principles we have been taught was actually quite fascinating to them, and they enjoyed immensely to my relief, as I was slightly concerned that a 1980 television talk show, with its dull lighting, and people actually listening to one another, might bore them. It didn't! I'm posting that interview here because I think it's worth sharing.
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