[MD] Grexit and Footyballs

[John Carl]

A fun and interesting piece on the way philosophy impacts culture and policy

http://www.washingtonpost.com/blogs/wonkblog/wp/2015/07/04/a-hilarious-monty-python-sketch-explains-why-greece-is-in-a-huge-crisis/

Walter Eucken (1891-1950), an opponent of the Nazis and an economist
who has been enormously influential in Germany since the Second World
War, wanted
to develop a comprehensive economic theory
<http://www.eucken.de/fileadmin/bilder/Dokumente/Diskussionspapiere/07_4bw.pdf>
that could describe prices, investments, debts, monopolies and more in a
comprehensive way — instead of as just a sequence of apparently random
facts.

In particular, he took issue with the work of John Maynard Keynes
(1883-1946) — the famous British economist who long dominated economic
thinking in the English-speaking world — about how the government should
respond to crises. Keynes believed that the government had to aggressively
deal with each crisis as it happened by filling in the gap left by the
private sector. It could so by reducing interest rates to stimulate
economic activity or spending money directly to get the economy moving
again.

"Thus economics is without a firm basis, always trying to catch up with
events and always moving from one crisis to another," Eucken wrote in The
Foundations of Economics, a 1940 book.

It was a direct echo of the differences between Kant and Mill.

Eucken saw markets as systems of rules and guiding principles and believed
that government's responsibility was to establish these principles and to
follow them. Those rules, he believed, should be designed to adjust the
economy automatically to a crisis, so that policymakers could adhere to
them even when things got bad.

In that respect, Eucken's thinking was similar to the American economist
Milton Friedman's, who also believed that central banks should follow rules
established in advance during times of crisis. Agreed-upon rules would
limit the chance that policymakers would misjudge and set interest rates
too high or too low as they tried to straighten out a wobbling economy.
Both thinkers also felt that giving too much leeway to government officials
limited citizens' liberty, and it was better to go by a system of clear,
well-known rules.