Wednesday, February 18, 2009
Keynes vs. Hayek
"Barack Obama and congressional Democrats (very few of whom likely have read Keynes's 1936 book 'The General Theory of Employment, Interest and Money') have dug up the dead economist's convenient justification for deficit spending in defense of their bloated stimulus legislation. But none ask the most important question: Was Keynes right? ... Keynes's thinking was a decisive departure from classical economics, because arbitrary 'macro' constructs like aggregate demand had no basis in the microeconomic science of human action. as [Frederick] Hayek observed, 'some of the most orthodox disciples of Keynes appear consistently to have thrown overboard all the traditional theory of price determination and of distribution, all that used to the the backbone of economic theory, and in consequence, in my opinion, to have ceased to understand any economics.' ... If the government borrows the money for the stimulus, then it will either have to print money later or raise taxes to pay it back. ... The problem with government attempts to manipulate the economy through fiscal policy ... is that it is audacious. It assumes that government knows better how to spend and invest than individuals acting in their families' best interest", my emphasis, Dick Armey at the WSJ, 4 February 2009.
Armey was a congessman. Keynesianism is just a "convenient justification", nothing more. See Mencius Moldbug's 21 August 2008 comments at: http://unqualified-reservations.blogspot.com/2008/08/de-gustibus-non-computandum-or.html.