I especially regret not having been called upon to answer Duncan Weldon’s claim that Hayekians are like dentists who have nothing to offer someone who is suffering from a rotten tooth. I might then have been tempted to point out, first of all, that it was pretty cheeky for a British proponent of greater government intervention to be bringing up dentistry. But what I really wanted to observe was that it is the Hayekians who, after all, are all for pulling an economy’s “rotten teeth” not only to eventually stop the pain but also to keep them from stinking it up, whereas it’s the Keynesians who say, in effect, “Oh, don’t worry about that tooth…just have some more candyand everything will be all better.”
I wish as well that I’d had more time to address Lord Skidelsky’s suggestion that one had to be far gone to believe that FDR’s New Deal actually delayed U.S. recovery from the Great Depression. He evidently is unaware of the very substantial body of research pointing to the harm done by certain New Deal programs, and especially by the National Recovery Administration, none of which by the way is due to crazy Hayekians. Indeed, some is by scholars generally considered sympathetic to Keynesian ideas.
Finally, neither Jamie nor I managed to make as much hay as we ought to have out of Skidelsky’s assertion that government spending of whatever kind is as good as any other sort for promoting long-run economic growth. Here surely was a chance, had we only the time, to draw attention to the rotten heart of Keynesian economics. For Skidelsky’s argument–that workers will supply factories with orders for things no matter who pays them–illustrates in all its naked crudity the dangers of ignoring the “supply side” of economic activity. After all, it isn’t just what workers would like to have in exchange for their paychecks that determines what they can have. On the contrary: what they can have depends crucially on what they themselves actually produce in exchange for the payments they receive. An army of government workers employed digging and refilling ditches, for instance (and the sweeping nature of Skidelsky’s assertion warrants the reductio) contributes absolutely nothing to either its own or others’ ability to consume, let alone to the maintenance or augmentation of the stock of productive capital.