It really is essential to grasp the demonic, consciously destructive nature of the work of Keynes. He was not wrong. There is no point in arguing Keynes versus Hayek. The answers are self evident to competent minds filled with accurate facts. The argument is lunacy versus reason, the wrecking ball versus brick and mortar.
As I thought about it this morning, I got to thinking about his coalmine analogy, reliably reproduced by reliable idiot Paul Krugman:
If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.
What is he arguing for? The diversion of money from productive to non-productive uses; the channelling of money from the actual economy to an artificial economy created by the government that will cease the moment the government stops spending money.
But the longer you can get the government to sustain an artificial economy, the more damage you do to the actual economy, and most importantly, the more DEPENDENT you make more people on the government. As I have said, this makes them pliable.
This is what was done in the Great Depression by FDR. He did “stimulus” spending on things–like the TVA–that were not inherently productive, and he deranged prices through wage and price controls.
A further consideration, plainly operative in our own day, is the mystification that deficit spending produces with respect to clarity on the part of producers what their future costs will be. Clearly, at some point tax rates or interest rates will go up, but it is hard to say when and how much. How do you price your products? How do you plan production? Is it not easier to produce less, and wait and see? Is it not more intelligent?
Add to that ridiculous idiocies like Obamacare and you get long term, unnecessary, economic malaise.
I was thinking the other day, also, about the French banlieus (spelling close), which are large housing complexes that are isolated from the economy. They are government built and maintained, but they CANNOT, of their nature, be self reliant. If we take as one pole of a continuum a subsistence farmer, who doesn’t really need anything from anyone, the opposite pole is that of people whose housing and income is provided by the goverment, and who are incapable of any independent economic activity of their own. No wonder they riot.
It is important to grasp that deep, profound intelligence can coexist in the same mind with profound evil. Not only can it, but it often does.