Keynes once said that he wanted economists to be like dentists: competent and useful. If you had a toothache, which dentist would you rather see - Dr Keynes who gives you some painkillers or Dr Hayek who just shakes his head and tells you that it's your fault for eating too many sweets?
I was at a talk recently at the LSE headlined by Robert Skidelsky on "Keynes vs Hayek". I was particularly entised by this argument that Hayekians cannot offer any practical solution once a country is in recession. Hayek would merely that say we shouldn't start another one.
This cannot be right. If we let the free market run its own course, the toll will be far too high. Recessions have a huge human impact - unemployment breeds so much more misery than we can possibly fathom. If the UK government had let Lloyds and RBS fail, thousands would have lost their jobs and lives would have been destroyed. This is far too important for any preservation of free market economic principles or a moral hazard argument.
I was at a talk recently at the LSE headlined by Robert Skidelsky on "Keynes vs Hayek". I was particularly entised by this argument that Hayekians cannot offer any practical solution once a country is in recession. Hayek would merely that say we shouldn't start another one.
This cannot be right. If we let the free market run its own course, the toll will be far too high. Recessions have a huge human impact - unemployment breeds so much more misery than we can possibly fathom. If the UK government had let Lloyds and RBS fail, thousands would have lost their jobs and lives would have been destroyed. This is far too important for any preservation of free market economic principles or a moral hazard argument.
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