Where Are You Mr Hayek & Lord Keynes When We Need You?

From the pen of J. Bradford DeLong unblushingly comes this mellifluous portion of a paragraph, see Cato Unbound ". . .the magnitude of the liquidity discount should be roughly equal to the technologically- and organizationally-driven rate of labor productivity growth divided by the intertemporal elasticity of substitution." Doesn't that kind of talk give you a thrill, maybe even a shiver running up or down your leg? That is a picture of Friedrich August von Hayek to the left. He must have done something right as he lived into his 90s, dying in 1992. He was one of the very few members of the intelligentsia who said that socialism could not work. Hayek's Road to Serfdom is one of those 20th century classics that our teachers seem never to have heard about. Can a teacher be sued for negligence posthumously?In The Road to Serfdom (1944) and in subsequent works, Hayek claimed that socialism required central economic planning and that such planning in turn had a risk of leading towards totalitarianism, because the central authority would have to be endowed with powers that would have an impact on social life as well, and because the scope of knowledge required for central planning is inherently decentralized. Advisers to both Reagan and Thatcher were among his followers. I wonder if President-elect Obama has ever heard of him? Wouldn't it be fun for Katie Couric to ask a question like that.

Winston Churchill is supposed to have said: "If you put two economists in a room, you get two opinions, unless one of them is Lord Keynes, in which case you get three opinions." We may be hearing again from this fellow or at least from some of his disciples in the universities, i.e. Krugman, Stiglitz, Summers, Geithner & Romer.

Keynes wrote, "The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back... soon or late, it is ideas, not vested interests, which are dangerous for good or evil."

With our present economic woes Mr Hayek (and Mr Friedman too) have gone out of favor and Lord Keynes is back in the middle. We really need an Einstein to clear this whole thing up. Does anyone else get the feeling that our elected representatives are hastily drawing up fixes, in order to put them into effect before non-governmental methods start correcting things, so that no matter how long it takes the ERs can take the credit? What kind of a district elects a guy like Barney Frank?— repeatedly!