Do yourself a favor. First, reacquaint yourself with this excellent Hayek vs. Keynes video.
…by the way: I consider this video to be more of a sequel to the original.
Now, read Jonathan Chait’s fairly drab attempt at push-back (via here, via here).
Notice the difference?
Yup. What we have here… is a failure… to communicate. Which is a definite pity, in its way: there really needs to be a good, accessible defense of current neo-Keynesian ec0nomic theory out there, if only to keep the Austrian school from running more amok than they, strictly speaking, deserve. Unfortunately, what we get instead are dull critiques by those who are: a, less creative than the people that provided the original argument (and who are being somewhat bitter about being less creative); and b, more interested in trying to score partisan political points than they are in actually doing a good critique in the first place. Put more simply: EconStories came up with something that people who don’t actually know much about economics can grok. The best that TNR could come up with were some drab arguments designed to keep at least some of the Keynesian faithful from lapsing into heresy.
Guess who won?
Asking what government should do the ameliorate a recession is like asking Godzilla what he should do to repair the city he just destroyed.
The answers generally come in two forms:
1) Stop breaking things
and
2) Get out of the way.