Reply To: Keynsians on unused resources in a recession


These answers make so much sense; they definitely answer what Keynesian Robert Skidelsky said in response to the objection that resources that are allocated by central planners or governments rather than by the market are sure to be wasted:

“Well it’s a short-run/long-run thing, isn’t it? The fact is that the efficiency of allocation is the long-run engine of growth. In the short-run when you have lots of unemployed resources, it doesn’t matter whether they’re allocated that efficiently. You’ve just got to get the level of activity up. That is the most important thing. And I’m afraid it’s what the government believes today. They say oh no, we can’t have government spending because it misallocates resources. I mean it makes growth less fast than it would be. But that’s a very, very unimportant question in the short-run because actually what you need in the short-run is all the resources to be used.”