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For your information, the phrase about "digging holes and filling them back up" is probably one of the most distorted quotes in all of economics. Keynes essent
by nhaehnle 15y ago
For your information, the phrase about "digging holes and filling them back up" is probably one of the most distorted quotes in all of economics.
Keynes essentially asked his readers to compare three possible scenarios in a situation where the private sector does not provide enough job opportunities due to a lack of aggregate demand. The scenarios are:
(1) mass unemployment
(2) the state providing employment in work that is considered useful
(3) the state providing employment in "digging holes and filling them back up"
Keynes point was that the order of desirability is: (2) is better than (3), and (3) is better than (1)
He was not in any way advocating in favour of (3), he was merely pointing out that even though (3) looks stupid, it is still better than (1).
- fexl 15y agoKeynes was making hay out of a disaster. The banks enabled a speculative boom, resulting in a massive mis-allocation of capital for many years. Then when the boom ended, they had mass unemployment. No surprise there. Keynes was wrong to think that (3) is better than (1). All that does it take capital forcibly out of one individual's hands and put it into the pocket of someone doing something useless. You might as well save him the trouble of digging the ditch.