not have been in delaware but ask to happen for us to win in 2012. to tell the story how i got involved in politics hard to embrace the principles why i chose to become a republican and two tala in a way some political advisers have said i was a little too honest. . .

coming up next, book tv presents "after words," an hourlong program where we invite guest nicholas wapshott and his latest book keynes hayek a quash the defined modern economics. the author of ronald reagan and margaret thatcher tackles economic pherae exploring the virtues of the free market reverses one in which the government intervenes. he discusses the competing perspectives and the men who made them famous with u.s. business editor of the economist matthew bishop.

>> host: soon nicholas, one of my favorite quotes from john maynard keynes is the one about how practical men often sleeves to some defunct economist and you've written a book about to. mr. keynes and frederick hayek. why do they matter today? >> guest: the dividing line in terms of modern economics of whether you start interfering in the economy and try to manage it and basically say don't do that because it will only cause an enormous mess and we have to clear it up eventually was 80 years ago when john maynard keynes, the economist of his day but certainly the most influential economist of the 20th century started working out ferias which look to the economy in a different way instead of as a series of business propositions which a lot of economists did he started

looking at above economics and became known as macroeconomics. he looked at the big picture of the different elements, different moving parts and also because he was talking at the end of the twenties when britain suffered unemployment and at the time come 1929 in the subsequent collapse of the american economy large-scale unemployment was a great problem. he was looking at it from a practical point of view. if there's anything a government needs to do which might cure some of the terrible poverty, the terrible additions of people to find work for years on end. and as that was 80 years ago but it turns out that in this division between whether you interfere or don't interfere in an economy turns out to be the principal issue of this electoral cycle. it's been submerged for a very long time of least because the kings ian's succeed and enjoyed 40 years of 1945 to 1975

intervening in the economy and managing it for the benefit of see the population but they made the economy bigger. between 1975 to 2008, say, we had a different thing. we had the economy that keynes was right in principle but what you should do is rationed the amount of new money that you ease into ian economy so that an economy wouldn't get out with itself. >> host: else famous s hayek. >> guest: a kind of son or grandson of hayek. i mean, he actually didn't think very much of his economics neither here nor there. the principle was what keynes and hayek felt it was economics. but actually the strength turned out to be to the economy because keynes suggested you can direct,

the government may do that. the government may cut taxes drastically and ease credit to ensure the business picks up. notwithstanding all of these things the government may do, hayek said yes but all of those things entailed increasing the size of the government and there is a problem about that, and that is the more you increase the size of government the larger the proportion of an economy is spent by government agents rather than the people themselves that is through taxation rather than people's spending out of their own pocket but more likely you are to have the society. so he added something which certainly is found i think a great echo in say the tea party movement among the other figures in america have even some conservatives that actually it's the government itself which is the problem, and that of course is something which has resonated since ronald reagan or even since barry goldwater in the republican tradition. but again, it's this side of the

family that is the main tradition in republicanism has been like the conservative party of britain, embracing everybody together. but the hayekian had a different point of view about what should or should not be done and the government itself turned out to be the problem and because keynes is' solutions worked or not the fact was even if they did work and let's say they do work the fact is that he says, and friedman says that's a bad idea because we don't want the state to be too big because that checks are individual choices and that is the basis of the undermining of the free choice. >> host: what strikes me as interesting in the book is the extent to which you get into the personalities and how they interact with each other and you think about the debate in politics and there is a real shouting match going on in the tea party right to the endorses hayek as vitriolic opposition to

keynes and paul krugman being an obvious voice of the school so i feel we can disagree as to how much he would actually endorse the position, but there's a sort of intolerance we're as in the book is quite clear he would have enormous admiration. i'm not sure whether keynes at miners boe much but maybe talk about how that relationship developed over time and did they respect each other? >> certainly you are right about hayek liking keynes. he of course hayek already knew as much as he was famous already by the time that hayek movant full employment as an economist, and he did that through the treaty of verso i would be tragic for europe and would lead to a second world war which was true. hayek was in the austrian war and he knew from his own personal experience that the

amount of inflation devastated austria the end of the war that was the way towards extreme politics. so she started off knowing keynes was a mythical heroic figure and in a way that never really departed. hayek always remain the enormous respect. almost everybody that came across him. it's difficult. i don't think you could doubt that he was the greatest in the 20th century. it was an astonishing creature. i wish we could meet him. he was plainly a person capable of juggling with many different balls at the same time and his achievements are astonishing was on track and could he would have been an astonishing person. but actually he ran in cambridge and bought pictures for the national gallery.

he used to stay in bed until noon every day on the telephone to the stockbroker. he was a speculator. he understood the market more than the people who admire the market. >> today he is seen as the face of big government where as in fact he was in many ways and capitalist back in the 1930's when there were more extreme views as to what should replace what was brought about in the stock market crash. >> it is one of the problems knowing too much about the economic theory in the modern political debate because words are bandied around so. but anyway, to go back to it, the keynes and hayek think the problem is that he was brought in by lionel robins, professor

of economics specifically to counter keynes so it was set up already in the first place for what could be a battle. lionel already had a battle with keynes and the bank of england kennedy about to the use of the bank of england, and that started off pretty sharply. remember of course that this is not your gentle to and fro of an argument in a bar. this is pretty high flow stuff on the tough measures. keynes was a kings college person and his stock and trade was sarcasm. at hominem attacks on sarcasm i think it protected him as every other school boy come from each other all those years. his jacket had three buttons all done, and he was very well mannered, they are both brought

up to treat each other properly but when they can to important things like disagreements over economic debates, then they just took the gloves off and so right from the beginning of the debate was very sour. they were very rude to each other to the extent other academics came in and said this is not the way to conduct academic debate please don't talk in these terms but it sent a trend that lasted until this day when they despised the hayekians. for decades they pretended they didn't even exist. the free volume biography of keynes hayek and it's barely a mention. >> host: why is that? >> guest: i guess you could say i was talking about keynes and he didn't take any effect to that but of course he did sake tv to take some account of that it was rather exhausting and later abandoned and gave it over to the millions to continue the

harassment. there is a wonderful group of economists around keynes, whereas pernicious has themselves but they learned literally in cambridge they would debate things and it could get personal. when you leave kings college but hayek was quite capable. one of the things we know about the crispness of the speech is very often it sounds far more abrupt than it might to an english man with everything with subsidiary clauses and so on but the crispness of the debate, and it's true even today if we can be taken aback when we come across the personal question but

in that case it was as good as it got and the result was certainly in the initial battle when the two men actually locked on the did lock horns and they didn't let go. they barely, actually scored a genuine point against each other in the real debate because they were too busy is my feeling each other about investments, what do you mean by savings, investment crux i would like to know more about what you mean by replacement of stocks. they got bored deep down into the weeds come into the grass and didn't escapes from it. >> host: let's turn around the different views in today's terms. how would you define today a hayekian and keynesian? >> guest: hayekian is someone suspicious of all the government efforts to manufacture the boom in the economy. hayek was true on this from the very beginning that the

hayekians remain true to it today and austrian economics and then to say that actually the market over the long term to itself and that eventually there would be in equilibrium where everybody is employed once again. >> host: so under the markets you can have doubles and crashes but somehow that is something you have to get full use to and live with and ultimately the economy will find its own way and get more prosperous. is that the idea? >> guest: absolutely. it is to say that he made a virtue out of it singing the bottom of the cycle there is destruction which is necessary to ensure the economy continues to roll and expand and so on. >> host: and keynesian? >> guest: the look at society as it is, and they say my goodness 9.3 per cent unemployed. like 15% of them have been

unemployed for six months or whatever, longer than six months. and they start looking at how many young people, how many minorities and so on whether the proportions are larger and they come to the conclusion this is intolerable. the government should intervene by whichever method they think is best and so he rattled off all of which had been tried by the way by the administration. they've made interest rates zero to the horizon so if anybody wants to borrow, to invest in everything it's not going to invest to the cost anything. the problem with that is, can't really push on the strength of the companies have so much need to borrow that's not getting very far. it's not the most politically and possible where they provided the administration congress on one side particularly not willing to compromise is to

darkly employ people the so-called shuffled ready projects we build the schools or the roads and so on. it is a matter of current debate right now exactly what obama's jobs bill says it is about this what we ought to do and we also ought to cut taxes if you want to increase demand in the economy which is what they said just left it up so that like providing extra electricity or something if you lift the demand you can do that by cutting taxes >> host: hayek's on views sound like the despair, keynes saying we are all intelligent from some of those are intelligent, the power of government exists to apply our intelligence to try to sell these changes the world faces whereas hayek's viewed sounds like basically saying the

intelligence there is basically nothing we can do for the government and it does sound like despair. >> guest: there's not much more to it than that. it is a pessimistic view of the world and that is why it comes to some things and intervention helps but it doesn't depend what stage of discipline had and he thought that keynes was a wrong direction and when he was awarded his nobel prize he said i come here to apologize with the economic profession. the fact is we have done a terrible job and it's going to take decades to get out of and unless we start now he actually lector everybody saying that we took a wrong turn and the 30's and it's going to take a long time to get back to the free and open society it does big the question of course when we talk about the politics today exactly

what de hayekian econ and become a genuine economy would look like. it's all very well to be an agitator to constantly sniping we don't want any raising of taxes, we don't want more government spending and these are absolute we are not going to agree to anything on those two conditions. nonetheless, the battle is strong in exactly that. if hayek's world would come about, what the size of the economy is very large to all sorts of things, things like pensions, would they do without pensions? >> he basically said the government should only do the absolute bare minimum to allow the society still essentially defend as far as i can see but also in favor of the property rights and enforcement of the law and order.

>> guest: exactly, he wagged about everything and was picked up by margaret thatcher, the rule of law was essential to society to get into trouble very quickly. >> host: he was cited as an adviser or inspiration by margaret thatcher and ronald reagan and people regard thatcher and reagan as to hayek and his thinking. how much in reality did what those leaders stand up against what they wanted to be achieved. >> guest: the research department they were discussing what got out of the handbag was capacious and slammed down the road to serfdom on the table and said this is what we believe so there's no doubt that what she believed was to introduce for

the first time actually to the conservative party and ideology, a checklist of things you should try to obtain which actually came out of a book on the whole conservatives and republicans never used to do this, so it was novel. were they really hayekians? whenever asked to make this clear i do not advise president reagan, said he always denied that they were. they were not wholehearted the mess. he felt they got the message but what they were saying they're up the election today is a matter of the difference between saying are you going to use this in order to nudge the world closer to your way of thinking or do you actually intend to introduce the whole scheme which hayek recommended and we are going to

have a time even if it takes 20 years and uncomfortable 20 years because all sorts of things will disappear, including all sorts of things to do with representative democracy. hayek didn't believe in -- he believed in the prices and the market. he thought even things like the government shouldn't exist but it should be handed over to a corporation. he didn't believe that the dollar should exist from sorry, the pound, the dollar should exist. he believed that there should be private companies each issuing currencies and that we would eventually come to understand which was the strong currency and which was sent and how to use the various currency but he also believed by the way something that hayekians he believed there should be a free market in the labor around the world no borders between nations. a lot of what this stuff runs very counter to the people who

say but the main problem of reagan and thatcher and there is no doubt that's an indication of they didn't do very much in hayek's terms it shows what a real hayekians future might be because most of us would believe i think that actually reagan and thatcher noticeably changed the way that we understand the world we live in and gave much more credit to things such as hayek was suggesting in the return to the free market instead of the mixed industries and it is unbelievable if you think that when thatcher took over from labor in 1979 the post office, telephone services, coal mines, steel, shipbuilding endless amounts to over time created the states as they had been bought and the privatisation was the beginning of the first step towards the state selling off all the bits it didn't need to do.

13 years and they had been fighting about it ever since with the legacy mant and whether they should continue. in britain right now we are in a sort of accidental hayekian experiment. the fact of the conservative coalition looked to the books and when they had a discussion with the government of the bank of england they were told there there is a problem of a sovereign debt because britain had borrowed heavily ought western nations borrowed heavily in 2008, 2009 disaster and you could do two things, you could pay it off soon or you could manage the economy and did that back and paid off leader. cameron and osborn decided they were going to pay it off sooner rather than later and the results as we can see is it hasn't quite got into the double dip recession yet, but the figure absolutely looks as if they are heading south. we are not talking get 0.1

growth. semidey think cameron and his advisers actually have read hayek and have any interest in that kind of intellectual debate? she clearly had the least in the handbag. >> guest: reagan who read it and rattle of all sorts of people. he was serious, but as cameron and osborn red keynes and hayek -- >> host: and obama has almost certainly not have read keynes. >> guest: i don't think that he has read much economics at all. roosevelt had an instinct for what to do, but considering that osborn and cameron ret politics philosophy and economics at oxford i don't think they have a

real grasp of keynes and a slender understanding of hayek and that's no good. >> host: talk about the road to serfdom and how that book came about and what drove hayek to write that particular point. >> guest: this is interesting because it came back in an odd way hayek had moved written in about 1930 he was not anti-semitic he wasn't sympathetic to the right call all sorts of things he didn't fit the cliche. notwithstanding the fact he had letters of recommendation from the director-general of the bbc and everything else in order to get the job to help wartime britain he was turned down and that i thought was actually in terms of the turning points of

history they should have used hayek into germany and austria and extraordinarily brave which was able to tackle things like rationing. there are practical things you might need to do in the wartime society but either way they said no thank you and the result was a devoted the war to writing what he thought was aiming towards the left and right. what he was anxious about this once of the war was over that because of the war had been seen to cure unemployment in a keynesian way that they would increase the size of the state wholesale and he thought there laid the danger of the soviet communism. he was more worried because nazi had been cured or defeated. and so, that's what he tried to

do. >> host: she predicted a vicious totalitarianism as a result of that growth of government. wasn't a sort of cozy social democracy. it was a nasty brutal regime. >> guest: they looked at the recent evidence. it's beyond belief to assume people behave in that way, but that had just happened to the world and still going on in the soviet communism so it wasn't too difficult a warning because it went terribly wrong because churchill who have read a lot of things have read of the road to serfdom with the explanation of what was said in a jump to the conclusion of the labor party were elected in britain in 1945, that the gestapo there would be a british form of the gestapo and he was foolish enough to save it and the standard equiano hayek which allowed another reason people in the of destroying because of the social

democrats had nothing to do with communism at all. communists were the chief rivals saying they would be just as bad as a communist and so with a single swipe they took hayek out of the game. >> host: you talk about how sweden and some of those scandinavium democracies have emerged now the definition of big government and get no one would look at those as sort of awful places to live and life is quite a good in those countries and to what extent the reputation of the view. >> guest: i would say pretty much because it is being in an oppressive society. but you don't have to go too far away from this to find a good americans who would say to have single payer health care is in itself a tyranny.

it depends on suppose how you define your liberties. >> host: would hayek have recognized that? >> guest: yes, he did, and hayek actually had a swipe at this. if he was here it would be interesting to hear what he had to say because he said the look of a scandinavian countries look on to the tranquil, koln, civilized places but people within their turmoil comes out of market forces. they were dumbfounded for a while. >> host: on that note, let's take a short break.

>> host: so today we talk about v. hayekians goal and the keynesian's goal and one can make the mistake of thinking those goals just arose and people admire the work and so forth to follow them. but in reality they are quite deliberately builders of movement and maybe you can talk about how they set about creating an army of the followers. >> guest: keynes had a simple way of doing it because he had a product to sell if you liked. by the end he completes it, the so-called general theory where he describes exactly how we tinkering with the economy he could make it operate at a high your planning and therefore employ more people to his own satisfaction any way. and because this is a message

that so many people wanted to hear at least in america and at harvard for instance when the boxes of the general theory a right they were ripped open as if there were contraband. that was an astonishing thing. and that desire to be at the forefront of a new and exciting and optimistic movement which is how to cure the unemployment which is cursed america for a decade you can see how obviously keynes himself, a very attractive figure, a very eloquent, very smoothes, how that is a movement waiting to form. no sooner had the war ended and keynes largely designed the piece, he was the architect of the peace and designed things like the imf. he designed the currency marginal flotation operations.

so you wouldn't imagine if you left keynes to do he had an old opinion of himself he thought he was better known than he was and before keynes plight he said when he was on wi-fi was amazing the well-known and prominent. as soon as keynes didier was lifted to sainthood why was turned into oblivion. keynes was dead, she had one and the foreseeable future was keynesian which at least it was for three decades. you could argue still to this day, i would. economics is keynes. s in defeat, however, keynes shows the extraordinary reserves of the personality and character decided after a short interval to call the people who resisted keynes and came from the austrian school who were likely

to be sympathetic to trying to find an ideology which would counter the wholesale he invited them to a hotel in switzerland in much montpelier as the revival of conservatism. >> host: when is this? >> guest: 1946. this is where conservatism and libertarians got into the same bed. frederick hayek, they were a maverick lot. he knew that they were a maverick. just invite everybody who looked as if they might agree and he was left year after year because from that time on they met year after year and stormed out.

it was widely stuffed. but have been great to be there. to have been invited to that meeting and attended the first meeting is for conservatives and ideological bent rather than having the right on the mayflower this is absolutely key. hayek had taken out for this book keynes tried to adopt the measures and he got nowhere. the fact is the orthodoxy was so in control he had a sympathetic to government. >> host: they always said they didn't find them persuasive. they were better. but the rise of hayek's group is interesting because he cited that he would do just as keynes did with a general pherae spending money on lobbying interests or persuading

representatives, congressmen, senators, presidents as the way to go forth is to convince a large body of the community and they taught people and so long that i would become much more firm as a fury and would allow people to join in or not join in as much as they want to and would provide a strand of fought which was deliberately contradictive to keynes and that is exactly the way that worked out. american large groups from large big business groups or maverick self-made businessman who have always believed tinkering with the economy for the government to get too large is an american. >> host: i suppose this led to the chicago boys in terms of that whole movement on the university of chicago was really let the free market economics.

>> guest: they were already there but not as they were today where they were 20 years ago. but it's interesting that milton friedman and a couple of others were invited to the first meeting with a thought it was an excuse to go from a freebie in europe and play bridge. in fact they recruited a fourth person so they could have somebody to play for them. they didn't take it very seriously but they came in with the seriousness and the intent of hayek. in fact, they didn't think much of them as i mentioned before as an economist the did not think about the earlier economics held much water. >> host: you are right as you say keynes today is economics, and friedman, who in many ways the tea party was a sort of economist he endorsed much of this framework even though i guess -- >> guest: he said as much.

he said in a way we are all keynesian which is being led on by the keynesian but he went on to say because we we understand the world as microeconomic. on the other hand, he said the government is too large and the only way you can cut the government is to cut the government, stop spending, and wait for the pressure of a deficit as much more strongly than it is to have some left over spending. >> host: also struck by how the heroine of the tea party movement ayn rand reacted to the road to serfdom with some of use. >> guest: yeah, i must say this reminds me about this sort of endless debates that used to take place on the left.

was luxembourg a better or worse person, and the factionalism was very salami slice into groups and the of course the and the next-door neighbor more than the to the person who should have been their enemy. >> host: that type of mentality. >> guest: he thought he was the biggest compromiser which would come as news to the tea party today but it's true hayek said unlikely things such as if we have this economy i don't see any reason why for instance people shouldn't be given proper pensions and health care. everybody at least should have that. that was a step too far for people like ayn rand. >> host: who told the government to provide that? >> guest: yeah something the fund and build it as the logic because perfect sense but if everything else is going to be private there are some things in

the states should guarantee and that is at least the ability to stay alive and remain healthy. >> host: why did he think the state would be capable of funding that welfare i guess we would call it today? >> guest: the times change. when the service was introduced in 1945, no one would imagine the leaps and bounds health care itself would take, that medicine would take and the cost of it but also the cost of talking about the pensions when the pensions were invented people were living to country, for years beyond the date. now deutsch to many of the things in the welfare state that keynes helped introduced is brought about we live much longer and healthier for longer. i'm not sure if he had to revisit it today that he might agree there may be another way to do it.

>> host: in terms of his fury now much was he willing to predict about how the world with the actually turnout in reality as opposed to what it ought to be like cracks he obviously lived long enough to see the collapse of the soviet union and the iron curtain to come down was he surprised when that happened or productive? >> guest: surprise to hayek. he would work it out in advance. he thought it was a perfect example of the contradictory economy. if you sublet the discretion to spend money to a cadre of the communist sheaths and you take away from individuals, then what you end up with is a society like the soviet union with all the horrors that that entails but sooner or later it is going to collapse because you cannot resist the people wanting to bargain, wanting to trade and spend which he thought was one of the core things that made of

humanity but also she said if the price mechanism had been invented, that is if one the semidey cannot with intention this is what we need to do he said it would be considered the single most important element of human life and he goes back to the fact that the price was the key to everything because that is where the millions and billions of people in the world apart and one-on-one with each other and agreed to at least something that he was always very worried very much beyond that and he said it will happen. i can tell you what happens. he was admitted. one of the problems was with keynes is he was someone who was a mason. he really didn't have anything much to put into place so he could point out of the reasons why he was wrong but he would say i wouldn't do anything because i wouldn't know enough to do.

we don't know enough about this stuff. >> host: is this the essence of his theory that things are too complicated for anyone in the position to actually be able to know that what they were doing was the right thing or were they more about a fundamental view of what one's political freedoms ought to be? >> guest: it came from both ankles. the first was the impractical one. he said it is impossible to understand what is in the mind of every but the and therefore how could a government agent make the right decision for every 100,000 to be pleased at least as many. it's patronizing. he is making the decision on behalf of others with their agenda. in his nobel lecture, hayek said that was a bit like going to a

football match and his faults were applied by the way that you knew all of the statistics of all of the individuals involved. new their ages, their height, their ability, their ability to pass or whatever, and you knew all of that, you know what the weather was like, you would the time of day was like and the circumstances of the people involved and then trying to predict what would be the result of the game. it is impossible to know that much information about people coming and we will never reach that. >> host: that raises an interesting issue because the movie money all basically takes an economist as the hero, they do the statistics on baseball and they come up with a recruit on a number of players in the best value for the statistical performance that you can predict and ultimately the red sox

employee exactly this approach. i wonder whether in a sense hayek, had he known the power that was available now in the era of data whether he would have taken a different view as to the technical feasibility of having economic policy that's designed based on pretty good information about the world. >> guest: i doubt if i must say. he didn't believe in aggregates so you couldn't take all postmen or butchers and work out whether there was a son of the economy. part of the argument was the acolytes who dusted to finish the job and one of those arguments is exactly about each

commodity rate of interest it's too technical to get into and there's a different natural rate for doubles as there are for paris but he wasn't prepared to get involved in any of that because he said that that was too much of a leap because you couldn't even bring apple's together or oranges together. he used to suggest it was like early surgery, economics is like early surgery the and to start hacking off. >> host: economics would be like dentistry that you hand over to some technicians be able to keep things looking good and i guess you really think that he ultimately believed would never

move beyond that and never reach that technical proficiency that keynes thought was close. >> guest: he put so much work into the individual, and i suppose his admiration for the individuals, starting off with himself, he never liked anybody else to make any assumptions on his behalf. i think maybe his own mind was unique. >> host: did he believe in progress? >> guest: i don't know that he would be able to come to the conclusion but progress would be. it suggests moving in a positive direction, and i think that he would say one person's policy is another person's negative. there is no point trying to press the progress. they wanted progress to happen in two weeks' time knowing full well it was great to happen in six months time by borrowing or getting their faster. but no, he wanted everything to go at its own speed.

>> host: interesting in the book you talk about a utopian kind. i mean, surely the essence of a utopian there is a belief in a bitter and perfect world one might live in. >> guest: yeah. there are contradictions with keynes and hayek. they've gone on for a long time and you find places in any individual court where they contradict each other. at montpelier he decided what was missing from his side's logic was the warmth and humanity and the vision the left had provided. he said even if it went wrong with the fact is communism start off with an admirable goal and was worth of the taking and it didn't draw a lot of people in. notwithstanding the practice he still kept their mind on the

honorable goal. he said that is what we ought to do. then they started painting a broad brush with the society might be like if you took the government of the equation of during the bear minimum. and he would withdraw from everything. from the city governments and so forth, so to that extent i think what he wants to do is move the boundary between where the parliamentary democracy lies and where the market takes charge. he says the market is democratic. we make these positions of the time by ourselves. you don't really need to go through like a sort of reformation. you don't need somebody to translate your thoughts. when you want to do is to move to a city that serves you and if the mayor of the move to another

city. he moves to an ideal world that is almost impossible to imagine how we it would come about. and certainly if it would come about very quickly there would be immensely painful for other people. >> host: you say that he saw the market as essentially space. some would look at u.s. politics in particular and say here is a democracy. but basically become a commodity that the market by is with so much campaign finance money going on. is that not in a way of the sort of hayekian model of how the government ought to be allocated to the highest bidder? >> guest: the way that he imagined it would come about and it's a very clumsy and the great thing is as hayek was concerned about his plan that because the market is open, it's open, so i guess everyone knows what he's

open to. just look up the price of something going on. but we don't know the price of lobbying is, so we don't know what the price of the health care compromise was that was reached by spending money on drug companies and health insurance companies that restrict the way that obama should protect the health care provision. we didn't want -- we in the loop they bargained. the title this and the winner is. what is the current state? is keynes winning, is hayek warning? will this be a result. >> guest: it's still too early to tell. suddenly we do think that we are embarked on the hayek keynes election that's been set out in the present that is pretty good keynes and his jobs bill which

way to becoming or may not come to fruition is as manifesto and he is needs a lot of anger that says here is what we have to do and he lists them off. riggins's taxation but can't be. on the other side, i think that whoever we end up with ebenefits this mitt romney, it will be his policy position will be guided by devotee party people, and they have roughly said we don't want you to to pay raise taxes under any circumstances. and if they hold that line, then the republican candidate will have to find some justification and have to find a program which says this is how we are going to live with other taxation and spending on money. they are also going to pay down the debt. you may be doing that by cutting the government services in which the republican candidate has to point out where and when it took

place and how deeply they will be. that makes a lively debate. >> host: do you feel -- it seems in your conclusion that ultimately your sympathies come down with caves. ultimately hayek capitalism and 1930's when the hayekian school was saying liquidate, liquidate the whole thing. and again after september, 2008, when lehman brothers failed and the whole market system hit beyond the brink of collapse, the government commit big government can't stop the collapse. you seem to feel, of all people, in the of the hayekian school of economic?" him basically as saying the

policy save capitalism and of the capitalists have their way they let be the people that caused the - of cabalism because it is an intolerable democracy unfortunately. speed that is the threat from hayek which is unless we do things and make people happier than they are, they can tip over into extreme politics or worse. this economy could collapse and the society could collapse as it did. we can't return to that, and davis devotee is a keynesian in a foxhole. in 2008, 2009 you didn't hear many people even in "the wall street journal" who would say anything. let's just get on with it. they were amazingly silent until the start past and then that's when people are saying we shouldn't have spent all this money on the stieglitz bill and

so on. there were some lone voices but there were no principal people, i can't think of anyone on the searcher who said this is create chalet -- we could pick up off and be so much better off. i can't see a gop presidential candidate either saying we tried and we're not going to this way anymore. we are not going to intervene in any circumstances. >> host: do you think hayek himself would have been against bailing out of financial industry in 2008 or in that situation failed the convening meltdown. >> guest: great question. we fought of exotically what he said. it would be really hard to say because to go back on that would be to go back on almost everything that he said. so i would imagine he would say

find out where the price is for these banks and as a market tell us how they would work. >> host: to get the a ouija board out, if you were able to speak to what do you think is the crisis would be? >> it's not easy because we live in a world where the practical considerations. even if keynes for the president, he would find it difficult given this. i think he would say cut taxes a good deal. i mean, a lot. really cut taxes. he would say spend on roads and education, bridges, if you can, but if you are not about to do that, then you are stuck. and so much of it is to do with the debt. in the devotee were in trying to

lift the whole of the level of the government holdings of notional gold if you like. you just suggest such a thing in the past where every nation would be given pieces of paper which were effectively gold sums. >> what about hayek? >> what would he be saying at the moment. i think that he would say we are in for an uncomfortable ten years. it's going to take us a long time to get out of the mess they put us into. >> in the agenda for the republicans it sounds rather more the hayek's message. >> host: i can't see any retail politician openly

espousing the fall of hayak. i think the would be really difficult poon. you have to spell out how many hospitals are close, you know, how many soldiers will be returned, what to do with the city's which depend upon entirely the federal finance groups. the military for instance. we are talking a lot of people's lives changing, talking disappointing people who've taken to the funds who now can't respect anything more in the private intervention. this is a price they would will volunteer for now, and a hint see after all the don't have to think that it's. >> host: it's been a terrific book and it's been fantastic talking with you. >> guest: its been great fun. thank you.

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