The November 28 issue of National Review contains an essay by Kevin Williamson (subscription required) that points to a core disagreement among those with differing views on how to turn around economic malaise:

Whatever consumer spending amounts to as a share of the economy, we do not need to encourage it, because getting people to consume in sufficient quantities is not the problem — ever been to McDonald’s? Walmart? Tiffany? A household with 600 cable channels? The after-Christmas sale at Saks? Neo-Keynesian sophistry to one side, no man, no household, and no nation becomes wealthy through consumption. We become wealthy through production. And our policymakers get the direction of the consumption-production vector 180 degrees backwards: As Say’s Law teaches us, we produce in order to consume; we don’t consume in order that others may produce. But Washington continues to believe that if it can just goose consumption enough with cheap money and giveaway interest rates, production and economic growth will magically follow suit. You can empirically test that theory by wishing for lunch and seeing how long you remain hungry.

Williamson is a little overly dismissive, here.  Wishing for lunch won’t make it appear, but standing on the street corner with $500 and calling out for lunch would have a different result.  The trick that Keynsians wish to perform lies in handing out those $500 bills so that people other than the consumer will have incentive to produce.  If, in producing that good or service, businesses create new means of production or invest in efficiencies for existing ones, the increase in economic activity might overcome the productivity lost by taking the money out of the economy elsewhere.  In the absence of tax increases, that “elsewhere” tends to be the future (through debt), so the gamble is that the economy will advance enough now to overcome the imposed burden later.

Economically speaking, a number of complications arise.  Apart from the need to find the $500 in the first place, the recipient of the free lunch may very well have been willing to use his own money for it anyway, and the producers may not need to fix or change anything to fulfill a one-time windfall of demand.  If the producers are not already in the lunch-delivery business, it won’t necessarily be true that the economy benefits by having them enter into it than by allowing them to accomplish whatever they had already planned for that day.  After all, an economic scheme relying on innovation as its central product arguably loses ground when the government encourages an unnatural focus on the sorts of things that people will buy when handed newly minted money in exchange for no effort.

And finally, as Williamson suggests when describing the rolling snowball of government subsidies of higher education and tuition costs, increasing the price that consumers are willing to pay for goods or services (that they want anyway) will allow the producers to increase the rate that they charge, with no added effort on anybody’s part.  The conclusion to which such observations lead is that the relationship of consumption and production is infinitely complex in the real world.  The larger argument over economic policy, therefore, is whether it’s possible for a governing class — whether politically elected or untouchably technocratic — to account for all of the necessary variables sufficiently to justify as strong a hand as it currently has.