This is the Cato Daily Podcast for Wednesday, December 5, 2012.

I'm Caleb Brown.

In popular media, the story is simple if consumers are spending will have more jobs and vice versa but the story however easily

told simply misses crucial components of what drives economies.

Arnold Kling an adjunct scholar the Institute, says this Keynesian fixation is a costly error.

You point to Zachary Goldfarb, who essentially lists a series of charts and his focus in your mind is spending and you call

this focus on spending the Keynesian fixation. Just unpack that a little bit.

Spending in jobs are both symptoms rather than causes.

So with the Keynesian fixation,

and you see it all the time in the press is people are saying well did consumers

spend this month are they spending our business is spending if they're spending

then there'll be jobs and if there's more jobs they'll be spending.

How many jobs were created this month?

If there were jobs that were created then there will be more spending.

And that's what, in my view, what they're doing is looking at symptoms, not causes.

Let's say, let's say I have a job as a truck driver.

Why do I have that job?

There are two reasons. One is that driving a truck provides value in the

economy. There's a reason why I'm driving a truck as opposed to riding a horse and pulling

a wagon because in our world today driving a truck provides value.

And the second reason is that I have a comparative advantage in driving a truck. I can do better driving a truck than I can as a surgeon,

maybe because I wouldn't be very good at surgery, and better than working in a fast food place, because I can earn more money as a truck driver

...