This was another good point from Karl Smith's response to the gnome thought experiment: "However, the larger point is that I think Bob’s analysis and that of many economists in this debate misses what working economists do every day."
That was exactly my thought when Steve and Troy made this absurd assertion that Keynesians can't grapple with capital heterogeneity the other day. They were telling me this at a time that I - upstart Keynesian kid that has somehow managed to get on the radar of a fair number of libertarian economist bloggers over the last couple years that I am - was (1.) working on first week problem sets going over models where one type of capital was good at producing one type of output but not another, (2.) writing a chapter about the dynamics of a specialized labor market, and investment in specialized human capital, (3.) teaching my undergraduates about specialized factors of production, and (4.) giving my edits to my team members on a feasibility study on a training model (apprenticeship) that is celebrated because it can be adapted by firms to their own production processes, which are often very different from other firms.
In other words I, as an actual economist and student of economics, was immersed in capital and labor heterogeneity and it's implications. And these guys are really suggesting that everybody but the Austrians has somehow missed this!!! As Smith suggests -they are missing what working economists do every day.