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A year left: Obama running against history
Topic Started: Nov 7 2011, 01:29 PM (886 Views)
ngc1514
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Chris.. but World War II did pull the US out of the Great Depression, right?
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Chris
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telcoman
Nov 8 2011, 04:18 AM
I think NGC has a good point. Hard to argue with it.
Then why can you not argue for it or against my response?
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Chris
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ngc1514
Nov 8 2011, 04:30 AM
Chris.. but World War II did pull the US out of the Great Depression, right?
There are those who argue that, and those who argue we would have done so anyway, and those who argue we would have never gone into a depression if government hadn't overreacted to a recession. WWII ended the Depression is a good simple story, but it isolates and abstracts from reality and fails to account for all the facts of the Depression. It also gives the faulty impression that governments can do something to solve economic problems by starting wars. Were it so what would that say of government?
Edited by Chris, Nov 8 2011, 04:49 AM.
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Chris
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Here's another story (i.e., explanation): World War II Ended the Great Depression?
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In his 2008 book, The Return of Depression Economics and the Crisis of 2008, Paul Krugman writes: “The Great Depression in the United States was brought to an end by a massive deficit-financed public works program, known as World War II.”

He has since repeated this bon mot in a number of columns and television appearances. Like Keynes, Krugman lets his fondness for flippant, pithy sayings get in the way of regard for long-run economic prosperity. (Keynes famously remarked that “In the long run we are all dead,” ignoring the fact that in the long run others are alive.)

It is true, as the graph shows, that the country’s gross domestic product rose sharply during the war.

But GDP measures only the total monetary value of production while ignoring what is actually produced. It is just a number, a number that would be no different if consumer goods were produced and sold or if the government set the workforce to making mud pies and then purchased those pies for a like sum. Yet what is produced makes all the difference. The point of an economy is to improve people’s lives by producing goods and services they want and need.

During the war the P in GDP largely consisted of the munitions needed to defeat the Axis powers. While these weapons were necessary to win the war, they did nothing to provide food, clothing, and shelter. Despite all the production increases that came with the war, the American people were materially worse off while it lasted. Some 15 million American men and women, over 10 percent of the population, served in the armed forces. Living, and sometimes dying, in a foxhole was not an improvement over stateside life—even life during the worst of the Depression. Back in the States living standards also dropped (though not as dramatically) as consumer goods, including food and gasoline, were rationed.

...World War II forced Roosevelt to concentrate on a single area of production: weapons. This focus was maintained for the duration of the war and resulted in a sustained economic bubble....

...Contrary to popular belief, the “public works program” known as World War II did not end the Great Depression; it ended the New Deal. The end of the war brought federal spending and tax cuts and the repeal of the Smoot-Hawley tariffs. All these changes combined to pull the nation’s economy out of its long and painful slide, and all could have been made without the war. Similar changes made now could restore the world’s economy without the massive human suffering that, in their absence, is all but inevitable. Inevitable, yet so avoidable and so unnecessary.
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Then why can you not argue for it or against my response?


You want me to write revisionist history? What happened, happened. I still remember the post war boom. I was there, I don't know if you were.
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Chris
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telcoman
Nov 8 2011, 05:33 AM
Quote:
 
Then why can you not argue for it or against my response?


You want me to write revisionist history? What happened, happened. I still remember the post war boom. I was there, I don't know if you were.
No, I asked you present an argument.

Narrow personal perceptions are deceptive to broader political/economic events.
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Pat
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I would argue that WWII spending by government was the perfect petri dish experiment that proves government stimulus fails as a solution to a sluggish economy. Once the war spending ceased, then the false economy created collapsed. This was then followed by two more government stimulus programs, the GI bill, designed to place unemployed servicemen in school and off the unemployment rolls, and the VA housing loans aimed at building houses and creating an unnatural housing bubble. Since Roosevelt's administration, we have been on a steady yet increasing diet of using government to replace the natural flow of a supply and demand capital environment. Creating false demand is like giving dope to an addict. A depression always follows.

Has anybody else noticed the number of jobs being shed at all levels of government? Government has been used for years now as the number one source of new jobs. I could go into the negative affect government has on productivity and wage inflation, but that would be for another thread.

One need look no further than the current protests around the country to see the evidence against government interference in the marketplace. Millions of people addicted to some form of incentive killing subsidy or program.

This last year of the Obama administration will be filled with grief for a population coming down off the addiction to government spending and handouts. And will mark the end of an administration that was dependent on and had no other answers than big government interference and spending. It just never occurs to the left that if government would get out of the way, then the markets could function properly and private industry and individual innovation would naturally spur job growth and prosperity.
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ngc1514
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Chris
Nov 8 2011, 04:49 AM
It also gives the faulty impression that governments can do something to solve economic problems by starting wars. Were it so what would that say of government?
It worked for Germany. Until they got in over their head and bit off a lot more than they could chew.
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Chris
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ngc1514
Nov 8 2011, 08:29 AM
Chris
Nov 8 2011, 04:49 AM
It also gives the faulty impression that governments can do something to solve economic problems by starting wars. Were it so what would that say of government?
It worked for Germany. Until they got in over their head and bit off a lot more than they could chew.
Yeah, those pesky untils always get you in the long run. As John Maynard Keynes put it "In the long run we are all dead." --Oh, and that was A Tract on Monetary Reform (1923) Ch. 3. :-)
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ngc1514
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Chris
Nov 8 2011, 08:43 AM
Yeah, those pesky untils always get you in the long run. As John Maynard Keynes put it "In the long run we are all dead." --Oh, and that was A Tract on Monetary Reform (1923) Ch. 3. :-)
Looking at that list of US recessions in Wiki, it appears that the economy has never had a prolonged period without recessions. In fact, the longest periods without recessions (up to an interval of 10 years) ALL took place since the end of World War II. Isn't that the same time frame when many say the era of big government really took off? Looking at the list going back to the founding of the nation, recessions seem to occur no matter what the government does or doesn't do.

Do you disagree with Keynes statement about all being dead?
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