On Nov 3, 2008, at 11:08 AM, Dan M wrote: > I think that the drop in unemployment from 1933 to 1937 is not the > subject of much argument. It's the reason for the following year's > rise > back up to 19% that sparks the arguments. Those who think that FDR > did > more harm than good cite problems with profits, new labor laws that > made > it easier to strike, etc. Keynesians would argue that the balancing > of > the Federal budget in 1938 was the cause, since deficits were still > needed. > > What is undisputed is that, as WWII started, the US rate dropped > down to > 9.9% in 1941, and dropped down below 2% from 43-45...as we were firmly > in the war. I'd argue that these data tends to favor Keynesian > analysis, since the war involved overwhelming government > intervention in > the economy, massive federal deficits, etc. Indeed, from a purely > economic point of view this is wasteful government spending at its > worth, spending billions upon billions on things that either blow > themselves up or get blown up. Yet, it was the foundation of the US > being the economic powerhouse that it was during the next 60 or so > years.
I have long used this as an argument for more, rather than less government spending. When the government spends money like it did during WWII, the economy soars. And that's just buying things that you KNOW are only going to be destroyed. Imagine if the government spent like that for things we need that will last. We'd have had something like Japan's G-Cans project to protect New Orleans (http://budurl.com/97zp) instead of a bunch of ill- maintained levees. Or we would have a high-speed cross-country rail network. Or homeland defense that actually works. Or ... well, you get the idea. And perhaps you think the idea is ludicrous. Fine with me. At least it's not the same old old "gummint bad, money mine" tripe. And we'd have a highly stimulated economy. Dave _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
