Edmund Storms wrote:
> You forget Jed that WWII was not a stimulus to the rest of the world and we > gained only because we sold the items that were destroyed for gold. After > WWII we were the only country that could manufacture much of anything for a > long time. I don't think the approach you suggest would work now. It isn't my approach. I do not know enough about economics to judge whether Keynsian massive deficit spending works or not. I am only describing what the Keynsians say. They say that WWII was an example of massive deficit spending, and that is what kick-started the economy. Whether it will work now or not, I have no clue. My only message to Rick was that if the gov't is going to spend massive amounts of money, it should spend it doing things it is supposed to do anyway, such as fixing bridges and monitoring volcanos. They $140 million they spend on volcanos will go right into the pockets of U.S. workers at scientific instrument companies. Our equipment is still made in the U.S., and it is still the best. Even the Japanese labs I have been in use mainly U.S. instruments. Rick says it is a "NON-STIMULOUS" but I do not see any difference between building bridges, schools or fire departments and installing scientific equipment to monitor volcanos and earthquakes. As long as you help people, make them safer and generate wealth, it is all good, and it seems like stimulus to me. There are, of course, many gov't "pork" projects that do no good. Governments build a lot of stuff nobody needs or wants, especially in Japan. Anyway, Obama is a Keynsian and he believes that useful spending is a stimulous. I don't know but I hope he is right, and Rick is wrong. I do not think the prosperity following the war could have been caused by the fact that the U.S. had intact manufacturing and other countries did not. Three reasons: 1. The U.S. was still economically isolated then. Trade was only a small part of our GNP. We did not import or export much, so even if the rest of the world had vanished, it would not have affected us. (Economically speaking, it did vanish.) 2. Most of the exports were gratis. We were giving stuff away for free to the Europeans under the Marshall plan, and giving food to Japan for free. (But not any industrial assistance to Japan; on the contrary, we taxed them to pay the cost of the occupation.) That is the same as wartime spending: huge sums spent with no benefit to the U.S. consumer, and no improvement to the U.S. infrastructure. 3. When other countries recovered in the 1960s, our economy did not suffer. Nowadays, I will grant that competition with labor from other countries such as China has affected us. That is because shipping costs have fallen and telecommunications are virtually free. - Jed
