I appreciate you taking the time to read the paper. That being said, the facts are still group raping your argument.
Also, the entire paper doesn't deal with how the Great Depression ended, which is what you were trying to use it for.
The argument is that the war brought us out of the depression, but that simply isn't possible if the policies that actually resuscitated the economy were decidedly un-Keynesian, which they were - constrained monetary policy, drastic drops in spending, reductions in labor regulations, etc.
How was the start of WWII a drastic drop in spending? How was the fighting of WWII a drastic drop in spending? Every chart I have ever seen shows a huge increase around the time when the economy started pulling out, and while this alone would be fallacious, there's logic behind why this would happen. People with money = people with spending power = demand. I have yet you see you actually confront this logic, which is something you will have to do. How does giving poor people money not lead to demand? How does it not lead to businesses having capital to invest?
It ignores the Marshal Plan, and the huge role American corporations and companies played in rebuilding Europe, a rebuilding only possible becuase of the war itself.
That would be true if the Marshall Plan coincided with the recovery immediately following the war. But it didn't. the Marshall Plan wasn't put into effect until the Spring of 1948. Thus it couldn't possibly have affected the data discussed in the paper.
Still, I can't understand why you're convinced by the "rebuilding Europe" argument. Surely it would have been better that the countries of the continent weren't decimated, right? Don't you see the flaw in expecting growth from replacing something that already existed? The same thing could be said about the douche who burglarized my ride. "It ignores the $500 WW had to spend on repairs, repairs only possible because of the burglary itself." Retarded.
As for the bold part especially: in 1988 there was a huge fire in Yellowstone national park. People freaked the fuck out, becuase they thought it wsa going to destroy the park. Lo and Behold. a few years later and the park was, by all accounts, more beautiful and doing quite great. Yes, this is an environmental analogy, but we're still talking about natural forces at work here (unless humans aren't natural?). The point is that destruction can lead to great rebuilding, in and the case of economics, that means great profit -
for somebody. Europe not being destroyed would have been great for Europe, but by comparison, the United States would not have had the great opportunity it had to rebuild Europe and profit greatly off of it. Someone loses, someone gains. How does the term "wartime profiteers" come into existence if there's no profit to be made? Again, how did Germany come out of its recession during the 1930's?
As for your car, ya, it sucks for you; but to stop there is being short sighted and doesn't follow through with all of the economic consequences - isn't that like the first lesson of EIOL? I'm sorry your car got burglarized, I truly am; but that's not an economic statement.
Do you deny GDP has any value? Does economic activity mean nothing?
By the way, you seem to want it both ways. First you argue that stimulus spending can grow the economy. However, when I point out the fallacy in that argument you resort to, "why is the most important factor ever jobs? Why don't other things matter? We live in a world where we think everyone needs to work, that they have to have a job..." So which is it? Can stimulus outperform the market, or do we just need to learn to live with less? And "both" is not a valid answer, because the two choices are contradictory.
Here's where you're misrepresenting the theory, as I understand it. I have
never suggested to replace the market with stimulus, or to make stimulus permanent. Stimulus alone does not out perform the market. This answers a few things that have come up in this thread, especially about tax breaks. If the economy is doing well, if there's ample demand, giving tax breaks
will be beneficial - becuase businesses will actually have incentive to use that money as capital to improve their business and grow the economy. However, if there is insufficient demand, caused by the lower and middle classes not having ample money and purchasing power, then giving money to business amounts to nothing. They will not hire peole, they will not grow their business, becuase there is no reason, none, for them to do so. It would very likely destroy their business, by wasting what resources they have in a time when they won't see people buying what they want. Why produce, when there's no demand? The stimulus and the government comes in
during this time and
this time only, because what it should do is employ those people short term, via infrastructure and other valid investments, which gives them money. This money then
returns to the businesses and the very people it was taken from, because those poor people have to spend their money on food, housing, etc. Those business will now have incentive to us that money as capital, to invest in their business, grow it, and hire more people becuase they actually see demand for their product. Follow the money all the way through, the money trail doesn't end by giving the money to poor people - again, isn't this the first thing EIOL starts out with, something it harps about constantly, yet fails to do itself?
And I have never said we need to learn to live with less, that's a horrible reduction of my argument. You aren't living with less, you are simply producing it yourself. This is where you should agree with me, our fiscal policy and our economic policy created a huge artificial bubble, a bubble which employed a lot of people. The only way to actually go back to the employment levels we were at is to basically create another huge bubble and false demand. I don't think we should go back to that, I think that instead of wanting both people in a relationship to have a job, one should work at home, helping do the shit that needs to be done, making the things that need to be made. Everyone doing this would help create a local market, which means people could easily liquidate their skills into cash. I'd say this is living with more in a lot of ways too, becuase hand made goods are simply of a better quality than the shit you buy at the store. You wouldn't burn through clothes as quickly, your food would be healthier reducing your medical costs, and improving your quality of life.
You create a false dichotomy by not truly understanding the opposing argument. Keynsian economics, at least my version (which may not even be very Keynsian as far as I know) is
not anti-capitalism, or some form of communism. It does not desire to replace the free-market, it desires to aide the free-market get working again. It's an exception to the rule of free-market capitalism, an exception which should not become the rule. The government is not intended in a stimulus to replace the economy, but to jumpstart it back into a position where it can behave normally and healthily. It's medicine. Say you break a leg, and you put a cast on it. No one thinks you're supposed to wear the cast forever, it's meant to help the bone heal, so that the cast is not needed. That's what a stimulus is.
There's no contradiction. If government creates jobs through military spending, and then a cut to that military spending equals short term employment problems, that's fully in line with my argument. That's why I bring up, "why does everyone need a job?"
To go back to the Marshal Plan, as well as the Korean War, and why I mention it: say there was a growing depression in 1946. I'll be honest, and you'll like this, I've never heard of this depression, so it obviously wasn't a very big deal (if it occurred at all like you point out). But depressions are formed by not just what occurs during that time, but what comes after. If an economy quickly recovers, no one is goin to call it a depression.
Length is what mostly determines are use of depression, not a quick jolt to the economy. So, if there's an economic downturn in 1946, if there's an increase in 1947 or 1948, caused by say the Marshal Plan and other investments that used American companies, this "depression" would not be labeled as such.
And as I said before, I'm gonna have to just bow out of the statistics argument. Without the raw data, without the training, I have no idea who is being more credible. Both sides use logical math, and both sides paint a different picture. Who do I believe? In this case, it's going to boil down to the logic underpinning the theories - and I have yet to see that logical actually confronted or dealt with. Economies are a weird thing, for one it's really something that doesn't exist as an entity; if there was no depression in 1946, this could be true for a variety of reasons, and a lot of them wouldn't be contradictory to the theory that economic stimulus by the government get's the free-market back on track. Hell, you could argue there not being a depression is just as much of a validation of the theory as anything.
Topic: "government can't create wealth" and all things economic (Read 2909 times)