The Myth of Wartime Prosperity
When pressed for a “success story” of their policies, Keynesians point with pride to World War II. They claim that it is the perfect illustration of the ability of massive government spending to lift an economy out of the doldrums.
In the effort to battle this myth, Steve Horwitz and Michael J. McPhillips offer an interesting new article that analyzes diaries, newspapers, and other primary source documents from the wartime era. They show that average Americans on the home front certainly did not think they were living amidst a great economic recovery. Yet as I’ll show in this article—relying on the pioneering efforts of Robert Higgs—we can use even the official statistics to turn the conventional Keynesian account on its head.
(Source: laliberty)
Not to come to his defense, but the incessant focus on Obama as the evil mastermind behind this accomplishes absolutely nothing in the way of convincing the economically illiterate on the left of the detriment brought by these policies. The fact of the matter is the Keynesianism has been the prevailing ideology of government and its cronies for the past 80 years, and Obama is only one in a long line of destructive presidents, both Republican and Democrat.
(Source: libertarians)
"It’s not capitalism when the system is plagued with incomprehensible rules regarding mergers, acquisitions, and stock sales, along with wage controls, price controls, protectionism, corporate subsidies, international management of trade, complex and punishing corporate taxes, privileged government contracts to the military-industrial complex, and a foreign policy controlled by corporate interests and overseas investments. Add to this centralized federal mismanagement of farming, education, medicine, insurance, banking and welfare. This is not capitalism!
To condemn free-market capitalism because of anything going on today makes no sense. There is no evidence that capitalism exists today. We are deeply involved in an interventionist-planned economy that allows major benefits to accrue to the politically connected of both political spectrums. One may condemn the fraud and the current system, but it must be called by its proper names – Keynesian inflationism, interventionism, and corporatism."
-Ron Paul
This can never be posted enough, especially these days, with everyone blaming capitalism for the greed of corporations.
(via haereticum)
1. Don’t think Krugman or Keynesian economists support war for the sake of benefitting the economy. This misconception stems from the analysis that WWII, a time of total war and production for war, this led to high levels of employment and helped bring an end to the depression.
I guess I should say thanks for giving me the opportunity to back these up? Cheers. Most of the sources here directly link to ones that contain the requested material. Two birds with one stone. Enjoy.
Keynesian economists and Krugman actually do support the broken window fallacy.
- Krugman’s war fantasies by William Anderson
- Does Capitalism Require War? by D.W. MacKenzie (commentary on Krugman throughout)
- Posted by Lew Rockwell on June 5, 2011
Writes Andrew Penn Fitzgerald:
Actual quote from Krugman on ‘This Week’ this morning: “If we had the threat of war, had a military buildup, you’d be amazed at how fast this economy would recover.”
And here I thought that we were currently waging offensive war in at least four countries with troops in more than 150 foreign countries and currently spend more on our military than every other country in the world combined. Clearly we just need to do more in the militarist direction (similar to Krugman’s other advice that we throw more money down the bailout hole to make it work).”
- A compulsory draft is AMAZING at reducing “unemployment”, you know - forcing people to join the army and get shipped off to die in war does wonders for reducing the % of employable people.
- Check out Robert Higgs lectures; totally demolishes the myth that the war ended the depression.
- Disastrous Economic Fallacies - Terror as Stimulus? [2min video] *Another Krugman quote.
2. Even if you pay people for seemingly menial or unimportant tasks, the people working these jobs generally will either have been unemployed or have a low enough income that they spend what they make, thus one accomplishes both putting people back to work and increasing personal consumption/spending levels.
- Public Works Mean Taxes - Economics in One Lesson, Henry Hazlitt.
- Fetish of Full Employment - Economics in One Lesson, Henry Hazlitt.
3. Find me an article where Krugman supports a housing bubble, or any bubble for that matter.
It’d be my absolute pleasure.
- Krugman Did Cause the Housing Bubble by Mark Thornton
- Krugman’s Intellectual Waterloo by Daniel James Sanchez
Last Monday evening, Lew Rockwell, from a tip by someone named “Travis,” posted this damning quote of Paul Krugman’s from a 2002 New York Times editorial:
”To fight this recession the Fed needs…soaring household spending to offset moribund business investment. [So] Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”Krugman. 2002. Calling for a housing bubble.
4. “Debt” isn’t killing the economy. And “debt” isn’t the only problem. More like, “Unemployment stagnating economic growth? Spending will fix that”.
- “The annual government deficit, plus the annual interest payment that keeps rising as the total debt accumulates, increasingly channels scarce and precious private savings into wasteful government boondoggles, which “crowd out” productive investments. Establishment economists, including Reaganomists, cleverly fudge the issue by arbitrarily labeling virtually all government spending as “investments,” making it sound as if everything is fine and dandy because savings are being productively “invested.” In reality, however, government spending only qualifies as “investment” in an Orwellian sense; government actually spends on behalf of the “consumer goods” and desires of bureaucrats, politicians, and their dependent client groups. Government spending, therefore, rather than being “investment,” is consumer spending of a peculiarly wasteful and unproductive sort, since it is indulged not by producers but by a parasitic class that is living off, and increasingly weakening, the productive private sector.” ~ Repudiating the National Debt, Murray N. Rothbard
5. Again, I’d ask when Krugman ever advocated that, and would also say there are times when either inflation or deflation are ways to correct economic fluctuations.
- Krugman Strikes Again by Peter Schiff
”In today’s column, Krugman analyzes the Greek debt crisis, arguing that the best solution for Athens would be to simply inflate away its debt burden with printing-press money. Krugman laments that this sensible option is being foreclosed by the monetary priggishness of the German heavyweights in the European Union, who are “foolishly” seeking to prevent inflation and impose fiscal discipline.” ~ April 12, 2010.- Inflation and Deflation, Human Action by Ludwig von Mises
6. This one doesn’t really make an argument, but rather seems to assert that your own belief is we are spending too much.
More a fact that I accept, as opposed to a ‘belief’ which requires faith.
7. This actually would be more beneficial to the economy, as anyone who has taken even one economics course knows that consumer spending is an essential part of any economy and yet human behavior is irrational in that when the economy slows instead of spending and pumping money to help get businesses moving and people hired, the savings rate increases thus further exacerbating the problem in the first place. Those with more disposable income ought to spend it. Just saying.
Hate to burst your bubble [pun intended ;D], but that ‘economics’ course you took - whilst being an appeal to authority fallacy - was also a waste of time & money. Don’t worry, I was also forced to sit through them aswell.
- Consumers Don’t Cause Depression by Robert P. Murphy
“There’s one saving grace about Paul Krugman’s column at the New York Times: when an Austrian economist wants to explain how mainstream economics leads to ruin, he can always trust Krugman to set up the target in a clear, concise manner. This saves us a lot of work, because we don’t have to first build up the position before knocking it down.”Long story short, I get this is supposed to be a joke, or “meme” but with little backing and sense to these particular ones I don’t think this is anything more than partisan mockery of legitimate challenges to your own economic viewpoints.
A long story short… “It’s funny because it’s true.”
This is delicious
Applauds. Great read.
