The acclaimed economic historian Price Fishback has this very useful discussion, at Freakonomics, on the extent to which Keynesian stimulus played a role in helping the economy during the 1930s and during World War II.
(HT Bob Higgs)
Keynesian Stimulus, the 1930s, and WWII
Previous post: Parliament of Ho, Ho, Hoes!
Next post: Hazlett on telecom
Podcast RSS Feed
Full EconTalk Text
{ 50 comments }
Says a lot about the massive economic sacrifices — tons of productivity with no reward in sight — that the public had to endure to get out of the depression: namely, World War II.
Today's soft, egalitarian useful idiots would rather be shackled and imprisoned than sacrifice their entitlements. So don't be surprised to see that happen next.
There aren't enough Americans left to stop it.
The myth exists, it won't be corrected, and such efforts will always be poohed poohed by all, and given "in the obit-page" coverage by the MSM, for the simple reason that you will not be allowed to sully in the least or cast any tiny doubt on the socialist St. Franklin of Roosevelt's status as the saviour of the world.
To even suggest that socialist policies did not save the world marks you as a heretic.
Coincidence but I just went to thre Houston Chronicle website to look up an item of interest and came across this:
Obama seeks support for plan to create 2.5 million new jobs……guess how?
http://www.chron.com/disp/story.mpl/front/6126786.html
Actually, vidyohs, to argue that Roosevelt's policies were harmful, mislabel them "socialist," and tar them all with the same brush marks you as a "useful casuist" – someone for speedy promotion and independent funding by folks with money.
Vidyohs – took a look at the article in the Houston Chron – what a powerful and exciting way to exacerbate the problem.
Patching up an unviable system is bad enough, patching it up using the methods that put holes in it in the first place seems slightly surreal.
T.L.,
Label me anything you like, I long ago learned that what the enemy calls me is relevant only to the enemy.
Matthew,
I couldn't agree more, that is why I thought the timing of the article ironic considering the topic of this thread.
Yee haw! Here we go cowboys, more of what doesn't work in the first place!
Matthew, the thought just struck me that the socialist work programs of St. Franklin of Roosevelt and now those proposed by Obama seem a lot like handing a drowning man an uninflated life vest. Getting a life vest seems like an exciting idea to a drowning man, but in those circumstances in the long run it only hurts. The only real excitement comes from the proposal, the results are quite different.
Hey, Howl-a-day,
I had a follow-up to your toxic paper assertion. Can a brother get an answer?
vidyohs, I think your metaphor is appropriate – reminds me of something I was thinking of earlier – that using a government to fix an economy is like trying to use an assault rifle to heal somebody dying of bullet wounds – powerful tool; wrong application.
Now if you want to find new and perverse ways to spend all of your money then sure, a bigger, better government is definately the way to go!
LowcountryJowls,
Read, comprehend, post.
vidyohs,
Because someone believes that your public policy preferences are misordered does not make him your enemy.
But, TL,
Everything you ever posted to this blog, every idea you have expressed, every argument you have made, has all gone in support of the theives.
Theives are my mortal enemy, therefore as a supporter of theives, if not an outright thief yourself, you are my enemy and I am not, nor ever will be, fooled by the words of the evangelical socialist (theif).
Socialism is just like arsenic, a little won't kill you, but once taken it can't be expelled by the body. So, the next small dose of arsenic will simply add to the sickness caused by the first. Every little dose of arsenic adds to the total and the total will kill you eventually. Socialism does exactly the same thing to nations that arsenic does to the body and in exactly the same way.
Why should there be any argument about this post. Any serious (or like me very amateur) observer knows the Keynes was a fool….or rather his theories on government spending making the "world go 'round" are foolish.
Keynes never says anything about government spending making the world go 'round, and the linked article actually says that the New Deal was not a Keynesian "stimulus", so I wonder if you read it.
Read, comprehend, post.
Did. Did [at least from what I read I did]. And, am. I even went to the 5-page .pdf document. Funny thing happened; it explained nothing about the crappola that you tried to foist upon us in that other thread. If what you wrote in that other thread is legitimate — and I suspect that it's not — then please walk me through how it works using the numbers and instances that you wrote of. If, however, you were just pulling stuff from deep, dark crevices from your backside, then just admit to it now and save yourself from further embarrasment.
"We'll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children, and building wind farms and solar panels," Obama said.
By their (the unemployed) choice or by the gentle nudging by Uncle Sam?
How are the unemployed sorted? That is, what subset(s) of the unemployed are best suited for the needs identified by Uncle Sam?
Does one go from unemployment to employment overnight? If not, what training is involved to get the unemployed back on their feet?
I'll assume that these are public sector positions. Who pays the salaries of these people?
If these salaries are to be paid through taxes, are not the taxed body deprived of funds that they may otherwise spend on different goods and services?
Within the same discipline, what impact does the creation of public sector jobs have on private sector jobs?
Today Obama promises a new "new deal" to "create or save" 2.5 jobs.
This means that as long as the US economy will have 2.5 millions workers it will be mission accomplish.
LowcountryJowls,
(a) Show that you have read and comprehended by stating what the expected cashflows are on an ordinary fixed-rate US-style mortgage. Since the cashflows are path-dependent, use at least two interest rate scenarios, one of which would be have a high probability of a refinancing event.
(b) Now modify the cashflows to show what happens in the event of a foreclosure and sale at auction of the mortgaged asset at less than the remaining principle of the mortgage.
(c) Using your results from (a) and (b), state the expected cashflows and payoff conditions for a credit derivitive which would be a synthetic equivalent to this mortgage.
Using your results from (c), note that one counterparty is entitled to receive small periodic payments with the downside risk of making a large one, and the other counterparty is obliged to make small periodic payments with the upside risk of receiving a large one. Note that this structure is superficially similar to an insurance policy or to "right" and "wrong" betting on craps, but differs because both parties are obligated to continue the relationship until the mortgage is extinguished.
The right to receive periodic payments is an asset. The obligation to make a payment is a liability. Is a security which under some scenarios will entitle the holder to receive regular payments but under other scenarios will require the holder to make a payment an asset, or a liability? What would you pay for the right to receive $1 per day for one year, except any day the TED spread is more than 250 basis points you must pay $3? Is that an asset, or a liability? If someone offered to put that deal up as collateral for a loan, how much would you be willing to lend? Do you see that it depends on the exact terms and the outcome of uncertain events, and that an overlooked detail may turn out to be significant?
vidyohs,
Arsenic.
TL,
The info in your link is not unknown to me and doesn't change a thing about what said. In small doses it won't kill you but the build-up will eventually.
In the case of arsenic use in medicines there is no resemblence to use of arsenic as a poison. Socialism is as poisonus as arsenic and the mechanism is of causing eventual death by poisoning through a slow build-up until it kills.
Unlike a doctor administering medicine, who has control of the doses, and who will cease using it at the first sign that it has done its job; those who cause the poison of socialism begin with just that little bit which sickens, and then in solution to the problem of the sickness they inject a little more socialism which causes even more sickness, to which the cure is an injection of even more socialism, etc. until the society collapses in on itself…..leaving the socialist moaning the fact that maybe they should have injected larger doses more frequently.
T L Holaday,
I brought the conversation back to the thread where it was started. I couldn't answer all of your questions. I'd hope that you will continue my education on this topic anyhow.
Price Fishback is an awesome name to have for an economist.
To me the similarities are straightforward:
During the New Deal, there was a mismash of Government spending and taxes and the rules were uncertain. Uncertainty of the magnitude created by FDR and his "brain trust" together with the interruptions in international trade (elevated tariffs, etc.) led to something akin to (but not) a liquidity trap. What was the point of investing when the tables were being turned regularly by government?
Currently we have a similar (not identical) set of circumstances. There is tremendous uncertainty created by Obama's election. If he uses FDR as a model and experiments with the economy (as he said on 60 minutes) not really knowing what will work, we are looking at years of uncertainty with government turning the tables unpredictably. Uncertainty of this nature will roil US investment, but barring huge trade restriction, this will lead to capital flight out of the US (an option not nearly as available during the Depression).
By the way, this fixation with "jobs" that politicians espouse indicates that they are either cads or fools. Wealth creation is not an automatic result of job creation, as anyone with half a wit knows: the former USSR had quite low "unemployment", but it now resides on the ash heap of history. So which is Obama, when he yaps that on his you tube address last week that his stimulus program is going to create 2 and a half million new jobs?
I didn't know any serious economists still believe in Keynesian stimuli.
The comments on the other blog are depressing.
indiana jim (Nov 23, 2008 10:36:45 PM) says:
"So which is Obama, when he yaps that on his you tube address last week that his stimulus program is going to create 2 and a half million new jobs?"
Has the incoming administration addressed, in detail, how these jobs will be created? I am sure they'll be public sector jobs.
Will these be Department of Transportation or Department of Housing and Urban Development jobs?
How many private sector jobs will be lost if public sector jobs are created?
One can see the potential benefit to this particular cohort of government based infrastructure workers: bridges, roads, nuclear power plants (oops, the next crew does not favor nuclear), solar, wind farms, etc…
The energy public sector becomes richer at the expense of other sectors.
If the idea is that private companies cannot do the job (private capital fails) and the public sector is needed to achieve these projects how are these public projects funded?
I see no other way to fund these projects either though indirect (borrowing) or direct taxation.
So, in a ironic twist private capital is funding these projects: it's our capital.
On a related point:
What happened with the funds appropriated for the 2005 Transportation bill? How was that money spent? Where is the transparency so the people that fund such projects (the taxpayer) can monitor their progress?
It is too often ignored in the current debate that John Maynard Keynes believed in the importance of international economic cooperation – of the coordination between major economies of their economic policies (e.g. fiscal/monetary stimulus) and ideally the creation of international economic institutions that created a framework in which countries could safely pursue policies for high employment (i.e. without risk of exchange crises, etc).
This is very evident from any close-up study of Keynes himself – such as the biographies of him by Roy Harrod, Robert Skidelsky, and Donald Moggridge – and by such works as Donald Markwell’s “John Maynard Keynes and International Relations”.
Keynes wanted FDR to provide interantioanl leadership on economic matters. This is something that the world economy needs today from the US – and which it is in the interests of the US itself to provide, given the dependence of its economy on that of the wider world.
FDR, of course, both presided over a strongly pro-free trade administration, and during World War 2 helped provide leadership – in partnership with the British, with Keynesian ideas in central place – in the creation of international institutions for international economic coperation.
Take a deep breath. Here's Obama at the "Bi-Partisan Governors Global Climate Summit".
"That will start with a federal cap and trade system. We will establish strong annual targets that set us on a course to reduce emissions to their 1990 levels by 2020 and reduce them an additional 80% by 2050."
Keep holding that breath. Breathing out now requires a permit, and you must buy the permit from your established competitors while everyone collectively breaths out 25% less. This "target" is laughably incredible, but the havoc it would wreak on the U.S. economy is not funny.
"Further, we will invest $15 billion each year to catalyze private sector efforts to build a clean energy future. We will invest in solar power, wind power, and next generation biofuels. We will tap nuclear power, while making sure it's safe. And we will develop clean coal technologies.
"This investment will not only help us reduce our dependence on foreign oil, making the United States more secure. And it will not only help us bring about a clean energy future, saving our planet. It will also help us transform our industries and steer our country out of this economic crisis by generating five million new green jobs that pay well and can't be outsourced."
So here's our "Keynesian stimulus" for alternative energy development. $15 billion/year will buy us five million new jobs that can't be outsourced. Who knew that Obama could make a $3000 job "pay well"?
I've got news for you. Cutting carbon emissions to 1990 levels will cost a lot more than $15 billion/year.
Keynsian stimuli as explained in almost all textbooks is orthogonal to the ultimate microeconomic stimuli of seeing resources allocated to their highest valuing users. The reason is that the aggregated government variables in the macro models G, T, etc. make no distinctions between different types of, for example, G and T. Following Osama's attack on the United States, the defense portion of G grew. Much of this was socially productive, but lots of other aspects of G grew that allocated resources AWAY from highest valuing users (e.g., various and sundry Congressional pork unvetoed by President George Dry-pen Bush).
The proposal of Obama to "lower taxes for 95% of the American people" would have to be considered by a Keynesian as a reduction in T. But any self-respecting micro economic would have to rhetorically ask, for starters, whether introducing further progression into the tax system would be lead resources to be allocated toward or away from highest valuing users.
G and T in the Keynesian model are blunt instruments; using them on the economy is like doing brain surgery solely using a pliers and a chain saw. It ain't pretty Sherlock!
I suppose an actual "Keynesian stimulus", as advocated by Keynes himself, would only employ idle resources, so it wouldn't reallocate any resources from lower to higher valuing users or vice versa.
The "stimulus packages" of late, that simply hand money to consumers to spend, are not "Keynesian" at all, since Keynes explicitly opposed them. They're more like Friedman's idea. Helicopter Bernanke got the idea from Friedman, not from Keynes.
If Obama managed to employ persistently idle resources building roads or Wind Farms or something, that would be a Keynesian stimulus, assuming that the resources are persistently idle because of a liquidity trap, i.e. a widespread unwillingness of established investors to leverage.
Obama's "investments" are no more likely to profit than the next man's, but since the resources are idle anyway, who cares? If only a few of Obama's seeds bear fruit, these ventures might then grow to attract resources away from the others, as you want. We don't want to make permanent state employees of idle resources, regardless of any profitable organization, but Keynes never proposed such a thing as far as I know.
How do you know this portion was "socially productive"? I suppose it was extremely destructive. What do bombs "produce" exactly? I thought they destroyed things.
Question; What is the difference between a Keynesian stimulus and just not transferring money from the productive sector to the political sector in the first place? That is, isn't the idea of a "Keynesian stimulus" just a form of propaganda used when the government realizes that it has gone too far and decides it needs to give a refund?
In practice, I suppose it is, but according to Keynes, it isn't. A widespread tax rebate is not a Keynesian stimulus at all. "Keynesian" is a generic political ad hominem in our political sect these days, but Keynes himself explicitly states that simply providing cash for consumption is counterproductive. The "stimulus" we received earlier this year was not remotely Keynesian. I doubt that the TARP provided much Keynesian stimulus either. Apparently, that cash is paying dividends to existing bank shareholders and financing the purchase of existing banks by other existing banks. Keynes rolls in his grave when we attribute this stuff to him.
Minor quibble, but I don't think that FDR was a socialist – he did not want government ownership of all industries. He was closer to a fascist – massive centralized power, government control (not ownership) of industry, and, seemingly, a will to serve as president until he was dead. Why else run in 1944 when he knew he was almost dead?
Martin wrote: "I suppose it [increased defense expenditures following 9/11) was extremely destructive. What do bombs "produce" exactly? I thought they destroyed things."
Yes bombs destroy things, and you seem not to understand that the very freedom of speech that you are enjoying on this blog is not free. Similarly private property preserved via the expenditure of resources on security measures and the credible threat of violence in protection of it.
Simply put Martin, we do not live in Edward Hicks's Peacable Kingdom (e.g., http://www2.gol.com/users/quakers/Hicks_Peaceable_Kingdom.htm). The lion and the lamb do not lay down together. Thomas Jefferson had it right: "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants."
From the article that Don suggested we read (my emphasis):
"Federal spending rose from 4 percent to 8 percent of G.D.P. during the New Deal in the largest peacetime expansion in federal outlays in U.S. history. Yet this was not an example of Keynesian stimulus to the economy. Economists and economic historians have known this for the past 70 years, yet the myth lives on."
and
"… the New Deal cannot be described as a Keynesian stimulus program. We can only hope that the word will finally spread widely enough now to correct the myth."
Earlier this year, I suggested a "reemployment" program. An employer in the for profit sector receives a refundable tax credit covering most of the cost of employing an idle resource for a year. At the end of this time, or maybe over the course of another year, the employer loses the credit. The employer then either terminates the employee or proceeds happily with the profitable relationship, possibly after renegotiating the employee's compensation.
An employee terminated early many times in a row under this program might be subject to criminal prosecution of some kind, since this pattern could indicate fraud.
With proper provisos, this sort of program, financed by state deficits (or simply printing money), would be "Keynesian", although when Keynes wrote, more centralized programs were in vogue.
No. My freedom of speech is free. Apparently, you owe yours to armed men, but I don't. Mine doesn't cost anyone anything. Only the armed men trying to shut me up are costly.
"The President is a terrible menace. Let's assassinate him."
Now, I'd like you to tell me, specifically, what cost this speech imposes on you?
That's true. I favor particular forcible proprieties that you're free to discuss with me. I'm not an anarchist.
But you haven't addressed my question at all. I wasn't addressing "security measures and credible threats of violence" in general. We weren't discussing the wages of cops patrolling my neighborhood for petty thieves. I addressed specific, costly measures imposed by a specific state at a specific time, like TSA agents searching my carry on bag for toothpaste, not to mention the incredibly costly occupation of Iraq. How do you know that these specific costs were "socially productive"? That's the question I posed. You're still free to address it.
Martin,
"…according to Keynes, it isn't."
I suppose. But Keynes believed that government services have value. I don't. To me, money spent on "infrastructure" is just money passed indirectly back to the productive economy via patronage schemes. It would be faster and more efficient to just give it directly back to the people it was taken from – and therefore "Keynesian stimulus" is just a rationalization for patronage.
But Keynes believed that government services have value.
They MAY have value, but the value is cannot be determined unless the service is severed from its monopoly provision and appears in the marketplace where choice by customers determines the value.
Highways, for example. It is frequently claimed that government builds roads.
The reality is that roads are built by contractors who know the value of a government contract when they get one.
How much do highways really cost us?
Who knows?
How much should they cost us?
Who knows?
See, this blog never used to post without info entry, it would always go to preview.
So that's how my posts appear without my name.
Martin asks "How do you know that these specific costs [defense expenditures post 9/11] were "socially productive"? That's the question I posed. You're still free to address it."
You altered my meaning by omission of the sentence I posted: this is disingenuous of you Martin; shame on you! I did not say that ALL was "socially productive" but rather "much of" the added G for defense was. Then you slip in "TSA agents searching my carry on bag for toothpaste"; cute! My basis for saying that "much of" the increase in defense has been socially productive is that the barbarians have been "kept at the gate". Seen any sky scrapers downed in the US lately? No; didn't think so. If you, as an "anarchist", place a low value on US national security, then our assessments will naturally be quite different. Again, I think Jefferson had it right (notwithstanding your claim that freedom of speech is free): "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants."
Sorry Jim,
Seen any sky scrapers downed in the US lately? No; didn't think so.
This argument doesn't carry any water. Correlation is not causation.
Violating a cardinal rule.
I am not an anarchist (at least not yet) and I can honestly say that I feel LESS safe with the TSA groping me and with troops over in Iraq trying to "build" a democracy. Which is one of the most patently absurd things I've ever seen.
I do like a national defense, I like a strong one. I like one that is … NATIONAL DEFENSE not "nation builders".
Actually, you changed the subject to free speech and private property rights. The record is pretty clear.
Slipped in? You specifically raise post-9/11 "security" expenditures, and the TSA is "slipped in" while free speech and private property rights are not slipped in? I can't take you seriously.
You have no reason to conclude that anyone has been kept at any gate. Nearly a decade elapsed between the first WTC bombing and 9/11, and we didn't spend trillions occupying Iraq in the meantime. If we had spent a tiny fraction of these trillions on the perpetually Orwellian "war on terror", why should I believe that any more barbarians would have crossed the mote? I rather suppose that we've spent the last six years generating a lot more would be terrorists.
It's irrelevant. I haven't seen any frogs fall from the sky either. Has occupying Iraq protected me from falling frogs? How about invading hordes of Bigfoot? Do I thank the Iraqi occupiers for the absence of that calamity too?
For that matter, how about Baathists? Baathists didn't commit 9/11 anyway. They were more inclined to hang Islamists or rain toxic chemicals on them. Should I be thankful that Baathists haven't invaded the U.S. lately? That's my "benefit" from every military action, knowing that anyone we kill can't do me any harm, even if he never did me any harm in the first place?
Actually, I wrote, "I am not an anarchist." The words are still up there.
But I do place a low value of "U.S. National Security". I don't even know what the words mean. I know what "my security" means, and I can try to guess what "your security" means, but that's the extent of it. For all I know, you're an Islamist yourself and would prefer to live under a medieval Caliphate.
So the huge standing U.S. Army that Jefferson explicitly opposed is now his "patriots", and individual anarchists are his "tyrants". If I join the Army, do I get a jersey with a big P on the front? That's what Jefferson meant by "patriots"? I never knew. Thanks for clearing that up for me.
"Seen any sky scrapers downed in the US lately? No; didn't think so.
It's irrelevant."
It IS relevant to national security and obviously to national and worldwide wealth (by the way the markets reacted after 9/11).
How CAN you say it is "irrelevant"?
That skyscrapers don't fall is relevant to lots of things but not to the efficacy of occupying Iraq specifically, because you don't know that skyscrapers would have fallen if we hadn't occupied Iraq. The Chef is right. You confuse correlation with causation. By your reckoning, we can spend a trillion bucks on anything and claim that the expenditure stops another 9/11, as long as another 9/11 doesn't occur. Maybe Osama likes national health care, so let's withdraw from Iraq and spend a trillion on national health care, then we can credit national health care with preventing another 9/11.
Government has justifications (excuses) for everything it does. These always follow the format that if policy P had not been carried out then disaster D would surely have followed. There is seldom any real consideration of alternatives, and no consideration at all of non-government alternatives. The purpose of the justification is to make an authoritative declaration that the policies have value. But of course, with no consideration of non-government alternatives, there can be no assumption that there is value. Therefore the justifications are simple propaganda – an appeal to authority.
Which Friedman? Please explain.
You've made a case that deficit-financed handouts are not Keynesian stimuli, but it's not clear whether you think Keynesian stimuli could work in practice, even if implemented correctly. I have my doubts.
I don't understand your point about Keynesian stimuli not focusing on consumption. That's one of the main contention between Keynesian's and anti-Keynesians, such as Friedmanites and Austrians — anyone who has stuck it to Keynes for ignoring Say's law. You seem to imply that you understand Keynes better than they do. Given the intellectual rigor I have seen examples off in that camp, I again express my doubts.
Martin,
I was talking generally about all defense spending following 9/11 and you spin it into:
"That skyscrapers don't fall is relevant to lots of things but not to the efficacy of occupying Iraq specifically, because you don't know that skyscrapers would have fallen if we hadn't occupied Iraq."
Now to trying to make sense of what you are trying to argue sans spin:
We do not KNOW that increases in defense spending in the US following 9/11 precluded further attacks on homeland USA. It is possible that if we had just all sat in a circle and had sung Kumbaya (http://www.lyricsfreak.com/p/peter,+paul+&+mary/kumbaya_20107820.html) that Osama's heart would have been moved and he and his men would have all given themselves up for trial and execution. But I think that this is highly implausible; on the other hand, I think it is highly plausible that increased defense spending post 9/11 was, as I said before, "socially productive." Of course "correlation is not causation", so what? Isn't the point of discussion, argument and debates on blogs (such as this one) an exploration of the realm of relative plausibility?
that Osama's heart would have been moved and he and his men would have all given themselves up for trial and execution.
As though the money and lives spent HAVE accomplished that.
Remember, war is a government program.
The cost almost always outweighs the benefit.
Certainly we are all much safer now that we had to dispose of our in excess of 2 oz. of toothpaste to fly out of Jackson Hole.
Milton Friedman. Ben Bernanke's quip about "dropping money from a helicopter" to fight deflation is a reference to Friedman.
I only referred to the article that Don linked, which explicitly states that the New Deal specifically was not a Keynesian stimulus. Just any deficit financed handout is not Keynesian stimulus. This characterization of "Keynesian" is incredible. He never advocated such a thing. Friedman wasn't advocating a "helicopter drop" of money either. He was only using this illustration to argue that inflation is a monetary phenomenon.
It depends on what you mean by "work". A Keynesian stimulus assumes that resources are idle, not organized profitably, and that people will not borrow to bet on a potentially profitable organization of these resources. That's a "liquidity trap". Many resources lie around producing nothing, but investors will not organize the resources into a potentially profitable organization, because they perceive the risk as too great.
Maybe liquidity traps can't possibly exist in a laissez faire economy with a free money system. I'm not disputing that, and I'm not defending Keynes. I'm only discussing myths about Keynes that Don's article dispels.
Without lots of idle resources lying around, there is no liquidity trap, and simply paying people to busy themselves is not a Keynesian stimulus. Simply handing people money to spend on existing goods is not a Keynesian stimulus. Keynes was explicit on this point. The "stimulus package" we received in February was anything but "Keynesian". Calling it "Keynesian" misrepresents Keynes.
So if many resources are idle and investors cannot or for some reason will not borrow to organize these resources, Keynes proposes that statesmen do it by running deficits. The statesmen aren't supposed to drop cash from helicopters simply to provide spending money. They're supposed to organize idle resources, maybe to profit, maybe to create infrastructure conducive to profitable organization. Ideally, this organization of idle resources generates both demand and supply; otherwise, it doesn't stimulate growth.
Keynes says that demand is not automatically sufficient to employ idle resources. That's a far cry from saying that simply handing people money to buy the output of existing organizations will employ idle resources. I can't show you where Keynes doesn't advocate this position, but if he does advocate it, I ask you to show me.
But my point about the New Deal not being a Keynesian stimulus is just what Don's article explicitly says.
We could sit around and not sing Kumbaya, because the warmth of Osama's heart is irrelevant. He's still at large, you know, and capturing a few of his men didn't require spending trillions on an Iraqi invasion. We might have caught more by spending a tiny fraction of this sum otherwise. We'll never know now.
Well, you can call anything you like "socially productive", of course. So can Barack Obama. It's child's play.
Several years ago, I did a calculation for another forum. For the cost of the Iraqi occupation (back then), we could post one highway patrolman along the interstate highway system every one hundred yards. Drunk driving kills or injures tens of thousands of people every year, so maybe over a few years, we might save 3000 people from terrible injury or death this way, not to mention billions in property damage.
On the other hand, if I believe you, without the slightest justification, we prevented another 9/11 by occupying Afghanistan and Iraq and the rest, at a far greater cost in financial terms alone, but in the process, we also sacrificed far more than 3000 American lives, not to mention the tens of thousands of Americans disabled, never mind any Iraqi and Afghan dead and injured.
But if that's your idea of "social productivity", so be it.
I like at least a pretense of plausible cause and effect, and I don't see how changing the regime in a secular state (albeit a fascist state) that was a bitter enemy of Islamists has this effect.
I rather suppose the Bush policy does just what Bush says it does. It draws Islamist fanatics like flies to kill and injure many more thousands of Americans and destroy far more American property than Osama managed to kill, injure and destroy on 9/11, simply because we made them more convenient targets.
Didn't we? Isn't that what actually happened?
"Didn't we? Isn't that what actually happened?"
No; and no.
". . . if I believe you, without the slightest justification, we prevented another 9/11 by occupying Afghanistan and Iraq and the rest, at a far greater cost in financial terms alone, but in the process, we also sacrificed far more than 3000 American lives, not to mention the tens of thousands of Americans disabled, never mind any Iraqi and Afghan dead and injured.
But if that's your idea of "social productivity", so be it."
Martin, you keep arguing just about Iraq, as though that was my argument; I understand your desire to persuade, but persuasion requires honesty sans spin. Again, for the 3rd time, I argued that the increased defense spending post 9/11 OVERALL was socially productive. If the only thing that the increase had gone to was Iraq, then your discussions above would persuade. They fail immediately because you keep spinning a broad statement into a straw-man-subset. This approach will only persuade those who have not understood or read my original plausible statements. If your goal is to persuade those who are too lazy (or whose opportunity costs it too high) to read the whole thread, then your technique is rational. Still, I hope you aren't kidding yourself into thinking you are doing anything else other than spinning straw men.
Denial doesn't change the reality. Many thousands of Americans have died, and tens of thousands have been injured, and trillions of tax dollars have been spent, as a matter of fact. This much we know. We don't know that the deaths, injuries and tax dollars prevented another 9/11.
You defended military spending post-9/11 generally. If you want to be more specific, you can do that.
So your assertion of some benefit "OVERALL", without asserting any specific benefit or even defending the largest part of the spending by far, is honesty sans spin? I can't take you seriously.
I have no illusions of persuading you of anything. I try to construct true statements, persuasive or otherwise. Falsehoods can be just as persuasive as truths. I'm not a politician.
"OVERALL" covers a lot of territory. It's a political weasel word.
The cost of Iraqi occupation overwhelmingly dominates incremental defense spending post-9/11, so what could "OVERALL" possibly mean here?
The broad statement is yours. It's not a straw man. If you want now to assert a narrower claim, you can do that. I also discussed the TSA earlier. Precisely, what are you calling "socially productive", the colored "threat levels"? Duck and cover drills?
There is nothing more specific in your posts, regarding the social productivity of post-9/11 defense spending, for others to read. What do you mean? If you want me to respond to a narrow assertion, you must state one.
I know I'm not, because I haven't attributed any proposition to you that you haven't asserted. I have no way of knowing what you mean by "post-9/11 defense spending OVERALL" unless you tell me. Failing to read your mind doesn't make me guilty of constructing a straw man.