World War II Was Not the Quintessential Keynesian Miracle
by Robert HiggsSomeone must have imagined that my hopes for improved economic understanding might be excessively optimistic and thus needed to be curbed to restore my normal emotional balance, because that person undertook to smash any such hopes to dust by e-mailing me a link to a Huffington Post article by Paul Abrams, “Economically, World War II Was Stimulus on Steroids.” This screed turns out to be an ostensible macroeconomics lesson composed in equal measure of economic foolishness, historical ignorance, and ideological tendentiousness — the veritable epitome of a worse-than-worthless contribution to public enlightenment.
The opening paragraphs indicate the direction of Abrams’s argument:
The next time someone argues that the New Deal failed, and only the Second World War ended the Depression, as ‘proof’ that government spending does not work, one can respond with the details of economic growth and unemployment reduction up to 1940, or one can ignore the claim and thank them for making your case for massive government spending in a deep, broad recession.
Right wing politicians are loathe to credit the New Deal with any success in hoisting the United States out of the Great Depression, but credit World War II for that achievement, believing that that somehow disproves Keynesian economic theory.
That claim, however, undermines their entire premise.
Abrams concludes that “massive government spending at a time of severe economic downturn and dislocation can indeed get an economy humming again,” as World War II shows; the New Deal was merely too timid. He seems unaware that his argument merely restates the fallacy-ridden hodge-podge of conventional wisdom about how World War II “got the economy out of the Depression” that has dominated the thinking of economists, historians, and the public ever since the war itself.
When I began to teach U.S. economic history at the University of Washington in the late 1960s, I quickly realized that this tale of the wartime “Keynesian miracle” could not withstand critical scrutiny once one went beyond the barest account of it in terms of the elementary Keynesian model and the standard government macro measures, such as GDP, the consumer price index, and the rate of civilian unemployment.
Almost immediately I saw that unemployment had disappeared during the war not because of the beautiful workings of a Keynesian multiplier, but entirely because about 20 percent of the labor force was forced, directly or indirectly, into the armed forces and a comparable number of employees set to work in factories, shipyards, and other facilities turning out war-related “goods” the government purchased only after forcing the public to pay for them sooner (via wartime taxes and inflation) or later (via repayment of wartime borrowing).
Thus, the great wartime “boom” consisted entirely of (1) some people’s mass engagement in wreaking death and destruction and (2) other people’s employment in producing supplies for these warriors after the government’s military labor drain, turning out “goods” never valued by consumers or private producers in voluntary transactions, but rather ordered by government functionaries and priced completely arbitrarily in a command-and-control economy. In no sense was the alleged “wartime prosperity” comparable to real, normal prosperity. The pervasive regimentation, rationing, price controls, direct government resource allocations, and forbidden forms of production (e.g., civilian automobiles) should have served as a tip-off.
After teaching my own students along these lines for many years, I eventually began to write articles and books pulling together my various studies. The most coherent of these books is my Depression, War, and Cold War, published originally by Oxford University Press in 2006. For all of the good I’ve done in correcting people’s understanding of what happened to the U.S. economy during World War and what lessons one might justifiably draw from that experience about, say, the scientific validity of the Keynesian model or its related fiscal-policy implications, I might just as well have held my breath and turned blue. Here we are in June 2011, and millions of Americans are being presented with the purest potion of economic misinformation one can imagine, an account in no way superior to those the young Keynesians were peddling so confidently in 1944, when I was born. Perhaps my mother ought to have strangled me in my crib, to spare me the bitter disappointment of seeing the research and writing I’ve carried out over more than forty years prove to have been completely in vain.
For the Paul Abrams’s of this world, of course, none of this makes the slightest difference. They are at pains not to understand how the economy actually works or to endorse policies that promote its greater productivity, but only to concoct a plausible rationale for the government’s taxing “the rich” more heavily and spending oodles of money on a laundry list of leftist idols — government “infrastructure,” green energy-conservation programs, high-speed rail, and the rest of the wasteful and economically foolish purposes that progressive politicians espouse to feather their own nests and enrich their cronies and political dependents at public expense. If they haven’t learned any sound economics by this time, chances are slim to none that they will ever learn any, but I cannot believe that they care about such learning, in any event. Politics is the name, plunder’s the game.
There’s a lesson here, besides the obvious one that public discourse consists overwhelmingly of ideological sound and fury, signifying nothing solidly connected to reality. For me, the main lesson is: mommas, don’t let your babies grow up to become economic historians. If you do, you only put them in line to have their hearts broken.
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72 Comments
"For me, the main lesson is: mommas, don’t let your babies grow up to become economic historians."
For me, the main lesson is: mommas, don't let your babies grow up to be democrats.
Come on, we both know dimocrats never grow up.
That's why they're dimocrats.
I'm all for going to War with and attacking all Muslim Nations to get the USA out of this new Great Depression.
Keeping said Nations after Islam is destroyed of course.
We are at War with Muslims, they (Muslims) started it, the USA should finish it.
As soon as I saw that the dude (Abrams) didn't know the difference between loath and loathe, I realized he was an idiot.
But the main point – all my life I've been taught that FDR and WWII got us out of the Great Depression. In my gut I knew that was wrong, but couldn't explain it. This article, in a few short paragraphs, gave me the "way to explain it" – the light bulb over my head is now at about 40W. Thank you!
Mr. Higgs, thanks for this wonderful post. During our current "debt ceiling" crisis, people on the left have been striving mightily to recussitate Keynesian theory, not only with the WWII angle, but also with Reagan as a tax increase guy. Both are, in essence extreme over-simplifications at best, and more realistically, flat out fiction.
If Keynesian economics worked as advertised, our economy would be soaring right now (6-8% per year or more), led by big spending states like NY and California. Most of Europe, Africa and South America (like Greece, Zimbabwe and Argentina) would have great economies, also, with little debt.
Reality says otherwise. Producing goods and services that people want is what works. Politicians throwing money around (Keynesian economics) just helps the lucky recipients, not the broad economy.
Gentle Readers,
Dear Prof. Higgs,
Thank you, Sir!
May I add: Quite true about the rationing and job market distortions! If you can find an ' old timer ' who lived during the War, they'll tell you it was a very strange economy. Housing & auto production ceased. Literally! War Plants were hiring & working 24/7, so there lots of jobs, and everyone had money, but everything from gasoline ( if you were lucky enough to have a car ) to food was rationed, so there was NOTHING TO BUY.
As a result, the Savings Rate was very high. The government sold War Bonds, which people bought out of patriotism and practicality – there were no goods to purchase.
Many people have fond memories of that period as a very large ' morale ' mobilization with dances, movie stars,
concerts, and other events were used to keep peoples spirits up. BIG HOLLYWOOD often references that mobilization.
But honestly, the ECONOMY STUNK! Bread was rationed, and there was no butter. If you had a car you couldn't get gas! People patched up their old clothes and furniture. Washed clothes by hand as you couldn't get a new washing machine or even parts to fix an old one! Couldn't get a place to live with the housing shortage – people literally lived in tents, box cars and chicken coops.
Money in your pocket and nothing to buy! People tolerated it because we had to win that war!
Sincerely,
John C Lepant Brighton CO
If it's pimped by a liberal or a Democrat as being "awesomely good for you!" ?
Be wary. Be wary wary careful.
You can give a Keynesian fish, but you can't teach him how to fish. You can lead a Keynesian to water, but you can't make him drink.
But let's always remember the sacrifice!
http://www.youtube.com/watch?v=X5lbNXNn3CI&fe...
To The Editor:
Response to Mr. XXXXXX Column:
The Great Depression did not end as a result of government largess; the Great Depression ended because the US went to war, and in so doing annihilated the enemies ability to produce goods, and thus wage war. By the wars end the only country with any manufacturing capacity was the good old USA. Admittedly, FDR’s policies might well have saved this nation from further erosion, but the birth of entitlement programs of that era, and those that followed, will in the next three decades combined with the interest on our debt, completely drain the productive resources of our nation. That is, our entire federal budget will be equal to those financial promises, and if the next forty-seven months of this administration are anything like the first one – those promises will buy me a cup of coffee, and a doughnut when I begin to rely on them.
As far as your apparent animus toward Republicans for trying to be, at long last, responsible with the funny money that is the American dollar; the toughest part of any fight is not deciding to do the right thing – it is doing it. Under Minority Whip Cantor the Republican party demonstrated that it is prepared to, at long last, stand for fiscal responsibility. Seven Democrats stood with Republicans on the last “stimulus” vote. While I do not have the responsibility of being director of any part of the Republican party; I am a registered Republican. My party provided the leadership, Abraham Lincoln, that preserved the Union and ended slavery. My party provided the leadership, Ronald W. Reagan, that pulled the United States, and the rest of the world out of the malaise of the 70’s. I’m proud of the Republican party and the spine it is showing against this self-destructive economic philosophy.
In so far as your assertion that the stimulus bill will create millions of jobs and provide for various forms of alternative energy. Sometimes when it snows I hire my teenage neighbor to shovel; my neighbor is a smart hardworking fellow, he once revealed he is saving it for college. Why? He wants to grow economically, maybe he will decide to sacrifice present wants for a matter of years and realize the goal of coming back to XXXXXXX and raise a family – as I have. That is real job creation; make work projects do not create communities, they destroy them. As for alternative energy, there is only one, nuclear power. At present not one reactor is under construction in the entire United States. All other forms of alternative energy even if we max them out – wind, solar, geothermal, and biomass – do not have the horsepower to do the job. Even if they did we cannot transport enough power from those areas that create it to those that will consume it.
The only way out of our current situation is to determine what is absolutely necessary and to use the organs of the federal government to fix the damage it caused, and take the rest, and throw it away. In doing that we will end the constant cycle that creates one crises after another. In doing this we will be able to rebuild our banks, our military, our communities, and fund restructured entitlement programs via a vibrant and growing economy. Building modern nuclear power plants, using that clean power to convert domestically produced coal to domestically produced liquid fuel; and continue to support applied science to research solar panel technology to shrink the cost of production, and increase its capacity to generate power and batteries to store it on cloudy days.
I did not live through the great depression, and I am sorry you had to – I did however, with the help of my older sister, survive a violent alcoholic mother who thought the world owed her something – she was right, but it wasn’t a roof, or a drink – and it certainly wasn’t something a five year old or an eight year old could deliver. There are “eight million stories in the naked city” mine is no worse nor any better than anyones – it is just different. I survived that abuse, I and you, will survive this abuse. Betting against America or an American(especially me) is always a bad bet; especially when our collective back is against a wall. We did it before and we will do it again, I have not a single doubt in my mind as to our ability to overcome this manufactured fiscal disaster or any other for that matter, real or imagined. We know that when we harness everyday wisdom, and apply it to seemingly complex situations we solve them. Since this Nation’s founding we have overcome every single challenge that has been placed in our way – we innovate, we compete, we overcome. And at times go to war to restore the peace or our liberty, and families all across America bear the raw cost of those battles – including mine.
In fact, I think this nightmare will be fertile ground for any politician, Democrat or Republican, to advocate for fiscal soundness, insurmountable national defense, restructured entitlement programs, and individual State control of the rest. Sir, politics ought not to be about who wins and who looses, or what party prevails, it ought to be about who can best articulate, and promote our shared values, and principles and in doing that lift all citizens up, not a few at the expense of the other. Remember, as President Reagan said, “If we lower our standards we lower the flag.” I say we put the shovels away and grab a bull dozer and a half track and get to work. I say we take our eyes off the politicians and put them back on the business leaders, the engineers, the scientists and the service members who preserve this great country, and all those men and women that make this country move everyday without so much as a thank you. This is where our attention should be, this is where our hope will turn to reality, this is where change will hone the granite that is the impenetrable American spirit.
Anyone who cannot see in the Keynsian program a naked expansion of the state at the expense of the individual is an obdurate fool or an ideological hack. There is nothing to recommend such an approach to economics unless you are politically connected to the flow of wealth that bureaucrats dispense. It is as if the Feudalism of the Dark Ages was reformulated to haunt us with it's oppression and injustice.
Keynes may have been honestly decieved by his own pedestrian economic reasoning, but those who followed him and promoted his theory had clear intentions to use governmental deficit spending as a means to expand the zero-sum game of theft that only force and fraud can create. The Great Lie is that this was something new, something different from the Statism of the Dark Ages: no, it was nothing more than Feudalism gussied up in pseudo-scientific garb.
Yes. An excellent point.
I remember reading that a UCLA study, yes that great conservative bastion, concluded the New Deal actually lengthened the depression by 7 years.
I hope that light bulb over your head is a CFL. Otherwise you will be sent to a retraining camp.
Remember, for the modern liberal, history began yesterday.
People tolerated it because we had to win that war!
And as I recall, America did so with pride, determination, and with honor rarely seen on the battle fields of human history.
What if you hold his head under the water?
I like Billy Beck's take on that one.
You can lead an idiot to knowledge, but you can't make him think.
Here is what Keynesian economists never could get.
You are wise to keep an eyeball on what the non-partisans at UCLA publish. Loyalty to Cardinal & Gold runs deep.
But the crosstown economic forecasters have been rock solid in the 20+ years I've been following them.
"For me, the main lesson is: mommas, don’t let your babies grow up to become economic historians."
Right now. Today. I'm just hoping they grow up knowing how to add and subtract for themselves. What also may help is if we get our jackass politicians to 'delearn' multiplication.
When did total failure and widespread carnage earn a multiplier?
"We know that when we harness everyday wisdom, and apply it to seemingly complex situations we solve them. Since this Nation’s founding we have overcome every single challenge that has been placed in our way – we innovate, we compete, we overcome."
unfortunately, we may have reached a tipping point where there are too many politicians & citizens who will stand by while others do the work, plotting how they will steal the fruits of those efforts. i hope i'm wrong, but it's not looking good…
Robert Higgs:
I also am an economist. I teach Keynesian theory but also Classical economists Hayek and Hazlitt. I would add one point to your argument. There was a tremendous transfer of wealth (gold and other assets) to the US by european nations as they purchased war items. This did help the US economy. So the lesson for today is: All we need to do is find nations willing to sacrifice their own wealth to improve our unemployment situation! (Yeah. Right)
Hey! It's just a 40!!! Don't tase me, bro!If it was a CFL it would still be warming up.
Those are good ideas, but unless you're prepared to obliterate them back to the stone ages, Islamic wars are never ending. The best and most simplistic explanation I could find to support your post is here:
Dhimmitude: History: Jihad
History of Jihad
"The relations of Muslims and non-Muslims were set in a context of a war: jihad. Its justification by Qur'anic verses and hadiths provides to jihad, the war against non-Muslims, a theological base. Jihad establishes a single pattern for relations between Muslims and non-Muslims and is central to their relationship. Jihad can be examined at three levels: its doctrine, its institutions, and its historical manifestations.
The ideology of jihad was conceived after Muhammad death. It encompasses a doctrine aiming at the Islamization of the world, supported by military institutions and tactics of war, all being considered as binding the Islamic community (umma). Jihad represents the Islamic worldview of war and peace, it constitutes a specialized domain of Islamic theology and law.
Jihad doctrine divides the peoples of the world into two irreconcilable groups: the dar al-Islam (the land of Islam) and the dar al-harb, (land of war) the non-Muslim world, destined to come under Islamic jurisdiction either by the peaceful conversion of its inhabitants, or by armed conflict. Jihad is the permanent state of war of the dar al-Islam against infidels until they submit to Islamic domination. Peace is accepted only temporarily according to circumstances. The institution of jihad regulates the conduct of war according to religious rules." –Bat Ye'or
Thumbs up on the link…
Viva Frédéric Bastiat and the parable of the broken window. Add, Maynard Keynes was a socialist, and socialists beget socialists.
If you had a car AND gasoline you couldn't get tires, as rubber was rationed.
I took an economics historian class, and let me tell ya, outside of Friedman and Smith (who are awesome as hell!), all other big named economists taught were socialists.
The only redeeming factor in that class was that when there was a mock debate between a team acting as marx and a team acting as Smith, and Friedman vs. keynes, the Smith and Friedman team royally spanked the living hell out of the marx and keynes team. Even with the professor trying to help the socialist team. And with the socialist team packed with college socialists.
Had a great grandparent who had the national guard thrown at him because he wanted to keep his bank open during Bank Day when FDR was president, and my grandfather only referred to FDR as "that man."
World War II Was Not the Quintessential Keynesian Miracle
No, it was the "quintessential" Keynesian outcome – War!
The "Great Depression" was a depression because (like today) our "masters" know what is good for us. Don't let individuals in the free market decide what the best allocation of resources is to be… Leave it all up to a committee of "wise men" (and their friends who stand to "profit").
No progress was made under Keynesian policies, and the result was radicalism and unrest that could only be sated by death and destruction…
Had America pursued a free market solution (absence of any governmental policy) it is possible that our own dynamic growth might have been enough to convince the politicians of the world that a second big war was unnecessary for their own survival.
Collectivism is DEATH! Keynesian "economics" is collectivism…
I look forward to a Muslim Free World.
FDR was a close family friend, i can't figure out if he was a globalist communist, or if he was undermining the oligarchy from within. there is a statue of him with a quote " they (who) seek to establish systems of government based on the regimentation of all human beings by a handful of individual rulers…. call this a new order. it is not new and it is not order" i know this, one of my family members was one of his best friends, and my family member hated communists and nazis. i think FDR fought the oligarchy from within, but I hate his social programs.
Ed's axiom. Conservative ideology is informed by the laws of economics. Progressive economic theory is informed by their ideology.
The war did not help us get out of the depression though I also thought it did from what I learned in "school". Wartime prosperity is Keynesian economics. Destroying is not economically productive. You could employ everyone to destroy and fight but that does not put food on the table.
Professor Higgs, who wrote this column, debunked that Keynesian fallacy. http://www.independent.org/newsroom/article.asp?i...
For the fun version in a music video format. See this http://www.youtube.com/watch?v=GTQnarzmTOc
The second war may have been necessary at the time (no sense arguing that point here) but it was caused by the actions taken by governments after WWI. The economic isolation imposed on Germany starved men, women, and children to a breaking point that paved way for a Hitler type person. It should have been avoided all together but governments did what was "best" for everyone by their policy interventions and restrictions on trade…
Ralph Raico has done some great work on that subject.
"The Blockade and Attempted Starvation of Germany" http://www.campaignforliberty.com/article.php?vie...
http://econ.as.nyu.edu/docs/IO/10125/Raico,_World...
I hope you're right. Because Islam have a continuing hell planned here on earth.
Could have distilled this post into something a little simpler: WW2 is not a pertinent example because 1) the nation's economy was dedicated to destruction on a mass scale – not something we would want to mimic; 2) the WW2 economy represented widescale national sacrifice that would not be sustainable as an indefinite condition (e.g. rationing, no auto sales, etc.); 3) the government played a heavy role via price controls, etc. and these would be undermined over time via a burgeoning black market (imagine a black market in an eBay society! Off the hook!). There you go. A moot argument given these three points.
Never mind the recovery from the Great Depression really started at the end of the war when a new government unwound all of FDR's nonsense. Alas, everything old is new again…
That book review is referring to the WARTIME blockading of Germany, which was a standard military tactic (and which the Germans tried to impose on Britain via submarine warfare). It is wholly irrelevant to postwar Germany and the rise of Hitler.
Wait. What? Now I finally get Libya.
Now I am depressed.
RAT biographers will never admit it, but WWII did bail out FDR from the longest and most deadliest depression's in history. Keynesian econ failed for FDR, and presently, isn't doing very well for Progressive Baracky either.
"Almost anything is easier to get into than out of." —Agnes Allen
Cash for clunkers had to be the most textbook example of it I can think. Pay people to scrap their old cars so that car manufacturers get more business, afterwards low income teenagers can't find a decently priced old car anymore.
Great link!
Here is another factor to consider: in response to German military build up several European nations found themselves woefully unprepared. The solution was to buy arms from America. France spent a huge amount, Great Britain spent its entire national reserves. American destroyers would dock around the British Empire and be loaded with gold bullion. At one point Roosevelt told Churchill to instruct every British married couple to hand in their gold wedding rings to be melted down and shipped to New York. Churchill declined.
Don't ignore the movement of worldwide funds when considering why WWII ended the depression.
Say did FDR create the Chicago Thugs!
First off it wasn't till after WW! that submarine's became an effective tool in war. This review is about WWI not WWII. Because a tactic is standard military procedure it does not make it rightly applicable under all conditions leading to war> I seriously doubt you read the piece. There was no war with Germany during the bulk of the blockade starving civilians. Read this entire researched paper then get back to us! Dispute the references to other supporting documents including government ones and Winston Churchill's own memoirs! It is not irrelevant (starvation blockade) it was a major factor that precipuitated the war when other smaller issues and lies from Churchill and Wilson were added to bring us into the war!
Here is Raico's Bio, what is yours? "Ralph Raico is professor of European history at Buffalo State College and a specialist on the history of liberty, the liberal tradition in Europe, and the relationship between war and the rise of the state. He is the recipient of the 2000 Gary G. Schlarbaum Prize for Lifetime Achievement in the Cause of Liberty. http://mises.org/books/great_wars_great_leaders_r... If you do not read the piece no more comment is necessary!
"all my life I've been taught that FDR and WWII got us out of the Great Depression. In my gut I knew that was wrong, but couldn't explain it"
I agree with you but where and how did this article explain it? Higgs says next to nothing in this article. It's crap. Obviously a Keynesian boom isn't a real boom.
"Thus, the great wartime “boom” consisted entirely of (1) some people’s mass engagement in wreaking death and destruction and (2) other people’s employment in producing supplies for these warriors after the government’s military labor drain, turning out “goods” never valued by consumers or private producers in voluntary transactions, but rather ordered by government functionaries and priced completely arbitrarily in a command-and-control economy."
No s*hit. No Keynesian would argue with that statement. That's a classic Keynesian boom. Does Higgs think that readers of this site actually confuse a Keynesian boom for a real boom? Was this article written for high school freshmen?
"In no sense was the alleged “wartime prosperity” comparable to real, normal prosperity"
Again, no s*hit! But did it pull us out of the depression? And if not, what did? Higgs, you are a joke. Answer the real questions.
"World War II Was Not the Quintessential Keynesian Miracle"
Yes, but why don't you write an article outlining the basic points as to why that's the case. This article has zero relevant information. Complete garbage. I can't even describe my frustration with this awful piece of journalism. Higgs, you d*****, this is crap and you know it.
Robert Higgs – You didn't labor in vain, the intellectual deck was stacked against you. As you are an economic historian as well as an economist you are certainly aware that Jean Baptiste Say destroyed the basis for monetary expansion as a means of fostering economic growth over two hundred years ago.
Say's Law, which says in essence that supply and demand are the same thing, showed that monetary manipulation could not possibly result in increased production. It could only route capital from productive areas of the economy to less productive areas. People don't buy and sell things for money, they trade what they produce for the product of other using money to simplify transactions through the price mechanism. Diddling the money supply redistributes wealth, it doesn't create any.
Keynes was accepted because he offered statists a rationale for what they were going to do anyway – steal goods and services by counterfeiting the currency. As long as people believed that government force could result in positive good then anyone who offered them a pseudo justification would be accepted.
Say knew monetary expansion would fail, von Mises knew it, Hayek knew it, even monetarists like Milton Friedman knew it, and you knew it. I'm not even an economist but I knew it too.
People laughed at Adam Smith's "invisible hand" that guided markets. They are now being spanked by the hand they thought didn't exist.
P.S. You wrote really fine article.
The Keynes vs. Hayak Rap pretty much says it all:
http://www.youtube.com/watch?v=d0nERTFo-Sk
Please do not forget that one of his closest associates was his wife Eleanor — a true commie. He was a true aristocrat, blue blooded, from on high, and worst of all, a politician first, everything else a distant next.
"Politics is the name, plunder’s the game."…note to self. Remember that phrase, always.
Good news Mr. Doakes. Southern Comp. Vogtle Nuke site.
Exactly. Not to mention all the potential use of those vehicles, down the drain. All the wealth used to create them in the first place, gone…..
This Paul Abhrams is a total fool in spewing his idea about the failed socialist ideas of FDR. The WAR brought us out of the depression, not FDR.
What he forgets is 400,000 dead Americans in that war and the deprivation of the citizens during the war. Rationing was severe. Any one who lived in that era knew what it was to be without food and without transportation. Innovation died until the end of the war and any new innovation was directed at war and killing an enemy, not creature comforts we all now demand free from obama and his tax cheats, socialists, marxists and communists in his cadre of support.
If Americans were put into those kind of total government control over what they did, ate, traveled, and told where to work and for how much (wage controls), the people would rebel. We had a national purpose at that time and it had nothing to do with partisan democrats, and ALL Americans pitched in either voluntarily or forced by government control of all aspects of American life at that time.
The "gimme' crowd is destroying this nation and the democrats who continue to support this vote buying scheme of the unintelligent and lazy of the once proud American citizen is driving us into third world status and bankruptcy.
The real question then is this the grand plan of a marxist president or merely a poorly thought out mistake of judgment?
or as someone* once put it when asked what can we do to peacefully co-exist with islam? "As far as they're concerned, we can pack up and move to new planet."
*an author, whose name escapes me, who wrote a book a book about radical islam about 10 yrs ago.
and due to the ridiculous scrap rules (only intact cars qualified for reimbursement- no 'parting out'), it also wreaked havoc on the used parts biz, too, making it more difficult to keep old cars on the road. btw- this was not an application of the Law of Unintended Consequences. they deliberately did everything they could to force people out of older cars and into new, UNION-MADE, cars. if they thought they could get away with restricting the program to ONLY GM & Chrysler, they would have. in actual practice, most folks bought anything but.
yes, this was the Broken Window Fallacy writ large. what's next? actually paying people to go around breaking single pane windows so they must be replaced with new energy efficient models???
those are excellent points. i've often tried to explain to people that "money" is (or at least should be) nothing more than an abstract convenience for keeping track of the value of actual goods & services. the trouble began when governments and institutions started treating money as a good/service in and of itself. some of this is both unavoidable and desirable- i.e. banks essentially 'renting' the use of other's idle money (which they are in turn renting- with interest- from its owners) when making loans- but it has gone far beyond those useful bounds.
Am I to understand that the scrapped cars weren't even used for parts? I actually didn't even know that part.
After look it up I see that the put silicate ions instead of oil through all engines, sickening.
Not exactly mentioned in the article is an important fact: for the US, WWII lasted less than four years. The American people put up with conscription and rationing and censorship and military tribunals, high taxes and coerced purchases of war bonds, because the situation was desperate and the goal was total victory.
We are at war with Islamo-fascism, since at least 1979 and by some accounts since 1967. But there is no willingness at all to win this war. It will take another attack, a bigger attack, and even then I fear that too many people will still argue that we should try to understand our enemies, instead of killing them as quickly and efficiently as possible.
Am I to understand that the scrapped cars weren't even used for parts?
yep. it was purely an exercise in deliberate waste of resources to prop up the unions, who prop up the democrats. in other words, money laundering.
Dear EdSki,
You must have a garage full of Kewpie Dolls: You ALWAYS hit the Bullseye Dead Center!
Thank you, Sir!
- John
Dear Mal,
Thank you!
- John
Dear Believes,
Who needs tires if you can't get gas!
Thank you!
- John
In other words, you're a crackpot isolationist loon, not worth my time.
Appeal to Authority. Classic recourse of a weak argument.
You can lead a horticulture, but you can't make her think.
Now that's bad. I like it, but it's still bad.
WWI was no stimulus as it is defined today.
The stimulus was money going to cronies, not regular people.
WW2 had money going to regular people who were in the military. When WW2 was over, they had 4 years worth of money in the bank, as the government paid allowances for housing, so military could just pocket the money (which most did because of their experiences during the Depression). You had millions of soldiers coming home with real money in the bank, that wound up causing the US Economy to grow for over 20 years.
So, remember why Keynesianism fails: Because money that goes into the pockets of cronies DOES NOT grow an economy. Money that goes int regular folks pockets makes the economy grow like gangbusters.
"There’s a lesson here, besides the obvious one that public discourse consists overwhelmingly of ideological sound and fury, signifying nothing solidly connected to reality. " – There will always be big lessons to be learnt. But are we wise enough to see them? – http://www.ukgritting.com
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