I can’t stand to read Paul Krugman every day, especially when I’m still recovering from pneumonia, so while he wrote a post entitled “Terrorists and Aliens” on Tuesday,
I didn’t catch it until today. Fortunately I wasn’t drinking coffee, or I would have had to buy a new keyboard.
First he says that Keynesian economics doesn’t work. After decades of claiming that government deficit spending will pull a depressed economy out of recession, a foundation of Keynesian thinking, he says that, “The Great Depression wasn’t ended by the intellectual victory of Keynesian economics…” He goes on to refer to a worsening in the Great Depression in 1937, “when FDR tried to balance the budget too soon and send the U.S. economy into a severe recession.”
In other words, all of that spending is great as long as you keep doing it, but as soon as you stop spending you are right back where you started.
Now that is, perhaps, arguable because his position is that the New Deal would have worked if FDR had continued it longer. He claims that he has mathematical formulas which prove that to be a fact, and I claim that what he has are tea leaves and that it is pure speculation.
Don’t get me wrong, I’m a big fan of the New Deal and I think we should do it again. It would be far better than just pretending that unemployed people don’t exist by changing the definition of unemployed. I just don’t think it would actually change the economy.
Then he says that what ended the Depression was World War Two, “which led to deficit spending on a scale that was politically impossible before.”
He has made that statement before, and it always makes me want to travel to Princeton and hit this idiot between the eyes with a two by four. This moron has his head buried so far up his ivory tower that he doesn’t even know what an economy is.
Every dollar of that deficit spending, and a large portion of the non-deficit spending, was on instruments of death and destruction; tanks, bombers, warships, bombs, artillery, small arms… In the real economy, the one where people live, you could not buy a car of any description. That didn’t matter, because if you had a car you couldn’t buy gasoline or tires for it. You couldn’t buy sugar, meat, chocolate, or cigarettes without a ration coupon. You could not buy luxury goods of any description.
Sure, unemployment was essentially nonexistent because ten million men overseas in harm’s way were fully employed, and a man buried in a muddy field in France or some Pacific island was not counted as unemployed, he was counted as dead.
It was not the war that led to this nation’s prosperity, it was the postwar years, when America became the world’s largest producer and exporter of everything, including oil. We had no competition, because we had bombed and shelled the entire rest of the industrialized world into rubble, barely leaving one stone on top of another. We supplied the world’s need for goods of virtually every type for several decades and became enormously prosperous in the process. And we had essentially no deficit spending in those decades.
Krugman proceeds, in his little babbling brook of nonsense, to speculate whether or not the terrorist attack in France will cause the French government to spend enough money to help the economy. He compounds his idiocy. Spending on war did nothing for our economy in WW2, and it will not help France now. Spending for militarism is like beating your head against a brick wall. It’s only helpful when you stop.