Member of British Parliament Schools Paul Krugman: 'I Find His View Reckless'

gopcongress...You're right about WWII

Submitted by Jer on Sat, 06/02/2012 - 8:38pm.

However...

In the months immediately preceding FDR's inauguration in March of 1933, the Depression was at its absolute nadir. In January and February alone over 4000 banks had closed, life savings were being wiped out, and the nation's entire banking system was on the verge of collapse. The stock market had lost 75% of its value. The unemployment rate was approaching a staggering 25 per cent. Crop prices had plunged and farm families were losing their land and being evicted from their homes by the thousands. The previous summer 40,000 WWI veterans had their encampment in the nation's capital burned to the ground and were routed by bayonets and tanks.

I could go on, but I think you get the picture. But the question is begged:  Exactly which year of the "early 30's" are you suggesting the "natural cycle" would have produced a return to prosperity but for government intervention?

Jer

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It wasn't even that.

Submitted by CobraMan on Fri, 06/01/2012 - 10:45pm.

"it was the mass production for the war effort during WWII that got us out of it."

It wasn't even that. Don't forget, people suffered through material and food shortage and rationing during WWII. The Boom didn't happen until the 50's, when new technologies increased production, lowered retail costs (especially in construction) and government spending actually fell. There was also the massive expansion of our transportation system that had the biggest effect.

If any government spending could be contributed to an increased economy, it was Eisenhower and the federal highway program that did that. The new business opportunities that the expanded highway system offered, the new access to previously underutilized land which was suddenly, cheaply available to both commerce and housing, is what caused one of the largest expansions of out economy in nearly a century, just as happened with the expansion of the railroad systems a 100 years before that. The program actually paid for itself, while it was still in the process! It didn't negatively effect our economy at all, It positively effected it. It actual caused LOWER deficits for decades! It's only when we stopped the expansion that the deficits stared rising again. That's not coincidental. That's an example of cause and effect.

The only time in history that expanded government spending ever equated to an expanded economy is when the money is spent on expanding transportation, expanding easy access, to previously unused territory. Everything else, including upkeep of the expanded system, is a drag on our economy, for no new business or living opportunities are created with out the creation of access to additional land, additional resources. That's what history has shown us time and time again.

The ONLY way our government can "spend" us out of this economic morass we find ourselves in is to vastly increase the transportation system in America. We need to triple it, at the very least. That mean laying new roadway to new territory, new land, that isn't being utilized. The "bridge to nowhere" will actually go somewhere. It'll go to new opportunities that were previously unavailable do to high transportation costs. We need to build. We need to build new. We need to build new, to "nowhere." But we're not doing that. No, we're to busy trying to re-arrange the deck chairs, trying to find new uses for already over utilized land, by tearing down old infrastructure and replacing it with "new." But it isn't "new " if it was already developed! It's just updated. We don't need updated. We need NEW! The "old" will automatically become updated in the process of creating the new, and at a fraction of the cost to the economy in general . It always does, and it always will.

I see this happening here in Minnesota. They want to spend a BILLION dollars tearing down the old football stadium just to put a new one a few hundred feet away, all in the name of "economic expansion," no less. But that "expansion" will never occur, not in an area that is already over developed! Somehow, none of the "economic experts" the government keeps relying upon has seems to understand that, ether on th federal, state, or local levels.

They should be putting it a few tens of miles away, in currently unused land, in order to stimulate the creation of new business, new housing, new employment opportunities. This isn't going to help us much at all, just like it didn't help us much the last time when they tore down "old" commercial property and built the "new" Minneapolis stadium. It took 30 YEARS for that stadium to pay for itself. How long will it take the next time?

If they just built it out somewhere where there is little to no existing development, the revenue all that additional NEW development would generate would more than offset for the stadium construction cost in less than ten years. For it's a heck of a lot cheaper to build new on new, to create new construction on previously unused land than it is to replace the old construction with new construction. There's no demolition costs associated with brand new development. When the costs go down, the demand increase. When the demand increases, so does production. When production increases, so does the economy. When the economy increases, so to tax receipts. I'm mean, really, is it all simple math. Too bad it's too simple for "experts" like Krugman to figure out.

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