The invisible link: For a real stimulus, let’s invade Europe
Over at the ASI Tom Papworth has been taking on economist Paul Krugman.
Below is the opening para, to whet your appetites and lure you in. Click here or at the bottom for the whole article. Take it away, Tom…
Here is Nobel Laureate Paul Krugman on how to bring a major recession to an end:
It took the giant public works project known as World War II — a project that finally silenced the penny pinchers — to bring the Depression to an end.
The lesson from FDR’s limited success on the employment front, then, is that you have to be really bold in your job-creation plans. Basically, businesses and consumers are cutting way back on spending, leaving the economy with a huge shortfall in demand, which will lead to a huge fall in employment — unless you stop it. To stop it, however, you have to spend enough to fill the hole left by the private sector’s retrenchment.
I’ve read a lot about World War II, but I don’t think I’ve ever heard it described as a “giant public works project” before.
To understand why any “giant public works project” will fail to stimulate the economy, continue reading.
November 6th, 2009 at 2:48 pm
“I’ve read a lot about World War II, but I don’t think I’ve ever heard it described as a “giant public works project” before.”
What are you – Mark Corrigan?
If you haven’t come across the public spending aspect of the war effort being credited with lifting the economy out of the doldrums, you just haven’t been paying attention. Or maybe all your WWII reading was restricted to Victor and Combat comics.
November 6th, 2009 at 4:16 pm
Squirrel,
I’ve heard the argument, which isn’t the same as hearing the war described as “the giant public works project known as World War II”.
The argument is bunk, though, as I have pointed out in the full article. The use of bogus economic arguments to justify mass slaughter and destruction is grotesque.
Perhaps you need to put down your Victor and Combat comics and read some Bastiat. Or even just the rest of the article.
November 6th, 2009 at 5:35 pm
If Tom Papworth thinks that Paul Krugman’s article attempts to justify mass slaughter and destruction, he clearly hasn’t understood it.
November 17th, 2009 at 10:53 pm
[…] like the proverbial monkey chucking darts at the FT. Everyone – left, right, Liberal, green, Austrian, etc – thinks this crisis is a Told you […]
July 13th, 2010 at 12:05 am
Richard,
I think Paul Krugman’s article tries to justify Keynesianism, which means he hasn’t understood enconomics.
The original article, for which the link seems not now to be working, is at http://www.adamsmith.org/blog/tax-and-economy/for-a-real-fiscal-stimulus%2c-let%27s-invade-europe%21-/ (I hope!).