He says very very clearly in his book that the government should spend money exactly like it did when WW II started to end this current depression the way it ended the Great Depression.
Does any liberal dare to think that by producing about 100 million planes tanks ships heavy weapons and tanks that it would help rather than hurt our economy??
Krugman is a Nobel liberal but not a soul will dare defend the pure stupidity of his liberalism which is now everyone's liberalism.
Krugman is great because he's the best they got and even the common liberal knows in his heart that Krugman is a liberal and so that liberalism is nutty.
Send a memo to the Boeing Company. I'm sure they will find your input fascinating.
Military Keynesianism CanÂ’t Work Â… Because WWII Was Different from Current Wars
World War II Was Different.
“Military Keynesians” people who think that war is good for the economy, base their theory on the idea that World War 2 pulled us out of the Great Depression.
It has been exhaustively demonstrated that this is a myth: war is not good for the economy.
Debunking the Myth that War Is Good for the Economy Once and For All
Some critics, and even some supporters, contend that in the modern world, these policies are no longer viable for developed countries because military strength is now built on high-technology professional armies, and the military is thus no longer viable as a source of employment of last resort for uneducated young people.
Given that America fights its current wars with drones and smart bombs, it “employs” far fewer men then during WWII. It is a different world.
The Marshall Plan, Special Trade Provisions and Other Unique Circumstances Made WWII Different
Krugman has written, “Deficit spending created an economic boom and the boom laid the foundation for long-run prosperity.”
But this viewpoint ignores a fairly obvious counterpoint. The United States emerged from World War II as the worldÂ’s conqueror, with virtually every economic competitor destroyed. Suddenly, America was the big boy on the block, leader of the Pax Americana, and our industries enjoyed numerous competitive advantages over international rivals. The dollar, suddenly, was the dominant global currency, and that granted Americans cheap money and influence that spurred unprecedented economic growth.
In addition, we then launched the ambitious Marshall Plan, which not only rebuilt our former adversaries, but also created international markets for US producers. One of the Marshall PlanÂ’s conditions was that nations receiving funding were required to give American exporters preferred access to their emerging markets. The years of the Marshall Plan, from 1948 to 1952, saw one of the fastest periods of growth in European history, with industrial production increasing by 35 percent and agricultural production substantially surpassing prewar levels. American businesses, especially those specializing in manufactured goods and raw materials, benefited greatly from these fast-emerging markets. Any massive stimulus plan today would not benefit from those same advantages.
Krugman has rejected this critique, writing, “Trade was a minor factor in the American economy both before and immediately after the war, with imports and exports a much smaller share of gross domestic product than they are now.”
Krugman admits that there was an increase in trade for a few years in the late 1940s due to the effects of the Marshall Plan, which allowed ruined economies to buy more from the United States, but it’s impact “was temporary,” he says.
But KrugmanÂ’s response is unconvincing. Here is a simple thought experiment to illustrate why. Imagine if America had lost World War II and not emerged as the dominant power.
Does anyone seriously believe that all of that wartime stimulus money would have resulted in anywhere near the post-war boom that the United States experienced? Krugman is underestimating the impact of being the worldÂ’s conqueror, and the financial, economic and psychological advantages that conveys.
Certainly, a large dose of fiscal stimulus right now would spur an increase in aggregate demand, but without a surging export sector, that would probably result in more government jobs (and perhaps more than a few “bridges to nowhere”) than private-sector jobs. There’s no guarantee it would boost private-sector growth, since America’s struggling export and manufacturing base still would face stiff competition from many upstart international rivals, with none of the advantages enjoyed by US exporters in the aftermath of World War II. The world today, and America’s position in it, are far, far different from what they were in 1945.
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Debunking the Myth that War Is Good for the Economy Once and For All
