The Second World War pulled the nation out of the Great Depression because it required that government spend on such a huge scale as to restart the nation's factories, put Americans back to work, and push the nation toward its productive capacity. By the end of the war, most Americans were better off than they were before its start. Yes, the national debt ballooned to 120 percent of GDP. But the debt-GDP ratio subsequently declined -- not just because post-war spending dropped but because the economy continued to grow as war production converted to the production of consumer goods. Lesson: The danger isn't too much stimulus, it's too little stimulus.The War was just an extension of the New Deal. Government spending driving the creation of jobs.
Friday, February 20, 2009
Why Robert Reich is one of my economic heroes!
Becuase he cuts through the BS with statements like this during a discussion of whether or not the New Deal helped America.