Some people love spending so much they’d kill to do it.
A while back, Paul Krugman, today’s leading Keynesian shill, trotted out the old chestnut that World War II brought America out of the Great Depression. In The Freeman: Ideas on Liberty, Steve Horwitz provides a concise, reasoned response:
Wealth increases when people are able to engage in exchanges they believe will be mutually beneficial. The production of new goods that consumers wish to purchase is the beginning of this process.
And borrowing from future generations to spend on goods not connected “to the desires of consumers, but rather to the desire of the politically powerful” doesn’t work.
Krugman talks war not because he wants one, but because he thinks government spending is so important that he’ll take what he can get, “even if the spending isn’t particularly wise.”
He misses the point.
The malaise that holds back recovery after a shock like the Implosion of 2008 isn’t lack of spending as such — it’s lack of confidence. Capitalism depends on trillions of separate plans and desires working together. When investors are wary of investing and consumers — fearing the future — don’t know what they can really afford to buy, no amount of “jump start” splurging will repair the engine.
At the end of World War II conscripts were freed, wage and price controls were abandoned, and a sense of victory permeated everything — and the Great Depression ended. Finally.
The lesson? End wars. Curtail regulations. Free up the system.
This is Common Sense. I’m Paul Jacob.