Nor does a "booming" economy mean you have 14.3% unemployment, to claim as much is misleading. You could say the economy was "improving" but to say it was "booming" is a complete distortion of language. Unemployment was trending downwards while GNP was trending upwards, this doesn't mean the economy was "booming", not in any sense of the word.
If a cancer patient's malignancy decreases in size by 10% you can say their health is "improving" but you cannot claim they are "healthy" or that their health is "excellent", because the fact remains that they still have a cancerous malignancy growing on their body. From 1933-1936 the malignancy was decreasing in size but it was still there.
Fine, we'll say the economy was improving. Which is really what we need to look at in terms of policy. Even the best policies in the world aren't going to result in everyone getting suddenly hired. In fact, the only policies that could do that would be draconian and frightening.
Ethereal said:
Furthermore, this entire argument presupposes that the improvement came about as a consequence of the New Deal. How are we to know that the improvement wasn't simply a consequence of the free-market self-correcting IN SPITE of the New Deal?
We don't, but the timing is quite coincidental. The stock market crashed in 1929 and Hoover did nothing for the next four years...as the economy sank deeper and deeper. Then we had the New Deal and within a few months the economy had bottomed out...followed by several years of government spending and a recovering economy. Then FDR turned conservative in 1936 and cut back some of his spending on the advice of his advisors...and in late 1937 through 1938, we had another recession. Then we had a buildup to World War II, and the economy recovered.
Ethereal said:
This is such a simplistic and narrow-minded statement. The difference between a government stimulus package and the buildup to a world war is much more than semantical.
In both cases the government is pumping a lot of cash into the economy by buying something it deems will be beneficial to society.
Ethereal said:
This is ridiculous. You're saying that social perception is not key to economic recovery? Is that your position?
I'm sure perception has some effect on the economy...but hundreds of billions of dollars in new demand has a pretty sizable effect too.
Ethereal said:
The country was unified. That is an objective fact of reality. Moreover, you offered your disagreement absent any reasoning. How is the unification of a country "irrelevant" to economic recovery? Do you honestly think the effects of such a phenomenon are negligible?
Yes, they are negligible. The fact that everyone agreed that we needed to fight a war is irrelevant in terms of economics. The government paid a lot of cash demanding a lot of goods/services, which resulted in a lot of formerly unemployed people being hired.
And let's not forget that prior to Pearl Harbor, there WAS a lot of disagreement over whether we needed to go to war. Yet the recovery started well BEFORE Pearl Harbor, as we ramped up production in preparation for war.
Ethereal said:
I said real demand, not artificial demand. Building something does not create real demand for products and services if there was never a real demand for the project in the first place.
What if you're building tanks to crush Germans or bombers to kill Japs? There's no "real demand" for those products most of the time.
Ethereal said:
Real demand is characterized not only by the desire for a product or service but the ability to pay for it. Just because a state desires something does not mean they retain the ability to pay for it; absent the ability to pay for something there is no real demand, only artificial.
WWII created real demand for products and services. Not only did we desire these products and services, we NEEDED them (that, in and of itself, is a crucial distinction), and we also had the ability (the willingness) to pay for them.
Whether or not we "need" something is subjective and irrelevant to the economic stimulus side of the equation. That might come into play years after we spend the money, but it doesn't effect the state of the economy now.
The short-term economic result of the stimulus would be the same whether we had taken all of those tanks to fight a war in Europe, or sent them to Antarctica and set them on fire.
As for the ability and willingness to pay for these products...we had nowhere NEAR the ability/willingness to pay for WWII. Yet the economy still boomed.
Ethereal said:
Allow me to clarify, I'm not speaking to long-term sustainability on the magnitude of decades, I'm speaking to short-term sustainability on the magnitude of several years.
The war infused the market with confidence which subsequently encouraged people to hire and spend. That is the difference between a simple stimulus plan and the buildup to a world war. People HAD to hire, and work, and spend, and produce. It wasn't a choice for them. That's why it was sustainable in the short-term.
I don't understand. They had to hire, work, spend, and produce because the government was giving them a lot of money to do so. How is that different from now?