Posted on 09/12/2017 10:33:07 AM PDT by SeekAndFind
“Well heck, then let’s replace all items everywhere. We will be rich!”
Exactly! This topic confuses even some normally clear-thinking FReepers.
I said basically that in a previous thread. Who has a successful economy based on tearing stuff down and then rebuilding it?
The depression ended a couple of years after the war
The common view among economic historians is that the Great Depression ended with the advent of World War II. Many economists believe that government spending on the war caused or at least accelerated recovery from the Great Depression, though some consider that it did not play a very large role in the recovery. It did help in reducing unemployment.[11][101][102][103]
When the United States entered into the war in 1941, it finally eliminated the last effects from the Great Depression and brought the U.S. unemployment rate down below 10%.[105] In the U.S., massive war spending doubled economic growth rates, either masking the effects of the Depression or essentially ending the Depression.
https://en.wikipedia.org/wiki/Great_Depression#World_War_II_and_recovery
Of course. Escaping one of the highest corporate tax rates in the world can have that effect. Not to mention escaping unions, regulatory handcuffs, and much more.
The same countries that taxed themselves into prosperity, ie, none.
Europe & Asia didn't recover until the '60s. Japan was 3rd World.
So burn down your house and everything in it if it's so good in the long term.
Unions are basically dead. Less than 10% of the manufacturing workforce is in a union. The sole driver of offshoring is to NOT pay first world wages for labor. Labor is only a small part of manufacturing costs, less than 8% in most cases. More like 5%. But 5% is a lot to add to a bottom line, regardless of the destruction it causes in the USA, socially, politically and economically for the individual and taxpayer with little or no benefit.
Wealth transfer from Insurance companies to the construction industry
5% for the unions.
35% corporate taxes.
~10% regulations
~15% health benefits
So far we’re up to 65%. Businesses have no patriotic duty to lose money.
If you define depression by unemployment rates, yes, WWII ended it.
But living standards DECLINED during the war. What good is lower unemployment if you can’t buy things, travel, etc.? That’s Soviet economics. The USSR & Cuba bragged about their full employment.
Disasters can have beneficial effects for certain segments of the economy, but they are not good for the economy overall.
The Broken Window Fallacy is about hidden costs.
I can only reiterate what I’ve already cited.
“massive war spending doubled economic growth rates”
I believe disasters to be a net positive in the long run.
Everything damaged will be replaced with new items even aging infrastructure that otherwise would have sat continuing to decay.
I think in this case you might see some giant tourist resorts or masses of off-island summer homes getting built.
These projects probably would have had local islander opposition (the NIMBY effect) in the past but will simply get ram-rodded though now.
The description of "net positive" may depend on your viewpoint.
Assuming you have good insurance and were able to save the sentimental irreplaceable stuff then, yes.
I am not attached to most of my stuff I guess.
>>>Businesses have no patriotic duty to lose money.
If corporations cannot use American materials an labor to make a product for domestic consumption then it is the obligation of the government to tariff imports to offset wage differences between the USA and the 3rd world. Duty has nothing to do with it.
Fortunately we now have a President that understands that simple concept.
It really wasn't.
It's true that the rampant unemployment of the Depression disappeared, but that will happen when the government forces 9 million men into the Armed Services.
Virtually all production of consumer goods was halted and what remained was severely rationed. Though the nation certainly pulled together, very few lived well during those years.
And though the production of war goods was incredible, virtually all of it ended up destroyed, sunk, or rusting away in mothballs at the end of the war. An economy that produces only to destroy its production isn't going to boom.
Now, we did what we certainly had to do, but it was the removal of the New Deal era government regulations in 1946 that enabled the country to switch back over to consumer production and employ those 9 million young men returning from the Pacific and Europe.
It was then that the Depression ended.
It depends what you mean by “good” for the economy. You have to replace what was destroyed. That cost of replacement is counted as production, but the destruction isn’t subtracted from production. So yes, any statistic of economic growth will be inflated by the destruction. But that inflation isn’t something good; it’s just something that looks good because of misleading statistics.
Of course, the money spent replacing what was destroyed will come out of money that COULD have been spent building something new and productive. (This is the same flaw with Keynsian spending.) So if you take the size of the economic product and subtract the cost of replacement, you get a value significantly lower than what the size of the economic product WOULD have been without having to make the replacement. But I expect if you don’t make that correction for destruction, you would have a value higher than if there hadn’t been the destruction, unless the destruction was so devastating and widespread that you hamper economic activity down the road, such as after the Japanese or Indonesian tsunamis, the Haitian earthquake, etc.
... you have good insurance ...
Insurance simply spreads the loss around. Suppose EVERYOE insured decided to burn their house down to get "new stuff" The insurance pool would not be able to cover the loss and everyone would be out the economic loss of their possessions. Would you destroy all your possessions if you had to cover their loss? Try reading Bastiat and if that doesn't convince you of your fallacy read this
That's a good question. Or asked another way - why did the Great Depression last all the way until WWII? IMHO, the biggest reason was the New Deal's socialist interventions and assault on property rights throughout the 1930's. We saw the same phenomenon with Obama.
How did things change from 1929 to 1946 (the start of demobilization)? That's the debate. The US population went from 122 million in 1930 to 161 million in 1950. That's a 30% increase in population in a period of Depression and war, for most of which almost no new houses or consumer goods were being built, so there was huge pent-up demand. Moreover, the world was destroyed, and their huge loss (their broken windows) were the USA's massive gain. Price and wage inflation also reduced outstanding debt.
Don't also discount the fact that FDR was dead, and his radical schemes were in the past.
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