akoff, on Tuesday, August 31st, 2010, 8:45 AM, said:
hmmm where to begin....somewhere in this thread you stated you didn't understand ecomomics, you have proved that with this comment.
85suited, on Tuesday, August 31st, 2010, 9:07 AM, said:
Oh, you're right, it turns out that World War II didn't play a major role in bringing us out of the great depression. After all, if it wasn't for the army, all those people could have been back at home being jobless and living in Hoovervilles. It's the broken Hitler Fallacy!In reality, if the hurts the economy to have potentially productive members of the country out of work. Their potential production is being wasted. This is a non-linear effect: the longer they are out of the job, the more difficult it is to get a job, the less motivated they become, the more unemployment they collect, and the more their family suffers. On the other hand, skimming across the top of the economy in future taxes is pretty linear: if I tax the rich an extra X % to pay for the jobs I create for the unemployed, the rich's productivity doesn't fall by a non-linear function of X. Therefore, I gain the difference, which is the extra productivity lost by the unemployed.This is what World War II did. The people who went to the army or into factories didn't in general come from other jobs, and therefore it didn't rob the economy of otherwise productive citizens. They were unemployed men and women (who didn't work at all previously). The government essentially paid for extra production without charging current production. If the government is in a position where it can buy the cost of production at the cost of only that production, it should do so.On the other hand, if the economy is in a stable equilibrium where the amount of people employed is at the right level based on consumption and need, then it hurts to artificially create jobs, because you're robbing potentially better production from an otherwise occupied sector. Simply citing "broken window fallacy" is an oversimplification.