Free Markets, Free People


Krugman admits WWII turned economy around, not “New Deal”


e may not have meant too (because doing so undermines the liberal shibboleth that government intervention via the New Deal is what turned the economy around), but Paul Krugman did indeed admits that WWII saved our economy after the Depression, not the policies of the "New Deal":

All around, right now, there are people declaring that our best days are behind us, that the economy has suffered a general loss of dynamism, that it’s unrealistic to expect a quick return to anything like full employment. There were people saying the same thing in the 1930s! Then came the approach of World War II, which finally induced an adequate-sized fiscal stimulus — and suddenly there were enough jobs, and all those unneeded and useless workers turned out to be quite productive, thank you.

All true, but then the US wasn’t carrying a $15 trillion dollar debt load (think huge financial drag) or its equivalent then either. That single fact makes a world of difference. But again, as you can tell, it’s Mr. One Trick Pony again pushing for an “adequate-sized fiscal stimulus”. In the absence of a world war I think it should be clear by now what he’s asking for … again. I mean what’s $16 trillion among friends, right?

He gets a bit cryptic about it, but it’s the same old demand:

There is nothing — nothing — in what we see suggesting that this current depression is more than a problem of inadequate demand. This could be turned around in months with the right policies. Our problem isn’t, ultimately, economic; it’s political, brought on by an elite that would rather cling to its prejudices than turn the nation around.

See … government can fix this, if it just would. So says Paul Krugman. Interesting …”the right policies” were admittedly not the reason for the recovery of the US after the Depression but they are what can save us now. Because, you know, the two situations are just alike, right? WWII and the “right government policies”? Or did I miss something?

And this guy likes to think of himself as an “economist”?

Go figure.



Twitter: @McQandO

Krugman – wow, just "wow".

I really don’t know how to actually characterize my reaction to this nonsense from Paul Krugman except to say if you thought he was in bizarro land before, check this out. The irony is he calls others stupid and invokes "Economics 101" when it’s clear … well you take a look. Here he’s talking about the proposed $50 billion "stimulus" focused on infrastructure. And he begins to pontificate:

Beyond all that, the new initiative is a chance for me to air one of my pet peeves: the stupidity of the claim, which you hear all the time — and you’ll hear again now — that it’s always better to provide stimulus in the form of tax cuts, because individuals know better than the government what to do with their money.

Why is this claim stupid? Because Econ 101 tells us that there are some things the government must provide, namely public goods whose benefits can’t be internalized by the market.

I had a friend who would accuse people like Krugman of being like a goose and waking up in a new world everyday. Apparently in today’s new world Krugman has forgotten that we just spent most of a trillion borrowed dollars on infrastructure stimulus. And then there was TARP, cash for clunkers, home buyers tax credit, mortgage payment relief and unending unemployment benefits. But it’s all too small now and it’s the fault of the usual suspects.

What Krugman doesn’t want you to remember, of course is his own recommendation on the size of the stimulus package:

All indications are that the new administration will offer a major stimulus package. My own back-of-the-envelope calculations say that the package should be huge, on the order of $600 billion.

In fact, the administration added 30% to his number and now, suddenly, it’s all too small. Not only that, it failed miserably.  And, when you add it all up, it’s about 3 trillion in spending for “public goods” over two years added to the federal debt. 

Result? 14.9 Americans unemployed, the economy in a shambles and consumers afraid to spend.  And Krugman, in his new world today, demands more spending and has the temerity to call those opposing it stupid and his approach “econ 101”.

To add to the Krugman madness, we have him essentially pining for the good old days of spending like we did during WWII.   Despite the fact that it all but destroyed the world and did destroy about 80 million lives, that’s the level of spending he now thinks is needed. 

From an economic point of view World War II was, above all, a burst of deficit-financed government spending, on a scale that would never have been approved otherwise. Over the course of the war the federal government borrowed an amount equal to roughly twice the value of G.D.P. in 1940 — the equivalent of roughly $30 trillion today.

Had anyone proposed spending even a fraction that much before the war, people would have said the same things they’re saying today. They would have warned about crushing debt and runaway inflation. They would also have said, rightly, that the Depression was in large part caused by excess debt — and then have declared that it was impossible to fix this problem by issuing even more debt.

But guess what? Deficit spending created an economic boom — and the boom laid the foundation for long-run prosperity. Overall debt in the economy — public plus private — actually fell as a percentage of G.D.P., thanks to economic growth and, yes, some inflation, which reduced the real value of outstanding debts. And after the war, thanks to the improved financial position of the private sector, the economy was able to thrive without continuing deficits.

This is possibly the most blinkered and absurd bit of revisionist history I’ve read in a long time. There’s a "rest of the story" that makes this so much word salad that Krugman obviously studiously ignores in order to attempt this absurd plea to what, spend the equivalent of 30 trillion in deficit dollars (or to drive home the point that 3 trillion isn’t nearly enough)?

Victor Davis Hanson handily disassembles Krugman’s “work” and shows it up for the dishonesty that it is:

As WWII ended and the clean-up began, there was an enormous amount of pent-up global demand for goods. Given the wreckage in Europe, Japan, and Russia and the underdevelopment of India, Asia, and South America, we were about the only ones with the industrial and commercial wherewithal to supply the world rebound — often receiving cheap oil, gas, minerals, and interest in exchange, which supplemented our own vast supplies of comparatively cheap and easily recoverable resources. Nor should we forget the psychological element: Americans, after winning two wars, were enormously confident about their newfound international stature and influence.

At home, four years of consumer deprivation during the war and the weak demography of the 1930s had combined to create huge demand, all while society was increasingly leaving the farm for good and becoming suburbanized. The result was that in the late 1940s and 1950s, the birth rate soared and consumers enthusiastically made first-time purchases of washers, dryers, fridges, cars, etc. Thus, the American economy grew by leaps and bounds.

Today’s situation is not comparable: We are in hock to foreign creditors for trillions and have not been a net creditor since the 1980s. A China, Brazil, South Korea, Taiwan, or India is as or more likely to supply recovering demand for food, steel, or electronics. One can read Krugman-like arguments in Greek newspapers today — that only more massive borrowing can stimulate Greek demand, provide jobs, and grow Greece out of its recession. As if present-day deficits and aggregate debt with soon-to-be-rising interest payments don’t really matter.

It is always an indication that you probably shouldn’t pay much attention to a certain economist when it takes an expert in history to tell the economist his business.

But then that’s to be expected if you wake up in a new world everyday as it appears Paul Krugman does.


I have little sympathy for the Japanese on this subject (update)

It is the annual Hiroshima remembrance in Japan and the usual cries of "outrage" and demands for an “apology” fill the air.

My father fought against the Japanese in WWII on Saipan, Leyte and Okinawa. I have studied the war in detail. I’ve been particularly interested in the planned invasion of Japan.

Okinawa was the first indicator of what that would have been like – it was and is considered a Japanese “home island”. My father was slated to be with the first wave of divisons landing on Kyushu. The technical description of their anticipated condition after a day or so was “combat ineffective”. That means those initial divisions would have been destroyed and unable to continue to fight.

The assumed number of casualties for that first big fight – and it wasn’t even on the main island – was about a million men on both sides. Don’t forget that they had a regular army home defense force of well over a million men and a home defense militia of 14 million. They had with held thousands of kamakazi aircraft and boats back for the expected invasion. And they planned to make a last stand and take as many invaders as possible with them.

Remember also how the territories the Japanese conquered were treated. Korean women forced into prostitution as “comfort women”. The rape of Nanking. Babies tossed around on bayonets.

So when I read things like this –

Moments before the atomic bomb was dropped, my mother’s friend happened to seek shelter from the bright summer sunlight in the shadow of a sturdy brick wall, and she watched from there as two children who had been playing out in the open were vaporized in the blink of an eye. “I just felt outraged,” she told my mother, weeping.

– I had difficulty summoning any outrage myself. The Japanese people supported the war, cheered the victories and reveled in the spoils it brought. They were brutal and murderous conquerers. And they refused to surrender.

After the first bomb was dropped on Hiroshima, the Japanese war cabinet of 6 split in their vote, refusing to surrender. After Nagasaki, they still refused to surrender until, in an unprecedented move, the Emperor intervened and essentially ordered them to do so.

If those who survived the atomic bombings at Hiroshima feel “outrage”, they should look in the mirror. They enabled and supported a regime that “outraged” the world. They cheered and shared in the spoils of a war they started which devastated much of Asia. They supported a brutal, murderous and criminal militaristic war machine that raped and murdered at will. If anyone should be “outraged”, it is those who suffered under the horrific but thankfully short Japanese rule of that time. If anyone should be apologizing yearly, it is the Japanese.

UPDATE: Richard Fernandez also discusses the subject.


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Death Of A Hero: SSG Darrell “Shifty” Powers

You know, the word “hero” gets tossed around a lot these days. That’s not to say there aren’t heroes in our midst, there certainly are, but sometimes it’s just a good idea to sit back for a second and reflect on the word and its real meaning.

If you’re a fan of the HBO series “Band of Brothers”, then you know what real heroes look like. The paratroopers of Easy Company, 2nd Battalion, 506th Parachute Infantry Regiment of the 101st Airborne Division were soldiers we got to know during that series through the depiction of their heroic actions throughout the unit’s fight through Europe.

They became real people on the screen. That’s because we got to know the real people the actors were portraying in a series of interviews with the survivors of the unit which were cut in at intervals throughout the film.

Well, with little notice or fanfare, one of Easy Company’s heroes made his final jump on June 17th of this year. SSG Darrell “Shifty” Powers has joined the 101st immortals, passing away last month as a result of cancer. Unfortunately, but not surprisingly, his death barely got a notice.

SSG Darell "Shifty" Powers, E Co, 2/506th PIR, 101st Abn Div WWII

SSG Darell "Shifty" Powers, E Co, 2/506th PIR, 101st Abn Div WWII

Today, members of the milblog community are holding a virtual memorial for Shifty Powers, a man who helps define the word hero. Here’s a portion of an email that has gone viral which does a much better job than I can in giving you an idea of who Shifty Powers was:

Shifty volunteered for the airborne in WWII and served with Easy Company of the 506th Parachute Infantry Regiment, part of the 101st Airborne Infantry.

If you’ve seen Band of Brothers on HBO or the History Channel, you know Shifty. His character appears in all 10 episodes, and Shifty himself is interviewed in several of them.

I met Shifty in the Philadelphia airport several years ago. I didn’t know who he was at the time. I just saw an elderly gentleman having trouble reading his ticket. I offered to help, assured him that he was at the right gate, and noticed the “Screaming Eagle”, the symbol of the 101st Airborne, on his hat.

Making conversation, I asked him if he’d been in the 101st Airborne or if his son was serving. He said quietly that he had been in the 101st.

I thanked him for his service, then asked him when he served, and how many jumps he made. Quietly and humbly, he said “Well, I guess I signed up in 1941 or so, and was in until sometime in 1945 . . . ” at which point my heart skipped.

At that point, again, very humbly, he said “I made the 5 training jumps at Toccoa, and then jumped into Normandy . . . . do you know where Normandy is?”

At this point my heart stopped. I told him yes, I know exactly where Normandy was, and I know what D-Day was.

At that point he said “I also made a second jump into Holland, into Arnhem.”

I was standing with a genuine war hero . . . . and then I realized that it was June, just after the anniversary of D-Day. I asked Shifty if he was on his way back from France, and he said “Yes. And it’s real sad because these days so few of the guys are left, and those that are, lots of them can’t make the trip.”

My heart was in my throat and I didn’t know what to say. I helped Shifty get onto the plane and then realized he was back in Coach, while I was in First Class. I sent the flight attendant back to get him and said that I wanted to switch seats.

When Shifty came forward, I got up out of the seat and told him I wanted him to have it, that I’d take his in coach. He said “No, son, you enjoy that seat. Just knowing that there are still some who remember what we did and still care is enough to make an old man very happy.” His eyes were filling up as he said it. And mine are brimming up now as I write this.

Today is a day to remember what he did and reflect on that. Of course his understated “I made the 5 training jumps at Toccoa, and then jumped into Normandy” doesn’t even begin to describe what jumping into Normandy entailed:

“I could hear bullets and shrapnel hitting the plane. As I jumped out the door, I could see that the left motor was on fire.” – Darrell Shifty Powers talking about jumping over Normandy, France, on D-Day.

Real heroes really don’t talk about it much, and they usually don’t include themselves when they do.

There are some real heroes that live among us and they deserve more than just a passing notice when they die. Shifty Powers was one of those heroes.

May he rest in peace and in the acclaim for his deeds he so richly deserves.

From this day to the ending of the world,
But we in it shall be remembered-
We few, we happy few, we band of brothers;
For he to-day that sheds his blood with me
Shall be my brother