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According to Keynesians, large cuts in federal spending would lead to a depression. In fact, large cuts after the Second World War led to a boom. David Henderson has the story.
… We often hear that big cuts in government spending over a short period of time are a bad idea. The argument against big cuts, typically made by Keynesian economists, is twofold. First, large cuts in government spending, with no offsetting tax cuts, will lead to a large drop in aggregate demand for goods and services, thus causing a recession or even a depression. Second, with a major shift in demand (fewer government goods and services and more private ones), the economy would experience a wrenching readjustment, during which many people would become unemployed, and the economy would slow down.
But if such claims were true, wouldn’t history confirm them? And wouldn’t the decline in the economy be large when the government cuts spending a lot? That’s certainly what the late Keynesian economist Paul Samuelson thought. Well, Samuelson was wrong, and not just wrong, but spectacularly wrong.
In a 2010 study for the Mercatus Center at George Mason University, I examined the four years from 1944, the peak of World War II spending, to 1948. Over those years, the U.S. government cut spending from a high of 44 percent of gross national product (GNP) in 1944 to only 8.9 percent in 1948, a drop of over 35 percentage points of GNP. The result was an astonishing boom. The unemployment rate, which was artificially low at the end of the war because many millions of workers had been drafted into the U.S. armed services, did increase. But between 1945 and 1948, it reached its peak at only 3.9 percent in 1946. From September 1945 to December 1948, the average unemployment rate was 3.5 percent.
Most of the policies that Samuelson had feared actually happened, and in spades. Price controls were eliminated. Not only was the federal budget deficit decreased, but also, in 1947, the budget surplus was over 5 percent of GNP. Demobilization happened big-time. Between 1945 and 1947, when the postwar transition was complete, the number of people in the armed forces fell by 10.5 million. Civilian employment by the armed forces fell by 1.8 million, and military-related employment in industry fell off the cliff from 11.0 million to 0.8 million. As demobilization proceeded, optimistic employers in the private sector scooped up millions of the soldiers, sailors, and others who had been displaced from the armed forces and from military industries. …
After David Henderson deals with that Keynesian fallacy, Shikha Dalmia counters some more.
Poor President Obama. Life under the White House klieg lights must seem soooo unfair. Senate Majority Leader Harry Reid has been saying since last year that although “private-sector jobs have been doing just fine,” public-sector jobs need help with another $35 billion in stimulus spending, without raising an eyebrow. But the president regurgitates the same line and all hell breaks loose: The blogosphere chortles mercilessly; Twitter chatter roundly lampoons him; and Mitt “I Like Being Able to Fire People” Romney accuses him of being out of touch with ordinary Americans.
Truth is, though, that Obama was asking for it. His statement might be conventional wisdom in his party’s circles. But it nonetheless manages to pack in virtually every “progressive” economic fallacy—and then some.
For starters, his claim that private-sector job growth is hunky-dory is hooey. It is true that private companies have added 4.3 million jobs since February 2010. However, this represents a 2.8 percent rate of job growth compared to the 8 percent average after previous recoveries—despite (or perhaps because of) $800 billion in stimulus spending.
But instead of asking whether the effects of his own policies—like uncertainty over the extension of the Bush tax cuts and the compliance costs of ObamaCare—might be choking the private sector, Obama wants to apply his stimulus therapy to the public sector. This won’t produce overall growth. Indeed, more government spending means a shrinking private sector, and there are three main reasons why. …
Marc Thiessen reports on another Obama equity investment that has gone south.
A few weeks ago, I reported on President Obama’s string of failed public equity investments, which have left in their wake bankruptcies, layoffs, criminal investigations, and taxpayers on the hook for billions. Well apparently, another of Obama’s investments is in deep fiscal trouble. CBS News reports: (h/t Hot Air and the Right Scoop): …
… Little wonder that Obama has all but abandoned his attacks on Mitt Romney’s record in private equity. With a public equity portfolio that includes A123 … Raser Technologies … ECOtality … First Solar … Beacon Power … and Solyndra (among others), Obama is in no position to be criticizing anyone’s investment record.
Ed Carson in Investors.com tracks the increase in federal jobs.
President Obama’s statement Friday that the private sector is “doing fine” drew so much ridicule that he was forced to backtrack hours later. But it’s clear that Obama and many other Democrats see job problems — and solutions — starting and stopping with government employment.
A quick look at payroll stats shows that’s not the case.
Private-sector jobs are still down by 4.6 million, or 4%, from January 2008, when overall employment peaked. Meanwhile government jobs are down just 407,000, or 1.8%. Federal employment actually is 225,000 jobs above its January 2008 level, an 11.4% increase. That’s right, up 11.4%.
Private payrolls have been trending higher in the last couple of years while government has been shedding staff. But that’s because governments did not cut jobs right away. Overall government employment didn’t peak until April 2009, 16 months after the recession started. It didn’t fall below their January 2008 level until September 2010. …
Jonathan Tobin tells us how ‘the color purple’ gets ugly.
In what must be considered among the most egregious acts of discrimination against Israel by leftist intellectuals, author Alice Walker is not allowing her Pulitzer Prize-winning novel The Color Purple to be translated into Hebrew because of her opposition to the Jewish state. The book, which was made into a popular 1985 movie directed by Steven Spielberg, is a story about racism and misogyny in the American south.
The Jewish Telegraphic Agency reports that in a letter posted on a site supporting the boycott of Israel, Walker said she was refusing to allow the translation in order to boost support for the movement to boycott, divest and sanction (BDS) the Jewish state because of its alleged mistreatment of Palestinians. But in saying she doesn’t even wish her work to appear in Hebrew, Walker is making a broader statement than a mere critique of Israeli policies. This sort of a boycott is an attempt to treat Jews and Hebrew, which is the national language of the Jewish people, as beyond the pale. In doing so, Walker has illustrated how hatred for Israel can erase the line between political opinion and outright anti-Semitism. …
Slate in praise of wooden spoons.
There are few things I absolutely have to have in a kitchen. I don’t need fancy pots (though Le Creuset makes some beautiful ones), or impressive tools I will rarely use (though I began asking for a blowtorch every Christmas at age 12), or single-use gadgets like avocado slicers or mango pitters (you already own these—they’re called knives). In fact, to feel confident that I can put together a good meal using whatever’s around, all I really need is some garlic, a little olive oil, and a wooden spoon.
For other people, the first two of that threesome will vary—but the third should always stay the same. Wood is sturdy but not harsh, lasts for years or even decades, and is one of the most versatile materials out of which a kitchen utensil can be crafted. Despite this, wooden spoons seem to have fallen out of favor in home kitchens. I rarely see more than one (if any at all) in the tangle of utensils on friends’ counters, and wooden utensils are consistently outnumbered by those made from other materials in stores. So many people neglect this beautifully efficient and historic kitchen tool, ignoring the many reasons wooden spoons are better than the rest.
Spoons predate forks by thousands of years, going back as far as the Paleolithic Era. ..