Comments for Robert Samuelson is Half Right: China Could Save the World at http://www.cepr.net , comment 1 to 14 out of 14 comments http://www.cepr.net Sun, 19 May 2013 13:26:03 +0100 FeedCreator 1.7.3 http://www.cepr.net/index.php/blogs/beat-the-press/robert-samuelson-is-half-right-china-could-save-the-world#comment-11812 Ellen1910, you had a good question on deficit spending and reserves down at Rogue Economist Rants. Saw it late. If you haven't seen it, I think my answer got to your point best. One point of view is that the current economy is much MORE sexist than the post WWII economy. People back then had a choice. Now they don't. Two incomes are now necessary for a married couple to have the lifestyle one income provided back then. One can think of this as modern married working women having a wage of zero. One thing not yet mentioned is the high postwar government debt/GDP ratio. Contrary to modern mainstream quackonomics, and following the rule that it is always 100% wrong, this is usually a good thing. It just means that the economy is full of risk-free, liquid government debt=money, which makes for financial stability - especially as it was not then hyperconcentrated at the top. The finances of the US economy lived off this high ratio for many decades, until now, when we need to raise it again. Floccina: No, borrowed money, if you mean government bond sales, does not come out of the economy. That's the core of MMT - correct accounting. Health care & education are the best investments there are. Much of what the USA spends on "health care" is not really that, but just transfer payments to wealthy predators, like the current governor of Florida. - Calgacus Tue, 27 Sep 2011 12:37:59 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/robert-samuelson-is-half-right-china-could-save-the-world#comment-11788 Contrary to your hypothesis - drawing a comparison from then to now is not practical. For instance, how do you know what was productive back then, what might have been the "numbers" had there not been high taxes. Your starting assumptions are what is complete nonsense. - Jethro Mon, 26 Sep 2011 15:43:01 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/robert-samuelson-is-half-right-china-could-save-the-world#comment-11785 One important ingredient of the WW-II and post-war success was the very high marginal tax rates. There were excess profits taxes on corporations and many CEOs became dollar-a-year men during the war. The idea that people at the top of the income scale would not be productive under high taxes is complete nonsense; in fact it is likely that under high tax rates those people are forced to direct their efforts, and the investment they control, to long-term growth rather than rapid speculative profits. - skeptonomist Mon, 26 Sep 2011 11:27:47 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/robert-samuelson-is-half-right-china-could-save-the-world#comment-11783 Dean, You had me up to when you said: useful things like education, health care By education I assume that you mean schooling (rather than say PBS and NPR), in which case there are very few things that we can spend money on that yield less benefits than schooling and health care. Capital improvement and research are much better bets. Most of benefits to schooling beyond the early grades are positional. On healthcare and schooling we seem to be beyond the point were marginal spending yields any benefit at all. Also borrowed money comes out of the economy and must be paid back. - Floccina Mon, 26 Sep 2011 10:46:27 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/robert-samuelson-is-half-right-china-could-save-the-world#comment-11781 Our investment in the reconstruction of Western Europe via the Marshall Plan, the construction of the Interstate Highway system, and the release of pent-up demand after years of shortages contributed to the economic recovery and the subsequent creation of modern America. It is unfortunate that nearly all of our business and political leaders have not recognized that the process was not stablized when we entered our Viet Nam adventure. We continued to pursue an expanding empire which, like all before it, could not be supported economically or politically. Now, lawyers who are innumerant, and faith-based political opportunists, are in the saddle riding in the direction of the edge of a very deep chasm. - Douglas Rusta Mon, 26 Sep 2011 08:44:22 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/robert-samuelson-is-half-right-china-could-save-the-world#comment-11778 Didn't WWII destroy some of the productive power of the competitors to US producers? That would seem to be stimulative to US producers and the labor market. That would be a big difference between WWII spending and current war spending. - Anad Mon, 26 Sep 2011 07:30:54 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/robert-samuelson-is-half-right-china-could-save-the-world#comment-11776 The Post WWII stimulus in the form of the GI Bill was huge. The first 10 years of GI Bill was more domestic spending was far more money than the first 10 years of New Deal Spending. GI Bill provide almost free college eduction, guaranteed home loans to soldiers that might not otherwise qualify for loans and business loans. It was a lot of stimulus. Many in Congress would not have voted for GI Bill but were shamed into doing something to thank the troops. - bakho Mon, 26 Sep 2011 07:08:53 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/robert-samuelson-is-half-right-china-could-save-the-world#comment-11775 Robert Samuelson is half right? Who'd thunk that would ever happen? - EMichael Mon, 26 Sep 2011 06:37:27 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/robert-samuelson-is-half-right-china-could-save-the-world#comment-11774 Argh. My previous comment was a reply Robert W. Mann. - PeakVT Mon, 26 Sep 2011 06:18:54 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/robert-samuelson-is-half-right-china-could-save-the-world#comment-11773 What I don't understand is why our spending in Iraq and Afghanistan hasn't had the stimulative effect as did WWII. The Af-Pak/Iraq/DHS spending, while significant, was/is on the order of 2-3% of GDP, and it ramped up slowly over several years, from 2002 to 2005. The WWII spending was much greater, and it ramped up very rapidly. By the time the current recession hit, the Af-Pak/Iraq spending had become a normal part of the economy, and so couldn't have any effect on the latest downturn. - PeakVT Mon, 26 Sep 2011 06:13:38 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/robert-samuelson-is-half-right-china-could-save-the-world#comment-11772 Robert, the main difference between two is the size of the spending relative to the size of the economy. The spending on WWII was more than 20 percent of GDP at its peak. Spending on the Iraq/Afghan wars never exceeded 2 percent of GDP. There are various ways of calculating the cost of a war. Some people, like Joe Stiglitz, have done calculations including indirect costs, like the disability payments to wounded soldiers over a lifetime. This substantially raises the costs of the Iraq/Afghan wars, although if we do an apples to apples comparison, we would have to do the same sort of calculations for World War II veterans. That would also give an enormous number. - Dean Mon, 26 Sep 2011 05:56:14 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/robert-samuelson-is-half-right-china-could-save-the-world#comment-11771 Was it spending or the compulsory levy of the employed and the unemployed (up to 15 million at one time) that produced "full employment? Of course when the 15 million got demobbed, there was massive unemployment. Nah -- those were just women and as we all know, women couldn't be unemployed. They always had a job in the kitchen and the nursery. - Ellen1910 Mon, 26 Sep 2011 05:51:35 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/robert-samuelson-is-half-right-china-could-save-the-world#comment-11770 @Robert W. Mann I would guess that the difference between military spending during WWII and now is that in the 1940s we were spending money on war machinary that was much more labor-intensive. - Bizono Mon, 26 Sep 2011 05:47:22 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/robert-samuelson-is-half-right-china-could-save-the-world#comment-11768 What I don't understand is why our spending in Iraq and Afghanistan hasn't had the stimulative effect as did WWII. I think I have read that we have now spent more than we did then. Thanks for your continual presentation of these facts about the economy. I imagine that it gets boring to you when you say the same thing over and over and the opposition doesn't seem to get the point. - Robert W. Mann Mon, 26 Sep 2011 02:00:29 +0100