To libertarians / Rand clones

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Except that those computers, while they are depreciating, do work that people actually value.

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And in determining the raw value of economic production, where does the "what the people actually value" factor in? I don't believe it does.

I sure was pissed off when I bought a Gateway. It was a total piece of junk and brought no value to me. My consumption (C) of $2000 still factored into GDP, however. Just like the government spending (G) on 100,000 airplanes factored into GDP.

On a related note, many technology innovations and efficiencies came about from World War II as well, which also factor greatly into the GDP growth rate. And some would say such things as the entire airline industry came into existence because of World War II.

[TomCollins]

I don't think anyone doubts that some good things came out of it. But the question is, what is the cost? Is it +EV?

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Is it +EV?

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I'd imagine to the freedom loving people of Western Europe, the Jews, the Gypsies, among others, yes, it was +EV. Long term economically speaking.

And clearly to the United States it was +EV.

I of course am staying entirely within the context of the Second World War.

[tylerdurden]

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It temporarily raises GDP at an overall cost.

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And this is good? I can see making an argument for it *if* GDP were *exactly* the same thing as "economic health*, but it's not. As you've shown, you can manipulate GDP without actually doing anything useful. Therefore, not everything that increases GDP is "good".

Generally, having a body temperature of 98.6 is good. If you get a fever, I can get your body temperature to 98.6 by shooting you in the head then placing your body on a heating plate set at 98.6. Hey, I got your body temperature to the desired number, it must be a good thing, right?

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Notice I never made a value judgement about good or bad. If I say "shooting somoene in the head will usually kill them" doesn't mean I advocate it.

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You have said in this thread that it will give a boost to the economy. Whether you advocate it or not, your statement is incorrect.

[MMMMMM]

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So, just to clarify, after a war, the country is in worse economic shape?


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In worse shape *than it would have been in, had there been no war*.

Of course the country could be in better shape after a war, since war is not the only factor influencing the "economic shape" of a country. But, if there had been no war, it ought to be *in further "better shape" yet still*.

[Borodog]

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Keynsian economics works.

If by "works" you mean never-ending malinvestment booms and inflation alternating with crashes, recessions, and depressions characterized by high unemployment and business failures as the market attempts to liquidate those malivestments, then sure. It "works."

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It temporarily raises GDP at an overall cost.

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And this is a good thing how?

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I never said it was good.

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No? That's funny because, double negatives aside, I'm pretty sure that exactly what you were trying to imply when you wrote this:

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Are you seriously denying that the war did not have a positive impact on the economy?

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If not, what was the point of this question? And indeed your whole argument about increasing GDP with worthless projects like foreign wars and digging holes?

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However, it is a nice secondary benefit when other reasons dictate massive spending.

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What reasons would those be?

By the way, I've asked many questions in this discussion and you've ignored most of them. Is this going to be a trend? Because if I'm wasting my time I'll just stop.

This is a very important distinction. It is also (probably) not measurable (like so many things in economics).

[MMMMMM]

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Maybe in a very stretched out way (like the economy would be worse off if Hitler invaded the U.S. Otherwise, monster wars like WWII are a waste of people and resources.

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I'm not saying its not a waste. I'm simply stating that it improved the economy.

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I suspect the difference here may be due to: Tom looking at short-term stimulus versus PVN looking at long-term genuine benefit (or lack thereof, or anti-benefit).

[Cyrus]

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FDR ... did incalculable damage to this country.

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The evidence of ignorance spreading among the masses of Americans is right here, in this thread.

How much have you guys read about FDR and that era, aside from the texts of those already agreeing with your viewpoint ?

[tylerdurden]

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pvn, would you agree that paying people to dig ditches, and then fill them improves GDP?

I'm not asking if it makes sense or is +EV. I'm sure you see the difference.

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I want to go back to this point.

Yes, paying someone $100 to dig a ditch and fill it back up increases GDP. Just giving someone the $100 for no work would not increase GDP. In this comparison, if you think that paying the guy is better for the economy than giving the money away, you're actually subscribing to the labor theory of value.

Wait, did I just say that giving the $100 away would be better for the economy? Yes. In that case, the laborer has the $100, plus he's still available to do someting actually useful.

Now, let's ignore that minor distinction. The more interesting question is whether paying someone $100 to dig a ditch and fill it in is better than not. Clearly, when your $100 has alternative uses, it's better to save the $100 and spend it on something of value. This is worse for the ditch digger, but better for me and for whoever actually provides useful services.

Well then, what if the $100 comes out of a magical barrel of money that never runs out? If you don't understand inflation, then we probably need to start a whole new thread. Even if we had a magical barrel of money that never runs out AND doesn't cause inflation, it STILL would be a bad idea to pay for ditch digging and filling, since we could in that case just give the money away.

Note that *all* of this changes if someone places a pipe or a cable in the ditch before the guy fills it back in. In that case, the sponsor may be able to generate more than $100 by transporting gas or water or data through the conduit in the ditch.

Now, maybe I have some weird psychological thing and I just enjoy watching people work. It's an entertainment expense, perhaps. In this case, however, I would either hire people to build useful things (such as ditches for pipes), so that I could recoup my expense, or I would simply go to constuction sites and watch people work for free.