Comments by "bart thomassen thomassen" (@thomassenbart) on "1946: The Greatest Depression in US History (prior to 2020)" video.
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After studying this historical episode, we conclude the following:
(1) Conventional wisdom is correct on one thing: there was no
depression in 1946, or anything resembling one.
(2) Accordingly, aggregate economic statistics need to be viewed with a skeptical eye, particularly in periods such as this, when there are pronounced governmental interventions in markets.
(3) The failure of the nation to enter a depression after 1944,
however, reflected not pent-up consumer demand so much as the dramatically ameliorative effects of changing relative prices on the macroeconomy.
(4) The smooth transition to peace was accomplished despite the existence of a fiscal policy that was the very antithesis of Keynesian economic prescriptions to deal with falling aggregate demand. The most dramatically contractionary fiscal policy in modern American history, failed to materially alter the pace of economic activity.
(5) Keynesian economics triumphed in politics and among aca demic economists at the very time that empirical evidence was
clearly exposing its explanatory weaknesses. The very empiricist his is not to deny, however, that there was a fair amount of economic discontent in the period. Because of continuing price controls into 1946, there were shortages of many consumer goods; labor strife ran high, with days missed because of work stoppages reaching a new peak.
(6) A market-Austrian interpretation of this historical episode is
very much more in keeping with the evidence.
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwiS2OSDyZb0AhVClGoFHZvDDy8QFnoECAMQAQ&url=https%3A%2F%2Fcdn.mises.org%2Frae5_2_1_2.pdf%3Ftoken%3Ds0L9_TOt&usg=AOvVaw3EO55LAElOVwhXQ6s_qhyj
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Being in the military, as with any govt. job, though a negative on the economic balance sheet, is absolutely not the same as being unemployed. No economy will function without security, basic govt. and obviously freedom from being pillaged by enemies. Essential govt. workers are employed by the rest of society, to fight for, protect and provide basic service for the rest. Your assertion is not correct.
You assume the natural state is one of peace and productivity. History clearly demonstrates the opposite. Nasty, brutish and short is the actual reality through most of history, so having military defense, is essential to create the environment for economic growth, beyond looting your enemies.
Yes govt. spending is all consumption but that is not the economic equivalent of unemployment. It is guns vs. butter. Employing 16 million men in WWII is an economic cost but employing millions more that were formally unproductive, is an economic positive. Producing guns, though non edible, is economic production and as long as this is not the only thing you produce, does increase real GDP, especially when it prevents your country from being conquered and or allows you do expand your markets by force. Which is exactly what happened at the end of WWII, when the US occupied fully 50% of world GDP, as opposed to 24% today.
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