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It's not about 'wisely' in terms of returns to the individual who invested, it's about 'wisely' in terms of creating aggregate demand. For example, funding a b

by jbooth 11y ago

It's not about 'wisely' in terms of returns to the individual who invested, it's about 'wisely' in terms of creating aggregate demand. For example, funding a bunch of national infrastructure projects would have horrible returns, being a 100% loss to the person who spent the money. But that money circulates in the economy, creating demand, and we get the infrastructure afterwards as well. That's speculation, of course, but we can look back to the New Deal to see that it's worked at least once before, and look at current-day corporate balance sheets and their underwhelming investment in demand-creating ventures to see that what we're doing now is not working. If the goal was to generate novel tax-avoidance schemes like the double-irish, though, we'd be a rousing success, so there's that.

clarkmoody 11y ago
Many smart people argue that the New Deal prolonged the Great Depression due to the government's incessant meddling in the market with price controls and new regulations.
- deleted 11y ago
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- jellicle 11y ago
  Nobody honest does. But I do agree with you that any economic opinion, no matter how nonsensical and contrary to evidence, can be purchased.
  - dragonwriter 11y ago
    > Nobody honest does. Maybe nobody who is all of honest, aware of the relevant documented facts, and sufficiently intelligent does. Maybe. But there are certainly people who are smart, people who are honest, and even people who are smart and honest that believe that the New Deal exacerbated the Depression in the way described. (Note that I very much do not endorse the idea that these beliefs are correct.)
cpeterso 11y ago
> we can look back to the New Deal to see that it's worked at least once before If only more legislation was evidence-based..
marcoperaza 11y ago
There are very respected economists and historians on all sides of debate as to whether the New Deal programs were effective, not effective, or if they actually prolonged the depression. Also, the New Deal was multi-faceted, so any analysis of its effectiveness needs to be specific. What parts were effective? Giving legal privileges to labour unions? Infrastructure investment? Social Security? Tax changes? You also have to consider the political side. Some of the New Deal proponents claimed that they saved capitalism, by preventing the crisis from boiling over to revolution. If they're right, there's certainly value in that. Now apply any lessons learned to today, a very different set of economic, social, and political circumstances. Also, beware of the broken window fallacy. Unproductive make-work is of no net benefit to society, and if foregone productive work is the opportunity cost, it's a net loss. Obviously, infrastructure investment is ideally productive, but the government has a pretty terrible track record for effectively spending money.

by jbooth 11y ago

clarkmoody 11y ago

Many smart people argue that the New Deal prolonged the Great Depression due to the government's incessant meddling in the market with price controls and new regulations.

deleted 11y ago
[deleted]
jellicle 11y ago
Nobody honest does. But I do agree with you that any economic opinion, no matter how nonsensical and contrary to evidence, can be purchased.
- dragonwriter 11y ago
  > Nobody honest does. Maybe nobody who is all of honest, aware of the relevant documented facts, and sufficiently intelligent does. Maybe. But there are certainly people who are smart, people who are honest, and even people who are smart and honest that believe that the New Deal exacerbated the Depression in the way described. (Note that I very much do not endorse the idea that these beliefs are correct.)

cpeterso 11y ago

> we can look back to the New Deal to see that it's worked at least once before If only more legislation was evidence-based..

marcoperaza 11y ago

There are very respected economists and historians on all sides of debate as to whether the New Deal programs were effective, not effective, or if they actually prolonged the depression. Also, the New Deal was multi-faceted, so any analysis of its effectiveness needs to be specific. What parts were effective? Giving legal privileges to labour unions? Infrastructure investment? Social Security? Tax changes? You also have to consider the political side. Some of the New Deal proponents claimed that they saved capitalism, by preventing the crisis from boiling over to revolution. If they're right, there's certainly value in that. Now apply any lessons learned to today, a very different set of economic, social, and political circumstances. Also, beware of the broken window fallacy. Unproductive make-work is of no net benefit to society, and if foregone productive work is the opportunity cost, it's a net loss. Obviously, infrastructure investment is ideally productive, but the government has a pretty terrible track record for effectively spending money.