Monday, December 1, 2008

Depression talk

Economic depression that is...

There's lots of discussion of the 1930s and the great depression as folks muster comparisons to the current economic situation. What I find interesting and don't quite "buy" is the conclusion that somehow a war is the way out of a depression.

I find it hard to understand how if we put all our efforts into a bombs that explode, into machines that destroy each other, into lives that are extinguished - that somehow all that destruction equals good news for the economy.

I guess essentially I'm questioning the statement repeated over and over that reinforces the view that war is good for the economy, and that WWII actually brought us out of the depression.

The Danger: If it is widely believed that war spending - or any kind of spending for that matter - produces economic benefits, then we're likely to not require spending to be tied to "productive" spending or spending that is expected to have positive economic benefits.

I can fill up canisters with gunpowder all day, and sell them to someone who blows them up at the end of the day - and I've created economic growth, but I haven't really produced anything. Similarly, I'm afraid we can bail out companies all day, we can cause alot of activity, but if they all disappear at the end of the day have we really produced anything? (or even worse - what if these hulking dying companies survive only to prolong a death whose time has come?)

I hope the large economic federal spending that we'll be injecting into the economy in the coming year or years tries to remain focused on "productive" outcomes. Whatever we spend it on, make sure it exists in a viable way at the end of the day. And I'm not necessarily sure I'm against large upheaval and turnover in the economy. Creative destruction can be good and often is necessary to clear the landscape for new ideas. The dinosaurs had to go before I could be here to write this. (and I'm not making a value judgment here - maybe the dinosaur's blog could've been far more interesting if he'd have survived instead).

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