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Colin R Fraser
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GDP is the market price of all final goods produced in a year, no? What is the market price of a tank?
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The question is whether government spending was the thing that ended the Great Depression. Government policy after the war is kind of irrelevant. The standard argument in favor of this motion, as I understand it, is that government spending was high enough to create noticeable multiplier effects on aggregate demand—as one commenter put it, we spent ourselves rich. Prices went up, real output went up, and unemployment was practically zero, and so, the argument goes, the Great Depression was over. What I'm saying, and what I think the article is saying, is that it's not as clear cut as that. The biggest reason that it is not clear cut is that all macroeconomic measures were broken during the war. The unemployment rate can't really be trusted, because at its core the unemployment rate is a measure of how the market is able to provide prosperity, and the market was not providing prosperity: government and firms were forced to hire. GDP numbers can't really be trusted, since the government set all the prices of goods, and military spending can't really be said to have a market value. What is true is that investment spending decreased during the war, and it wouldn't be controversial to say that investment spending is a large source of prosperity. Another measure of prosperity, consumer spending, stayed constant by generous estimates and went down by others. The question is whether the US and Canada would have pulled out of the Great Depression at the same time or sooner without WWII, and I believe that it's silly to argue that they would not.
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What part of what I'm saying isn't accurate? I don't disagree that having enough to eat is worth something, but I find it difficult to accept the argument that there was "wartime prosperity"—not starving to death is hardly prosperity—especially when you consider the things that I've mentioned.
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16 million+ of them (in the US) were sent to another country to fight in a war. Some of the ones who were not sent to another country to fight a war were sent to jail for not going to another country to fight a war. For those people, the 40s sounds terrible. Price controls on goods degraded the quality of goods. Aside from legislated restrictions on consumption, consumers were urged to "Use It All; Wear It Out; Make It Do; or Go Without!". What good is having a job if you can't use the money it pays you to do anything?
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*In what way were they better off in the 40s than they were in the 30s, I mean.
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In what way were they better off?
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Not sure what your argument is I believe the argument goes something like this: If we define prosperity as the degree to which we may consume what we want to consume when we want to consume it, WWII did very little to enhance our prosperity. Yes, standard economic measures moved in directions that we would normally equate with higher prosperity, but because during WWII the US ran a command economy, standard economic measures were irrelevant as measures of welfare. For instance, how are we supposed to reliably calculate GDP, the market value of all final goods and services, when the things that we produced, like tanks and ammunitions, have no market value? How are we supposed to calculate inflation when the government is controlling all prices? Even by generous estimates, real personal consumption expenditures rose by 4% between 1941 and 1944 )and population rose by about that same amount) and by probably more realistic estimates, real personal consumption expenditures decreased. If people are consuming less, how can you argue that they are more prosperous? Here is where I am getting my stats: http://www.independent.org/newsroom/article.asp?id=138
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Julie: Yes, it is important to look at the big picture in many cases. However, almost nothing you just said has very much to do with whether BC HST is good tax policy or not. What are your reasons for believing that HST specifically is not a good tax policy?
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Marcello: "Do you think they're just going to stash it away like Scrooge McDuck and swim around in it? You don't think they're going to try and invest to try to be more successful? Yes. And No I don't. Because that is what they have always done before." One example of "them" "always" doing this "before"? Just one?
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Jun 10, 2010