# How can enormously wasteful enterprises be good for an economy?
**URL:** https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281
**Category:** Great Debates
**Created:** [June 25, 2012, 7:45pm UTC](https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281 "2012-06-25T19:45:20Z")
**Posts on this page:** 20
**Page:** 4
### Author:  [@lance\_strongarm](https://boards.straightdope.com/u/lance_strongarm)
#### Post date: [June 26, 2012, 2:47pm UTC](https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281/61 "2012-06-26T14:47:57Z")
> [@XT](#):
>
> Obviously I disagree…mainly with your assertion of an absolute.
I will readily agree that there are no absolutes in economics.
> [@](#):
>
> It might work out that way, but it’s not a given. Or, to put it a different way, what evidence do you have that this has happened historically? That borrowing a lot of money simply to put a bunch of people who were out of work back to work and without expanding markets in any other way has made any economic system ‘self-sustaining’. I can’t think of a single historical example where this was the case without some external expansion, but if you can then I’ll consider it seriously.
That’s a question that begets entire books, not just debates on the internet.
But I dug a little, and the first reliable hit I got was an article by, well, you know who.
> **[Opinion | Keynes Was Right (Published 2011)](https://www.nytimes.com/2011/12/30/opinion/keynes-was-right.html)**
>
> Once again, when politicians and policy makers decided to focus on deficits, not jobs, they proved Keynes right about a slump being the wrong time for austerity.
---
### Author:  [@Hentor\_the\_Barbarian](https://boards.straightdope.com/u/Hentor_the_Barbarian)
#### Post date: [June 26, 2012, 3:01pm UTC](https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281/62 "2012-06-26T15:01:34Z")
> [@XT](#):
>
> Maybe I’m misunderhearing you…I’ve only skimmed your cite while I’m traveling around this morning…but looking at the charts under “II. The Post-WWII Western European Miracle” I see that Germany didn’t get back on track until just about 1960 (that would be 15 years…i.e. ‘years’ plus a ‘decade’), same with France and Britain. Looks like, interestingly enough, that Italy was actually ahead of the curve…though the chart isn’t exactly precise it looks to me like they were back on track by the mid 50’s. That jibes with my own anecdotal memories (I was pretty young in the 60’s). From memory the various Asian countries had similar timelines of recovery (IIRC, the 60’s is when Japan really got back on track and started to be really competitive).
>
> And this recovery IS remarkable. Think about it…they went from a totally devastating war to being back to where they were prior to the war in less than 20 years. That’s pretty remarkable.
>
> -XT
You’re wrong about France, and I believe that your recollection is off about Japan.
But my main point lies more in the spiked points that show up starting in 1945 for essentially every country. Rather than the US benefitting from the opportunity to bend war torn countries over a barrel and give then a rogering, it looks like a period of dramatically mutually beneficient international trade.
And how much rogering could we be doing when our tranfers abroad spiked up in the late 1940s? Further, these war torn countries were able to dramatically increase their GDPs while also establishing significant social safety nets for people.
In the US, we had the Great Compression, where a fairly consistent distribution of wealth and opportunities for the middle class to buy homes and other goods saw a period of personal stability and broader economic growth than ever before or since.
This idea that the US prospered because other countries were bent over the barrel just doesn’t fit the evidence, and does seem like fiction tailored to fit a particular partisan agenda.
---
### Author:  [@Great\_Antibob](https://boards.straightdope.com/u/Great_Antibob)
#### Post date: [June 26, 2012, 3:12pm UTC](https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281/63 "2012-06-26T15:12:40Z")
> [@Hentor\_the\_Barbarian](#):
>
> YAnd how much rogering could we be doing when our tranfers abroad spiked up in the late 1940s?
Just to help you with your point a bit: [Ahem.](http://en.wikipedia.org/wiki/Marshall_Plan)
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### Author:  [@Hentor\_the\_Barbarian](https://boards.straightdope.com/u/Hentor_the_Barbarian)
#### Post date: [June 26, 2012, 3:36pm UTC](https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281/64 "2012-06-26T15:36:48Z")
> [@Great\_Antibob](#):
>
> Just to help you with your point a bit: [Ahem.](http://en.wikipedia.org/wiki/Marshall_Plan)
Thanks for making that clear, and the Brad DeLong piece was written in some measure with a specific focus on the Marshall Plan. One point that I hadn’t really thought of in the same way, though, that DeLong made was that the spending by multiple governments on the development of NATO was itself a stabilizing and economically enhancing force. He has a figure that shows military and non-military unilateral transfers from the US to Europe.
His summary:
> [@](#):
>
> The short answer is that post-WWII western European economic policy was so successful because it tapped into a virtuous circle. Trade expansion drove growth, growth drove expanded social insurance programs and real wage levels; expanded social insurance states and real wage levels social peace, social peace allowed inflation to stay low even as output expanded rapidly, rapidly expanding output led to high investment, which further increased growth and created the preconditions for further expansions of international trade.
>
> Add all these factors up, and find an extra 1.5 to 2.0 percent per year of productivity growth–the approximate magnitude of the unexpectedly-rapid growth of the post-WWII western European miracle–coming from nothing but the fact that things had started off on the right foot.
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### Author:  [@XT](https://boards.straightdope.com/u/XT)
#### Post date: [June 26, 2012, 3:41pm UTC](https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281/65 "2012-06-26T15:41:04Z")
[QUOTE=Hentor the Barbarian]
You’re wrong about France, and I believe that your recollection is off about Japan.
[/QUOTE]
Well, it’s your cite (which I can’t access now for some reason…I keep getting a page not found error for some reason). It looked to me as if France got back on track in the late 50’s to early 60’s according to the chart there (from memory now). As for Japan, [this](http://en.wikipedia.org/wiki/Japanese_post-war_economic_miracle) seems to indicate that they started to get on track in the mid-50’s that set the stage for their expansion in the ‘Golden 60’s’.
> [@](#):
>
> The period of rapid economic growth between 1955 and 1961 paved the way for the “Golden Sixties,” the second decade that is generally associated with the Japanese economic miracle. In 1965, Japan’s nominal GDP was estimated at just over $91 billion. Fifteen years later, in 1980, the nominal GDP had soared to a record $1.065 trillion.
> [@](#):
>
> But my main point lies more in the spiked points that show up starting in 1945 for essentially every country. Rather than the US benefitting from the opportunity to bend war torn countries over a barrel and give then a rogering, it looks like a period of dramatically mutually beneficient international trade.
The US benefited from a near monopoly in the post war period for industrial manufactured goods and services. Of COURSE it was mutually beneficial…I never said differently. It’s the primary reason you see all of those countries recovering so fast…the US invested huge amounts of money and effort into making that happen, which further stimulated our own economy and opened up vast new markets world wide for our products. You seem to be taking my off hand statement of having them ‘over a barrel’ to ludicrous lengths.
> [@](#):
>
> And how much rogering could we be doing when our tranfers abroad spiked up in the late 1940s?
You are really fixated on your rogering thingy, so I can see where your mind is. I’ll point out that it’s YOUR rogering thingy, not mine…you are taking what I wrote out of context and spinning it in your own way for your own reasons.
As to your question, again I’ll point out that our early industrial manufacturing monopoly translated, down the road, into huge new markets for our products. Seriously, have you never seen US products in other countries?? In the 50’s, 60’s and 70’s a lot of US products were nearly ubiquitous in places like Europe and various Asian countries, and even today you’ll see lots of iconic US products in those places.
> [@](#):
>
> Further, these war torn countries were able to dramatically increase their GDPs while also establishing significant social safety nets for people.
Well yeah…of course. Gods know what point you think you are making here, because I sure don’t. If you thought I was denying this or something else then, again, you are misreading what I’m writing and putting your own (sexual) spin on things. Possibly you need to not fixate so much on having someone over a barrel and ready for a good rogering. 😛
> [@](#):
>
> In the US, we had the Great Compression, where a fairly consistent distribution of wealth and opportunities for the middle class to buy homes and other goods saw a period of personal stability and broader economic growth than ever before or since.
And we had a period of economic expansion unrivaled in history, due mainly to a huge leap in manufactured goods and services we were providing throughout the world. That triggered greater domestic market expansion, as everyone wanted a new car, a house of their own and all of the other goodies we Americans like so much. It allowed us to pay off those large debts while continuing to drive our economy forward. Where you start to see the US industrial Juggernaut slow down is when all those other countries started to get their own shit together, and we no longer had an industrial manufacturing monopoly selling to the world. Other countries started to compete with us more and more seriously, and we basically lost market share. It was inevitable, and it allowed us to move into a post industrial era that continues to allow us to expand economically…it’s just that our manufactured goods and services are all more niche oriented today, with a lot of value add (necessary since our labor is more expensive than most in the world).
> [@](#):
>
> This idea that the US prospered because other countries were bent over the barrel just doesn’t fit the evidence, and does seem like fiction tailored to fit a particular partisan agenda.
Well, your spin certainly shows SOME sort of agenda, but I think it speaks more to some sexual quirk of your own than anything partisan. 😛 I’m curious though…what do you presume is my ‘particular partisan agenda’ here? How does it work exactly?
-XT
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### Author:  [@Hentor\_the\_Barbarian](https://boards.straightdope.com/u/Hentor_the_Barbarian)
#### Post date: [June 26, 2012, 4:36pm UTC](https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281/66 "2012-06-26T16:36:28Z")
> [@XT](#):
>
> And we had a period of economic expansion unrivaled in history, due mainly to a huge leap in manufactured goods and services we were providing throughout the world. That triggered greater domestic market expansion, as everyone wanted a new car, a house of their own and all of the other goodies we Americans like so much. It allowed us to pay off those large debts while continuing to drive our economy forward. Where you start to see the US industrial Juggernaut slow down is when all those other countries started to get their own shit together, and we no longer had an industrial manufacturing monopoly selling to the world. Other countries started to compete with us more and more seriously, and we basically lost market share. It was inevitable, and it allowed us to move into a post industrial era that continues to allow us to expand economically…it’s just that our manufactured goods and services are all more niche oriented today, with a lot of value add (necessary since our labor is more expensive than most in the world).
See, you say these things without providing any sort of evidence or data or cites, and then I have to take the time to go and look, and it keeps turning out that you’re saying untruths.
Where is the “huge leap in manufactured goods and services”? Can you provide evidence of this? Because stuff like this: [trade1903](http://www.econdataus.com/trade05.html)
shows a decline in goods exports from 1945-1950, a slight uptick in imports during that same period, and a plateau of each through the 1950s.
When you make a claim, would you please back it up with something?
> [@](#):
>
> Well, your spin certainly shows SOME sort of agenda, but I think it speaks more to some sexual quirk of your own than anything partisan. 😛 I’m curious though…what do you presume is my ‘particular partisan agenda’ here? How does it work exactly?
>
> -XT
Because you seem to just be regurgitating some tired conservative nonsense about how the New Deal was not effective and Keynesian models did not explain the recovery from the Great Depression and the US economic expansion through the 1950s and 60s. Statements without basis in fact, vague stuff about opening of markets, etc. etc.
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### Author:  [@John\_Mace](https://boards.straightdope.com/u/John_Mace)
#### Post date: [June 26, 2012, 4:37pm UTC](https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281/67 "2012-06-26T16:37:58Z")
> [@XT](#):
>
> I’m probably closer to that than John here is, and my thought on John’s band name would be ‘he shouldn’t give up the day job’…
>
> 😛
>
> -XT
I see you didn’t get the actual joke. No biggie.
---
### Author:  [@XT](https://boards.straightdope.com/u/XT)
#### Post date: [June 26, 2012, 5:16pm UTC](https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281/68 "2012-06-26T17:16:12Z")
[QUOTE=Hentor the Barbarian]
See, you say these things without providing any sort of evidence or data or cites, and then I have to take the time to go and look, and it keeps turning out that you’re saying untruths.
[/QUOTE]
And yet, you’ve not been outstandingly successful in doing so thus far. In fact, you don’t seem to be all that successful in even reading what I’m writing and understanding it. Instead, it’s almost like you are responding to some tape recorder of what you think a ‘tired conservative’ would be saying. You gave a cite, I looked at it and pointed out that the charts pretty much demonstrated that the statement I was responding to of yours was wrong, and that while it didn’t prove me completely right it certainly showed I was closer to it than you were. Yet, this demonstrates, someone in your convoluted ‘logic’ that I was lying somehow (well, telling ‘untruths’…a very clever distinction, no doubt, to avoid the rule of calling someone a lair in this forum. I’m sure no one will detect that…nope, very clever).
> [@](#):
>
> Where is the “huge leap in manufactured goods and services”? Can you provide evidence of this? Because stuff like this: [trade1903](http://www.econdataus.com/trade05.html)
Well, it’s on your chart there. The top one, since the bottom one starts in the 60’s. It’s the green dotted line. You could, of course, have asked me for a cite before calling me a liar, but that doesn’t seem to be your way. Are you questioning that US trade expanded rapidly in the post war period, or that our manufacturing expanded rapidly in the post war period…or something else. Because it’s not clear to me, through the snark, just what the fuck you ARE question, aside from my veracity.
> [@](#):
>
> shows a decline in goods exports from 1945-1950, a slight uptick in imports during that same period, and a plateau of each through the 1950s.
Did this chart count aid due to things like the Marshal plan? Did you think that US exports due to aid from things like the Marshal Plan only accounted for a slight uptick in US exports? Did they only count as a slight uptick in the countries we provided that aid to?? And, finally, after we phased down that foreign aid, do you say that it didn’t allow US products to penetrate large new foreign markets??
Here’s the thing…I might be wrong about all of this, but I’m not lying, contrary to your assertion. Thus far I’ve seen nothing from you that indicates that I AM wrong, at least about the basics here. Your cites don’t seem to show that anything I’ve said is incorrect (let alone to be a deliberate lie). What I’m seeing here is you don’t seem to understand what I’m saying and are arguing with me just out of habit.
> [@](#):
>
> When you make a claim, would you please back it up with something?
Sure Hentor…my pleasure. What, exactly, are you questioning and want a cite for?
> [@](#):
>
> Because you seem to just be regurgitating some tired conservative nonsense about how the New Deal was not effective and Keynesian models did not explain the recovery from the Great Depression and the US economic expansion through the 1950s and 60s. Statements without basis in fact, vague stuff about opening of markets, etc. etc.
And see, I wasn’t saying much about the New Deal or Keynes. I asked a question (unanswered) as to why, despite FDR borrowing heavily in the early 30’s and putting people back to work, this didn’t solve all our economic woes and make our economy ‘sustainable’ (as part of a side discussion), but that was really the only part I even remotely addressed. In point of fact, I think that having the government borrow heavily to ramp up our war fighting (and thus manufacturing) industries was one of the key aspects in our later economic growth. The others being the US participation in the war that put us in a key position to effect the peace, our strong military ensuring a relatively peaceful period in the post war era, our ability to institute and enforce a free(er) trade system, assisting in rebuilding the economies of friend and ex-foe alike (which gets back to all that borrowing that stimulated US industry and put it in the position to be able to do all these things in the post war era), plus a few more things. You are assuming you know my argument here without, seemingly, knowing it. You ASSUME it’s all about a smack down on FDR and Keynes, when it’s really not.
I’m sorry that you think that there is no basis in fact that the US did in fact expand it’s trade massively in the post war era. Your own cite shows that we did. Look at exports…it rose from $9.7 billion in 1946 to $114 billion in 1976 (I’m assuming adjusted dollars…if not then it wouldn’t be correct). Compare that to the $4.0 billion in 1940 (and this is even including Lend Lease, presumably). If you don’t see that as a huge expansion of US exports leading to one of the cornerstones of our economic golden age then I don’t know what else to tell you. If you don’t see that US corporations made huge strides in opening up global markets in the post war period then, again, I have no idea what to say to that. To me it’s like asking if water is wet or the sky is blue.
-XT
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### Author:  [@XT](https://boards.straightdope.com/u/XT)
#### Post date: [June 26, 2012, 5:17pm UTC](https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281/69 "2012-06-26T17:17:35Z")
[QUOTE=John Mace]
I see you didn’t get the actual joke. No biggie.
[/QUOTE]
Nope, didn’t get it.
-XT
---
### Author:  [@Ruminator](https://boards.straightdope.com/u/Ruminator)
#### Post date: [June 26, 2012, 5:27pm UTC](https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281/70 "2012-06-26T17:27:35Z")
> [@Hentor\_the\_Barbarian](#):
>
> This all bears no resemblance whatsoever to anything that has ever happened in reality.
Reality is Japan, Portugal, Greece, etc. Plenty of internal government officials and economists _from within those countries_ readily admit Keynes stimulus does not work, if one cares to look for them.
> [@](#):
>
> It sounds fevered and scary!
In 2008, Paul Krugman said we needed 1.3 trillion of stimulus.
In a 2010 CNBC interview, he said we needed 10 trillion of quantitative easing.
Gee, can we guess what’s his next insightful profound remedy will be? “$100 trillion!!!”
Skeptic: “Uh, Paul… total worldwide GDP is only 60 trillion.”
Paul: “Well then! That right there is the problem to our worldwide economic slowdown!”
Yep, I have the luxury of mocking Krugman in a post he won’t see. In any case, the next paradigm shift in economic thinking will expose Paul Krugman and Keynes as fundamentally flawed. I daresay they will be viewed by future college economics students as quacks. The concept of “economic stimulus by QE” degraded to the equivalent to “chemistry by alchemy”.
> [@XT](#):
>
> The others being the US participation in the war that put us in a key position to effect the peace, our strong military ensuring a relatively peaceful period in the post war era,
…which also allowed the United States dollar currency to supplant the English pound as a worldwide reserve currency. This gives the USA a hidden discount to buy foreign goods. The US reserve currency status is one of the factors that’s independent from any “planned” Keynesian strategies.
In the 1950s, there was an unusual combination of worldwide factors that allowed an American high-school dropout to earn a above-average middle-class income while the wife stayed at home with the kids. That was a one-time historical anomaly. Those factors are gone and $10 trillion of “stimulus” won’t bring it back.
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### Author:  [@lance\_strongarm](https://boards.straightdope.com/u/lance_strongarm)
#### Post date: [June 26, 2012, 5:30pm UTC](https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281/71 "2012-06-26T17:30:41Z")
> [@XT](#):
>
> I asked a question (unanswered) as to why, despite FDR borrowing heavily in the early 30’s and putting people back to work, this didn’t solve all our economic woes and make our economy ‘sustainable’
Why do you say it didn’t?
Unemployment was about 4% in 1929. It shot up to 25% in 1932. FDR took office in 1933. Unemployment dropped steadily until going up again in 1937 a bit, then dropped more. By 1941 it was down to 10% and kept falling fast into 1942.
We can debate for days and days exactly why this all happened. But the mainstream view among economists is that the New Deal worked, and the reason it didn’t work faster (and there was a new recession in 1937) is that it should have been even more aggressive.
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### Author:  [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)
#### Post date: [June 26, 2012, 5:37pm UTC](https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281/72 "2012-06-26T17:37:07Z")
I can’t believe I am the first to say this.
This is all explained in great detail in Chapter 3 of [The Theory and Practice of Oligarchical Collectivism](http://www.newspeakdictionary.com/go-goldstein.html) by Emmanuel Goldstein.
**War is Peace**
Jeez, I thought you people were a well-read group.
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### Author:  [@Great\_Antibob](https://boards.straightdope.com/u/Great_Antibob)
#### Post date: [June 26, 2012, 5:50pm UTC](https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281/73 "2012-06-26T17:50:21Z")
> [@Ruminator](#):
>
> In 2008, Paul Krugman said we needed 1.3 trillion of stimulus.
>
> In a 2010 CNBC interview, he said we needed 10 trillion of quantitative easing.
>
> Gee, can we guess what’s his next insightful profound remedy will be? “$100 trillion!!!”
Based on this, it appears you don’t understand the difference (or that there is a difference) between fiscal and monetary stimulus. Or that quantitative easing is but one form of monetary policy that can be loosely interpreted as stimulative.
It’s on you to get definitions straight, rather than assuming the guy with the economics job is getting it wrong.
---
### Author:  [@Hentor\_the\_Barbarian](https://boards.straightdope.com/u/Hentor_the_Barbarian)
#### Post date: [June 26, 2012, 5:54pm UTC](https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281/74 "2012-06-26T17:54:15Z")
> [@LonghornDave](#):
>
> I can’t believe I am the first to say this.
>
> This is all explained in great detail in Chapter 3 of [The Theory and Practice of Oligarchical Collectivism](http://www.newspeakdictionary.com/go-goldstein.html) by Emmanuel Goldstein.
>
> **War is Peace**
>
> Jeez, I thought you people were a well-read group.
Whoa! Man, that is like… so… deep or something, man.
Let me just try to comprehend that for a moment.
Man, Krugman is undone by your three word statement. He will have to surrender his Nobel for sure, man.
---
### Author:  [@Kevbo](https://boards.straightdope.com/u/Kevbo)
#### Post date: [June 26, 2012, 6:00pm UTC](https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281/75 "2012-06-26T18:00:13Z")
> [@FixMyIgnorance](#):
>
> Didn’t a lot of the debt we took on during the wars come back to haunt us in the present?
The WW2 debt was largely paid off by the recession of the mid-late 1970s. As a percentage of GDP, the public debt fell to essentially pre-WW2 levels at that point and was holding approximatly level during Jimmy Carter’s term. It increased hugely during the Reagan & Bush I terms, as well as during Clinton’s first term. By Clinton’s second term, the economy had swelled so much from the [dot.com](http://dot.com) boom, that the debt was once again headed downward. The [dot.com](http://dot.com) crash, followed by 9/11, followed by immersion in two wars, followed by the financial crisis/real estate bust/recession has radically increased spending.
Apropos the current thread, Reagan’s spending early in his first term was probably needed to break free of the late-70’s recession, just as Obama’s spending is stimulating the current economy. Very much on-topic the $26 billion B-1b program and the Grenada invasion were pretty much the equivalent of paying people to dig ditches, then fill them in. The B-2 was in the works, leaving no real role for the B-1 over the B-52, and the US had no strategic or economic interests in Grenada. Throw in the useless and futile “War on Drugs” as well, except there we are paying people to dig prison cells and fill them in with poor people.
What is REALLY stupid is racking up debt during the boom times, as was done during Ronnie’s second term and under both Bushes. That is the time to be stocking the larder for the lean times to come.
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### Author:  [@Simplicio](https://boards.straightdope.com/u/Simplicio)
#### Post date: [June 26, 2012, 6:00pm UTC](https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281/76 "2012-06-26T18:00:18Z")
> [@LonghornDave](#):
>
> I can’t believe I am the first to say this.
>
> This is all explained in great detail in Chapter 3 of [The Theory and Practice of Oligarchical Collectivism](http://www.newspeakdictionary.com/go-goldstein.html) by Emmanuel Goldstein.
>
> **War is Peace**
>
> Jeez, I thought you people were a well-read group.
I agree, we should adopt the economic policies advocated by George Orwell.
---
### Author:  [@Ruminator](https://boards.straightdope.com/u/Ruminator)
#### Post date: [June 26, 2012, 6:00pm UTC](https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281/77 "2012-06-26T18:00:53Z")
> [@Great\_Antibob](#):
>
> Based on this, it appears you don’t understand the difference (or that there is a difference) between fiscal and monetary stimulus.
I understand the difference. That’s why I notated them differently.
It seems you’re the one that doesn’t understand they are related. Look past the labels. (And also look past someone’s credentials to see if they spew idiotic ideas. (as I type this, I see another poster has whipped out the N-word again… “Nobel”… well keep in mind that PK didn’t get a Nobel for his work in analyzing effectiveness of economic stimulus.)
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### Author:  [@Kevbo](https://boards.straightdope.com/u/Kevbo)
#### Post date: [June 26, 2012, 6:15pm UTC](https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281/78 "2012-06-26T18:15:48Z")
> [@leahcim](#):
>
> But, at the start of the scenario, some entrepreneurial islanders could have said, “There are a bunch of unemployed people, and I bet that the employed people would buy vegetables if they were available, so I’m going to hire some of the unemployed people and start up some vegetable farms” and get to the same end scenario more efficiently.
It would be efficient if that is how people who wield capital act, but that is not what what entrepreneurial ventures look like. The VC’s would look at the island and say “That island is filled with people who mostly have no money, they can’t even buy all the fish that is available. There is thus no market for vegetables. If you want start-up capital, show me the market. In the meantime, I think I’ll invest in these nice safe municipal bonds.”
No matter how wishful the thinking the Right engages in, supply side stimulus (tax cuts for rich people) has never worked anywhere near as well as demand-side stimulus. Supply side stimulus always has a multiplier effect less than one, and demand side always has a multiplier greater than one, and sometimes near 2 or three. It is WAY more efficient in practice.
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### Author:  [@LonghornDave](https://boards.straightdope.com/u/LonghornDave)
#### Post date: [June 26, 2012, 6:31pm UTC](https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281/79 "2012-06-26T18:31:35Z")
> [@Hentor\_the\_Barbarian](#):
>
> Whoa! Man, that is like… so… deep or something, man.
>
> Let me just try to comprehend that for a moment.
>
> Man, Krugman is undone by your three word statement. He will have to surrender his Nobel for sure, man.
Yes, I’d say it is fairly clear that the reference has gone over your head. Just to clue you in, I have made no statement (three-words or otherwise).
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### Author:  [@Hentor\_the\_Barbarian](https://boards.straightdope.com/u/Hentor_the_Barbarian)
#### Post date: [June 26, 2012, 6:35pm UTC](https://boards.straightdope.com/t/how-can-enormously-wasteful-enterprises-be-good-for-an-economy/626281/80 "2012-06-26T18:35:39Z")
> [@LonghornDave](#):
>
> Yes, I’d say it is fairly clear that the reference has gone over your head. Just to clue you in, I have made no statement (three-words or otherwise).
Now my mind is totally blown!!! Like, you didn’t come up with those wise words yourself??? Cause, there like so deep and ive never herd then before. But there totally like applicable to the present discussion. How did you ever think them up, man?
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