20/20 Hindsight Can Be Amazing - Even In Economics

I was recently sent this 1934 Chicago Tribune Cartoon by one of my Teapublican friends.  Contrary to what some might think, I actually do have people I consider good friends that are Teapublicans. We have agreed to disagree and try not to discuss politics, certain theories of eugenics.  I politely nod at them when they break this tacit agreement and try to shift the conversation to something on which we can agree.

The interesting thing about this carton is that the advice in the lower left corner actually worked; not in the short term, but ultimately it worked, and not in the abstract . WWII resulted in the greatest deficit spending in the history of the US. This was a result of massive demand created by WWII.  It became the greated public works program the world has ever seen.  We made everything from guns and airplanes, bombs and ammunition to clothing and parachutes.  We sent all this stuff, not to mention a lot of men and women, off to war.  It got blown up or otherwise destroyed and had to be replaced.  There was demand on a massive scale and that demand for war materials not only jump-started the economy, but pushed it into high gear.

WWII is proof positive that the US economy is demand driven. Not only did WWII provide for a way out of the Depression, but also started the longest period of economic growth and prosperity the US has ever seen. It was not "trickle-down" anything, it was DEMAND! The war created demand, the government, by absolute necessity, had to become the biggest consumer.  Because the US was literally fighting for the survival of a way of life, we didn't care how often, nor how much, we over drafted the government checking account.

The conservative ideologues, Teapublicans, that believe we should give tax breaks to the rich and Corporate America are fooling themselves, or just lying.  Give a rich man or a corporation a tax break, absent someone to buy his goods or services, he puts the money in the bank and waits. Sure, they can invest the money, but without demand, it is just a cash reserve; it sits somewhere waiting for demand to create the need for more production and expansion. 

If we give someone that is living from paycheck to paycheck a tax break, he spends the money and creates demand, which causes the corporation to make more products or provide more services.  It is not exactly rocket science.  The fancy term is Keynesian Economics, named for John Maynard Keynes, who in 1999 was named one of Time Magazine’s 100-most influential people of the 20^th Century. 

 

Interestingly enough, George W. Bush, a patron saint of neo-conservatism, used Keynesian economic theory as the underpinnings of his response to the economic crisis of 2007-2008 [Insert Teapublican gasp here].  Yes Teapublicans, even George figured out that the Laffer Curve had long-since been debunked, a worthless, if warm and fuzzy feeling, theory.

So, while we wait for the Teapublicans to crash the economy if they don’t get their way, they send around a cartoon that proves the point they think is evil, rude, immoral, unethical and, probably, fattening.  Amazing!