Did World War II spending boost economic growth? Although some statistics appear to affirm this, wiser historical analysis demonstrates that artificial increases in output during the war masked a debilitated private economy. Meaningful growth increased after the war, when free-market mechanisms returned and marginal tax rates were reduced. Gross national product (GNP), the total value of everything produced by United States domestically or abroad, did increase during the war and trended downward as the war ended in 1945, falling considerably in 1946 and 1947. It would be shallow analysis, however, … More
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President Obama will deliver his third State of the Union address on Tuesday night. According to a preview video released this weekend, the speech will outline Obama’s vision for improving the economy and creating jobs. With an unemployment rate of 8.5 percent, there’s much work to be done. But after three years of Obama’s failed policies, it’s unclear if anything Obama says Tuesday night will differ from the Keynesian ideas he’s already proposed. This week’s chart comes from Heritage’s analysis of the December unemployment report. The economy added 200,000 jobs … More
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The remarks of Alan Krueger, chairman of Obama’s Council of Economic Advisers, asserting that taxing the rich can spur economic growth demonstrate that he and the Administration are nothing if not consistent in their mistakes. Krueger says that there is growing income inequality in the United States, that this growing inequality contributes to slowing economic growth, and that raising taxes on the wealthy to offset some of this growing income inequality would actually stimulate the economy in the near term. While income inequality in the United States is growing, the … More
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As we’ve argued countless times, government attempts to stimulate the economy create uncertainty that often paralyzes business decisions. Don’t take our word, though. In a letter to President Roosevelt during the Great Depression, the father of Keynesianism himself, John Maynard Keynes, wrote the following: You are engaged on a double task, Recovery and Reform…. Even wise and necessary Reform may, in some respects, impede and complicate Recovery. For it will upset the confidence of the business world and weaken their existing motives to action, before you have had time to … More
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President Obama’s economic stimulus was supposed to revive America’s economy and put people back to work. But nearly three years after Democrats rammed the bill through Congress, it’s a clear-cut failure. The nation’s 8.6 percent unemployment rate stands out as one of consequences. Then there is the high-profile Solyndra scandal and countless other government schemes gone awry. In a new video from Reason.tv, Jim Epstein takes a closer look at other examples — in a setting just a few miles from Capitol Hill. In Silver Spring, MD, government contractors pocketed … More
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