From a full-page ad in the New York Times signed by more than 200 economists, including three Nobel laureates:
More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s. More government spending did not solve Japan’s “lost decade” in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the U.S. today.
If I observe that exercise didn’t by itself solve the weight problems of persons A and B, should I infer that it won’t help C?
You are right that their example does not prove that spending won’t help. Of course, there is nothing illogical with what they are saying, which is that the evidence we have of X, we have no evidence that X leads to Y.
So if we looked at all the evidence we have of exercise, and we could not a demonstrable improvement in weight (ditching the silly solve/help dynamic), then yes, your analogy would hold.
If there are no examples of X leading to a demonstrable improvement in Y, should I infer that X won’t help Y in this new context?
I’m on the fence on stimulus, but let’s be frank, the most compelling argument for stimulus admits we have no evidence it will work, but argues that the sample size is so small that we can’t rule out that it will work, and that it’s worth the risk.
Fred jumped of a cliff, fell, and smashed his brains open.
Ted jumped of the cliff, fell, and smashed his brain open too.
So if Lisa did the same thing, the outcome will be different?
No the New Deal didn’t end the Great Depression. The government spending of WWII did – and technically that’s government spending by FDR in the 1940s, and not the 1930s. Of, what clever rhetoric.
“The government spending of WWII did” — Is that a vote for the Iraq War stimulus package?
(MeThinks recovery more linked to being lone industrial power standing AFTER the war, allowing for real growth after wasteful spending of war)
Plus, the evidence in economics is overwhelming that it did help persons A and B tremendously. It’s downright embarrassing for a supposed economist to say that he thinks the government spending for World War II had no effect on ending the Great Depression. I think this is why Arnold Kling, as Libertarian as he is, could not bring himself to sign this. Here’s the comment on this I left on his blog:
I’m impressed that Arnold didn’t sign this. It’s sad that this will help confuse the public. They won’t realize that the economists who signed this did so not because smart government investment won’t increase growth in wealth, science, technology, and total societal utility greatly. Instead they signed this for these reasons:
1) They understand that smart government investment will increase growth in wealth, science, technology, and total societal utility greatly, but they are willing to give this up to gain even little bits of extra economic freedom, that is they’re very libertarian.
2) They don’t understand the macroeconomics. They became economics or finance professors producing research in a very different, and perhaps very narrow, specialization. It’s like asking a civil engineer, or even a civil engineer who narrowly only works on a specialization in tensile strength, for advice on a computer engineering. Even if he’s a great civil engineer he may understand very little about computer engineering. Fama’s the quintessential example of this.
3) Government being more valuable would make their research less valuable, so they lie and/or mislead about the value of government.
4) They’re well compensated, or hope to be, with high paying jobs, consulting, etc. by the right wing machine.
5) They just hate it when the government takes their money and the money of the wealthy and they care more about decreasing this than the fact that smart government investment will increase growth in wealth, science, technology, and total societal utility greatly.
It should also be noted that a petition in favor of smart government spending was signed by far more Nobel Laurents and top economists in 2003.
Sven, yeah, that 1930’s thing is very Mankiwesque. Nonetheless, the economic evidence is still overwhelming for the 1930s.
Are you implying that the Cato Institute is anything but an objective fount of scientific knowledge?
But that is the problem isn’t it. Everybody expects that things will get worse EVEN with a stimulus. The stimulus is a palliative not a cure.
I made a comment elsewhere that said something like,
if a patient is lying by the roadside after a smash, and you “say stopping the bleeding won’t solve the cause the smash, or bring the patient back to full health” – does that mean though that you shouldn’t do it?
That ad was complete propaganda. I used it to line my cat’s litter box.
I feel sorry for kthomas’s cats.
The strange delusion that war production suddenly solved what Roosevelt didn’t assumes that going from >25% unemployment to <10% unemployment did no good, either for the economy or for preparing the economy and the populace.
Indeed, the strange idea that having returned to the pre-Depression levels of output doesn’t mean you are out of the Depression seems rather confusing. (If we are defining it as a Depression because of a ca. 10% unemployment rate, then Nixon and Reagan both presides over short Depressions.)
The Great Depression lasted a long time, despite the intervention of substantial government spending, both civilian and military. I presume that the argument runs that it would have been deeper or longer without that spending, or both? How much deeper and/or how much longer? How could we know?