Saturday, February 25, 2012

Basic Economic Stimulation

Most economists acknowledge that the massive government expenditures of WWII are what led us out of the Great Depression and into a long period of growth.  While much of those expenditures went into expanding industrial capacities for war materiel, a fair share of it must have gone into genuine fertilization of the economic soil.  Things like improved domestic transportation infrastructure and the GI Bill really were helpful in making the post-war expansion possible.

In was perhaps a bit of altruism and moral sense that made the GI Bill possible.  It was the idea that a grateful country owed a debt to its veterans that could be partially paid by providing them an educational opportunity that they would not have had otherwise.  There was no reason to think it was an investment in future economic activity.  It just seemed like a right thing to do.  Serendipitiously, it turned out that stimulating higher education across such a broad spectrum did wonders for the economy.  We had pride in that thing known as "American know-how".  The expansion of higher education is from where that know-how came.

Another stimulative effect was the post-war expansion of access to natural resources around the globe.  Those resources included both energy and material commodities.  The availability of cheap energy contributed to the growing economy and the general improvement in quality of life.

I think that there are at least two key areas in which government stimulation could do good and lasting things for the economy.  One is to take the supply of cheaper energy seriously.  Energy goes into everything we do.  Cheap and abundant energy makes everything else much easier.  The other stimulant activity is to, once-again, take a broad shot at stepping up the educational level of the population.

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