Paul Krugman, previous winner of the Nobel Prize for Economics, is no doubt a brilliant economist. So knowing that he knows more about Economics than I could ever hope to, it is with some trepidation that I comment on his recent comments that all we need to get our economy running is a good Alien Invasion.
Now lest you think that Paul Krugman is crazy, he reportedly made these comments when discussing what to do about the current economy. Krugman's point was intended to call attention to the widely held belief that it was the spending of the World War II effort that pulled the US and the world out of the Great Depression. As I understand it, his point was that if we had a threat serious enough that we would consider spending without limits that we could expect the same type of response in about 18 months.
Yet, when we think about that does that make sense? After all, if that were the case, wouldn't Greece have a booming economy right now instead of riots in the streets? Something about that just doesn't ring true.
I think that what is missing here is a little more perspective. During World War II, Germany was also spending without limits in order to win the war, but no one would claim that their economy was in terrific shape after the war. What is different about the US is that the US won the war. Obvious as that may seem, it is a crucial difference that I think explains why the US economy boomed while Germany's economy busted. World War II was not only fought by armies, it was also fought by economies. At the end of World War II, the economies of Europe as well as their infrastructure were destroyed. That left the US as the only major economy left in the world, which then provided the money, and the goods and services necessary to rebuild the rest of the world.
The world's experience with Communist economies would seem to support this idea. After all in a true communist economy, 100% of the economy is basically government spending. But the communist economies were notorious for not functioning well on several levels and I am not aware of anyone who would argue that they were successful. None of them could have been considered prosperous.
Don't get me wrong, I think that there are areas where government spending is appropriate and helpful to an economy but I do not believe that government spending in and of itself can bring prosperity.
Just my opinion.
AND using that segue way - if you want an opinion on your real estate matters, give me a call. I am a licensed broker in Kentucky and Indiana and specialize in commercial real estate.
By the way, I am sure that my managing broker would appreciate it if I mentioned that the views in this article are my opinions only and do not necessarily reflect the opinions of Commonwealth Commercial Real Estate or any of those who work here (other than me, of course). AND if you disagree or have an opinion you would like to share, please feel free to make a comment.
Thanks, all. Have a terrific day!
David
David W. McCoy
Associate Broker
Commonwealth Commercial Real Estate
10444 Bluegrass Pkwy
Louisville, KY 40299
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