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The Ludwig Von Mises Story

Keynesian Economics and World War II

This video pretty much says it all.  No matter how many times the Keynesians have been proven wrong the press always ignores the end results of this flawed theory.

Whenever you get into a debate with these statist, they always point to WWII and how the military machine and the heavy handed policies of FDR brought us out of the Great Depression.  That argument is being refuted.  Economist Robert Higgs points out the fallacy of this theory in his piece World War II and the Triumph of Keynesianism.  Here is an excerpt:

So, government policies created sustained high unemployment, and Keynesians blamed the market. The Keynesians then credited the government's wartime deficits for pulling the economy out of the Great Depression and continued to credit defense spending for preventing another economic collapse. In this way, sound economics was replaced by economic ideas congenial to spendthrift politicians, defense contractors, labor unions, and left-liberal economists.

How much better it would have been if the wisdom of Ludwig von Mises had been taken to heart. In Nation, State, and Economy (1919), Mises said, "War prosperity is like the prosperity that an earthquake or a plague brings." The analogy was apt in World War I, in World War II, and during the Cold War. It is still apt today.

To read the whole article click on the link below:

http://www.fff.org/freedom/0395d.asp

Keynesian Economics: The Beast That Refuses to Die

Starring Paul Krugman as Igor.