Someone asked about the relevance of wartime multipliers. Just to be clear:
- I have written a lot about crowding out, and little of my analysis relies on wartime observations.
- It used to be said that the wartime spending pulled the U.S. out of Depression. Given that President Obama is telling us that he'll pull us out of recession, it is of some relevance that the wartime spending still crowded out private spending. Thus my link to Professor Barro who, incidentally, "wrote the book" on how government spending affects GDP.
- Even if it were true that the U.S. economy was at full employment before WWII began -- in which case it might not be a valid comparison to 2009 -- I have already directly addressed (in at least two different ways) -- the myth that the stimulus plans in Washington would actually utilize currently unemployed resources.
- Conspicuously absent from the commentary of those who claim that public spending would stimulate private spending are actual examples in which that actually occurred. [Admittedly, those economists (are there any besides Professor Krugman?) are vastly outnumbered and therefore need more time to put their case together]