Digging Holes and Filling Them in Again
two Answers 2
Keynes suggested information technology during the Great Low. Information technology's non exactly the same, but I think what you've heard was a mutation later so many years.
In the depths of the great depression, Keynes suggested that "the Government should have people dig up holes and then fill them up". What at first seems like a wild idea, may accept had some logic backside it. Keynes believed that an initial injection into the economy could stimulate economical growth. Excavation upward holes and filling them upwardly over again seems pointless, and is, except that it gives coin to people, which they then go and spend, increasing aggregate demand - leading to economic growth. This issue is known as a "multiplier" outcome - an initial investment leads to a greater than proportional increase in national income/product/output.
The actual quote from his book was:
If the Treasury were to fill onetime bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled upwardly to the surface with boondocks rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes upwardly again (the right to practice then existence obtained, of form, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its uppercase wealth besides, would probably become a good deal greater than it really is. Information technology would, indeed, exist more sensible to build houses and the like; but if there are political and practical difficulties in the fashion of this, the above would exist meliorate than cipher.
And the 2nd mention of "dig:"
'To dig holes in the ground', paid for out of savings, will increase, not merely employment, only the existent national dividend of useful goods and services. Information technology is non reasonable, however, that a sensible community should be content to remain dependent on such fortuitous and frequently wasteful mitigations when once we understand the influences upon which constructive demand depends.
The General Theory of Employment, Interest and Money (London: Macmillan, 1936), p. 129.
answered Aug 27, 2018 at 17:24
TomboTombo
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The practice of 'make work' was quite common long earlier the bang-up depression. If the U.s.a. regular army did study it (and I have no information if they did or not) and then it would not take been for soldiers to dig the holes, but for the desperate to exist given a means of earning some income - the theory being that piece of work was better then charity and whatsoever piece of work was better and so no piece of work. In parts of Ireland, y'all can come across beautiful dry stone walls that were built up and over mountains by wealthy state owners during the famine (1845-1852) to give their starving tenants the income to pay their rent (and feed their families).
Groundwork reading and references: The use of work vs charity to bargain with poverty: Irish Poor Law - 1838
Interesting essay on what lead to the Irish dearth being and so astringent: http://www.clarelibrary.ie/eolas/coclare/history/prefamine_clare.htm
answered Aug 28, 2018 at viii:47
Paul SmithPaul Smith
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Sources would improve this answer.
Aug 28, 2018 at 8:56
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Source: https://history.stackexchange.com/questions/47820/during-the-great-depression-did-the-us-army-do-a-study-involving-paying-people
How does such a project contend with the cleaved window fallacy?
Aug 27, 2018 at nineteen:24
@corsiKa, they Keynesian business relationship (which I remember is incorrect) is that the cleaved window fallacy does not apply when an economy is "ill" since in that location are unused resources which can be utilized.
Aug 27, 2018 at 21:05
Keynes seems to have neglected to consider that the initial investment (the notes and the price of burying them) must be taken from some existing resource. =) This can exist done via taxation, inflation, or loans. All of them have away resources from other producers or savers. In other words, all it does is shuffle money into a useless activity when it could have gone elsewhere. WW2 is an example of the idea in action, but it came with enormous debt. 1 might contend that it was the death of many of FDR'southward policies during WW2 and the fact they were non revived that concluded the Depression.
Aug 27, 2018 at 22:39
Regardless of what you experience "anyone can see", an arroyo without rigor is basically just wishful thinking. In the historical context, Keynes was arguing against your exact indicate, there is no magical "marketplace" that can jump on opportunities when the system is in a stable depressed state. I am not here to defend Keynes as a modern theory, but the historical interpretation of his work. If you lot would like to empathise his reasoning I suggest reading the cited work in this mail, or you can continue to wave your hands. The bug at manus go well beyond single industries and products =)
Aug 28, 2018 at 0:34
@jpmc26 - actually what anyone can see is that a production that vastly benefits a customer is non enough to create a marketplace... history is rife with such examples where a discovery or invention was made then languished, and besides was picked upwardly later to popular and/or earth changing outcome - the product alone was not enough. And the "figuring out how to sell it" flake was as well, seriously nontrivial, which again emphasizes that the product itself was not enough, and in that location is (as Crasic said) no magical "market" that volition work just because information technology would make sense if information technology did.
Aug 28, 2018 at v:08