I talked a little about this in a post in the discussion on the presidents Coolidge and FDR, but I wanted to expand on it and get some more feedback on the subject. So for those of you who didn't read the other thread let me recap for you. When talking about this last recession many have said that with out our saftey net programs it would have been a recession. On the surface that seems a reasonable enough argument untill you think about opertunity cost. For those unfamiliar with opertunity cost it is defined as: The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action. So when you say without the saftey net programs we would have had a depression you ignore that the economy would look wholy diffrent if the trillions of capital spent on these programs over 70 years was in the economy for that time period. Now let me make something clear I am not trying to get into the merits of theses safety net programs simply discuss opertunity cost. So let me know what you think would that money of changed the tragectory of our economy or would it have been simply squirled away and been off better in the saftey net?
I think your post is a bit misleading, though I don't think it's intentionally so.
You make it sound as if all the money spent on social safety nets in the last 70 years was what stopped the Great Recession from becoming the Second Great Depression.
But that's not the case.
Over the past 70 years, the U.S. economy has had several significant recessions and economic downturns. The money spent at those times aided the people of those times.
So social safety nets have helped people throughout the 70 years that we've had them, not just now.
Personally, I am in favor of social safety nets. Social safety nets are designed to provide aid to people and, hopefully, get them back to work.
A laissez-faire capitalist system is not. Rather, such a system is designed only to allow businesses to gain the most profit however they can no matter the consequences. And that system doesn't care how many people are unable to find work or are put into poverty because of it.
And I think that the return on investment we get by having people take advantage of social safety nets in a bust cycle outweighs the opportunity costs we suffer by not having that money in use during a boom cycle.
By having that money in reserve during a bust cycle we hedge against economic collapse. It also ensures that we have reserves to invest in entrepreneurs and workers who can use that money to re-fortify our economy.
Without social safety nets, it is unlikely that we would be able to hedge that risk. So I'm all for social safety nets.