This blog has often contended that economic expansion is driven by innovation followed by production - not Government meddling.  The obvious question then is, "What drives innovation?"  The answer can perhaps be found in the old saying, "Necessity is the mother of invention."

When the United States finally confronted the evils of the Axis powers, it found itself in a true existential struggle.  Prevailing in such a struggle epitomizes the term "necessity."  Americans responded with innovation after innovation in communication, production, transportation, aviation, and yes even energy.  It was WWII that yielded nuclear power.  Perhaps it's not terribly inaccurate to claim that we literally "nuked" the Great Depression.  Yet nuclear energy was but one of numerous technological advances, born of the necessity to defeat the Axis powers, that propelled the U.S. economy out of a depression and into two decades of expansion.

It could be argued that these advances were due to "Government Spending," and that is the same policy as the New Deal, or today's "Stimulus Package".   While it is true, that government spending paid for the innovations of World War II; it is false that government spending directed the innovations of WWII.  This is where the "necessity" factor becomes operative.  In programs such as the New Deal or today's Stimulus Package, spending is pre-directed at pet projects and public works that are all based on known technology and are chosen primarily on political influence.  There is little need for innovation, or even successful implementation.  Political influence will win the contracts and profits - whether or not the contracts and programs ever achieve anything is inconsequential to program.

If that sounds cynical; consider that since the mid 60's the U.S. has spent about 10 trillion dollars on programs to fight poverty.  After 40 years we still have the same number of people in poverty.  Not only does governmnet spending on social programs not help the economy in general, it doesn't really even help those for which the spending is directed.   Given the poor history of positive economic impact of social government spending, it is difficult to imagine that the current Stimulus Package, loaded with items like "State Fiscal Stabilization" (an $80 billion gift to failing State Governments) and "Climate Monitoring" will do anything but place greater burden on the private sector, and deepen the current recession.

It follows then, that if the U.S. were to honestly emulate the steps that lifted us out of the Great Depression, it try to recreate the necessity born of the existential struggle of WWII.  To do so, Congress need only use a bit of creative thinking.

The Congress could act as though the world was a dangerous and unstable place, and that we were engaged in two ongoing war efforts.  Congress could imagine a scenario that a hostile, despotic, middle eastern State were on the brink of obtaining nuclear weapons capabilities.  Congress could stretch it's imagination and believe that this unstable State had established an informal alliance with North Korea and Venezuela, creating the possibility that these weapons could be delivered over vast distances and threaten the energy supply of the free world.  Congress could "think out of the box" and creatively conjur up a scenario where world growing hostilities in between India/Pakistan, Russia/Georgia, Isreal/Iran, Afghanistan/Taliban, as well as a growing Chinese military, may require as strong, large and pro-active U.S. military as did WWII.

If the current Congress could just use some imaginative and creative thinking and direct government spending towards the necessity of dealing with the above mentioned "imagined" threats, it's at least possible that the resulting innovations and productivity could hasten the beginning of a new era of expansion and productivity.  In the worst case we would at least have the lasting value of added military capability.   But alas, the current administration appears fatally focused in the status quo of battling the "clear and direct" threats of global warming, carbon emmissions, private sector health care, and excessive CEO pay.    Given such focus, it is becoming increasingly likely that the limited economic "nuclear arsenal" will be expended without even getting close to its' target.

Should this mindless, naive dilution of U.S. wealth continue it's current cours, the country will become exceptionally vulnerable due to an overextended military, and a weakend currency.  At that point one can only pray that the world does not face an immediate crisis that requires U.S. military intervention.  Yet it seems that a certain Vice Presidential candidate virtually guaranteed that such a would occur.  For the sake of the country, and the world, we can only pray that he was wrong.