Thursday 16 October 2008

Vincent van Gogh The Bedroom painting

Vincent van Gogh The Bedroom paintingVincent van Gogh Reaper paintingEdmund Blair Leighton Lady in a Garden painting
and in fact a country can easily raise its output above this level. A common situation for this is during wartime, when a country may ramp up production dramatically to support the war effort.
However, if the maximum sustainable output is exceeded, the output has to come crashing down at some point (after all, by definition, that level of output is not sustainable). After this happens, the country has to slog through a long period of low output. The worst part is that the bust is always bigger than the boom.
During periods of high output, everything looks great. Everyone is happy and optimistic that the situation will last forever. But when reality sets in and output plummets, everyone is miserable, and they wonder why they allowed things to overheat in the first place, since they ended up paying a steep price for it.
In the long run, a country gets the highest level of output overall by always staying as close as possible to the maximum sustainable output. There won’t be any periods of miraculous productivity, but there also won’t be any periods of awful stagnation. Not too hot, not too cold, but just right.

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