Without an income people can't pay for their living expenses.
However, that doesn't mean the work those people are performing for that income is actually necessary to anyone else. The question is: through easy and cheap credit, was the economy paying a bunch of paychecks to some people in exchange for unnecessary labor?
If I hire a guy to dig a hole in the morning and fill up the hole in the afternoon, the guy I hired very well may need his job, but his job isn't anything anyone needs done. When my line of credit runs out, I'm going to lay that guy off. The question is: how much of the economy pre-recession consisted of people getting paid for more convoluted but equally unproductive labor?
Perhaps a better metaphor: if I hire a guy to do all my long division, when my line of credit runs out, I'm going to lay that guy off and buy a calculator. How much of the economy consisted of (often unionized) long-dividers running their employers into bankruptcy until their employers had to buy calculators?
An economy has to produce wealth to survive, not just distribute it to people in exchange for mere effort.
Your comment made me recalled a quote of Frederic Bastiat.
"But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, "Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen."
It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way which this accident has prevented.
Let us take a view of industry in general, as affected by this circumstance. The window being broken, the glazier's trade is encouraged to the amount of six francs: this is that which is seen.
If the window had not been broken, the shoemaker's trade (or some other) would have been encouraged to the amount of six francs: this is that which is not seen." - Frederic Bastiat
However, that doesn't mean the work those people are performing for that income is actually necessary to anyone else. The question is: through easy and cheap credit, was the economy paying a bunch of paychecks to some people in exchange for unnecessary labor?
If I hire a guy to dig a hole in the morning and fill up the hole in the afternoon, the guy I hired very well may need his job, but his job isn't anything anyone needs done. When my line of credit runs out, I'm going to lay that guy off. The question is: how much of the economy pre-recession consisted of people getting paid for more convoluted but equally unproductive labor?
Perhaps a better metaphor: if I hire a guy to do all my long division, when my line of credit runs out, I'm going to lay that guy off and buy a calculator. How much of the economy consisted of (often unionized) long-dividers running their employers into bankruptcy until their employers had to buy calculators?
An economy has to produce wealth to survive, not just distribute it to people in exchange for mere effort.