World War II: Still Being Touted as the Quintessential Keynesian Miracle

Liberty and Power at the History News Netowrk ^ | June 29, 2011 | Robert Higgs

[Captain Kirk]

Someone must have imagined that my hopes for improved economic understanding might be excessively optimistic today and thus needed to be curbed to restore my normal emotional balance, because that person undertook to smash any such hopes to dust by e-mailing me a link to a HuffingtonPost article by Paul Abrams, “Economically, World War II Was Stimulus on Steroids.” This screed turns out to be an ostensible macroeconomics lesson composed in equal measure of economic foolishness, historical ignorance, and ideological tendentiousness – the veritable epitome of a worse-than-worthless contribution to public enlightenment.

The opening paragraphs indicate the direction of Abrams’s argument:

The next time someone argues that the New Deal failed, and only the Second World War ended the Depression, as ‘proof’ that government spending does not work, one can respond with the details of economic growth and unemployment reduction up to 1940, or one can ignore the claim and thank them for making your case for massive government spending in a deep, broad recession.

Right wing politicians are loathe to credit the New Deal with any success in hoisting the United States out of the Great Depression, but credit World War II for that achievement, believing that that somehow disproves Keynesian economic theory.

That claim, however, undermines their entire premise.

Abrams concludes that “massive government spending at a time of severe economic downturn and dislocation can indeed get an economy humming again,” as World War II shows; the New Deal was merely too timid. He seems unaware that his argument merely restates the fallacy-ridden hodge-podge of conventional wisdom about how World War II “got the economy out of the Depression” that has dominated the thinking of economists, historians, and the public ever since the war itself.

When I began to teach U.S. economic history at the University of Washington in the late 1960s,

[Huskrrrr]

Sure, reducing half the world to rubble then being the worlds’ leading exporter of gas, steel, appliances, etc. works every time.

[Steely Tom]

Think how stimulative a full-scale civil war would be!

[Doctor 2Brains]

People who say WWII ended the Great Depression are 100% absolutely WRONG. And if you follow that chain of thought that becomes quite clear. Start with the question, “Exactly HOW did the war end the GD?”

[wbill]

Yup.

All we need to do is dismantle all of Europe and most of Asia with High Explosives. Then, we can sell them the stuff they need to rebuild.

Problem solved. How could I have been so foolish not to recognize it? :-)

[KarlInOhio]

Was it the war production doing it? Or did the forced deprivation through rationing (which could not have been achieved without the war) cause a huge demand immediately after the war? Maybe some comparisons with Britain should be made because they kept rationing well past the end of the war.

[Ohioan]

Keynes was a sociopath. His economics, as Henry Hazlitt pointed out in the 1950s, contained nothing that was both true and original; and much that was neither true nor original.

For more on the Socialist guru: Economics Of A Sociopath.

William Flax

[Ohioan]

But keep in mind, the New York Stock Exchange never got back to the 1929 levels until the 1950s. Contrast that with how we bounced back from the 1893 Depression, without Keynes or Bryan's free coinage of silver.

Keynes was the point man for those who wanted to destroy Capitalism & those who completely rejected the traditional moral order that defines social purpose from a multi-generational perspective.

As I suggested, he was a despicable sociopath, who was not about building a better tomorrow.

[Lazamataz]

White hot pokers and caustic agents.

[astyanax]

Economics Of A Sociopath.
Link isn’t working. This does...
http://www.truthbasedlogic.com/keynes.htm

[sickoflibs]

Abrams: “Rather, this is designed to make the “war economy” more concrete, so that, instead of claiming that the Depression finally being ended by World War II proves that government spending failed, it actually proves the opposite, and that massive spending, commensurate with the depth, breadth and scope of the Great Recession, will indeed work. The inadequately-sized stimulus saved a few million jobs, and has added another 2 million, but that rate is insufficient to make the economy hum, and put millions of people back to work. Although one suspects that the right wing will take cheap shots at this article, because it undermines their entire philosophy, let me be explicit that this does not suggest in any way that war, or the preparation for wars, is required or justified for economic recovery. As indicated below, there are plenty of “public goods” that we need as a foundation for our economic future that we can spend that money on much more productively than war.”

This is the standard :” WWII ended the great depression so Roosevelt's public works programs would have ended it first if they only were bigger ” theory.
Krugman has said this as with other liberals, it's a favorite with these socialists.

If WWII was so successful economically why werent these socialists calling for an even bigger Iraq surge to fix the economy, and instead they were saying Iraq spending was hurting the economy? He goes on to explain why we shouldnt conclude war is good, even though he says it got us out of the Great Depression and is proof that it works. These circles getting you dizzy yet?

[Wildbill22]

So wiping half the world away first is essential to the Keynesian economic model? Makes sense.

[massgopguy]

Our infrastructure was the only one left standing. We converted our wartime manufacturing plants back into civilian seamlessly.

[Ohioan]

Thank you!

I put a dot in a place where it did not belong.

Here is how it should have read: Economics Of A Sociopath.

[stephenjohnbanker]

” If WWII was so successful economically why werent these socialists calling for an even bigger Iraq surge to fix the economy, and instead they were saying Iraq spending was hurting the economy? He goes on to explain why we shouldnt conclude war is good, even though he says it got us out of the Great Depression and is proof that it works “

Shut yo mouth!!

[Zeneta]

Must See.

Send it to everyone you know.

“Fight of the century”

http://www.youtube.com/watch?v=GTQnarzmTOc

[CDFingers]

Thus, the great wartime “boom” consisted entirely of (1) some people’s mass engagement in wreaking death and destruction and (2) other people’s employment in producing supplies for these warriors after the government’s military labor drain, turning out ”goods” never valued by consumers or private producers in voluntary transactions, but rather ordered by government functionaries and priced completely arbitrarily in a command-and-control economy. In no sense was the alleged ”wartime prosperity” comparable to real, normal prosperity. The pervasive regimentation, rationing, price controls, direct government resource allocations, and forbidden forms of production (e.g., civilian automobiles) should have served as a tip-off.

Only the liberal elite could love this, only a freedom loving people could endure it.

[PGR88]

Killing 40 million people is a great way to take care of the unemployed.

[Bon mots]

It did solve unemployment. Giving every able-bodied male a rifle and sending him overseas essentially took him out of the unemployment line.

[ex-snook]

As a WW II guy going to college under the GI bill we discussed two views of the future by the mail order giants. It was Montgomery Ward vs Sears. Montgomery Ward [Sewell Avery] predicted doom and did nothing. Sears decided to build stores. Sears prospered and Montgomery died.

I think what ended the depression was the war generated optimism of the period and the government facilitation of demand. The GI bill put a lot of spending money in the hands of guys and gals making up for lost time, going to school, building VA secured homes, starting the baby boom, and staffing the industrial engine. Maybe there were other big picture things beyond my view. But to me the future was unlimited.

There were jobs, which created demand, which created jobs, which created demand. The depression ended when jobs were available. I still feel that is the solution today, whatever theory it takes. [jobs in America, that is].