You've made an excellent point, the Grandfather Economic Report includes this graph:
In the report he writes:
Since successful military capacity is related to the potential of the private sector to support a large economic war-time surge, if needed, it is instructive to first compare the relative size of the private sector today to that before, during and after WW II and see how today's surge potential compares.
This chart shows a 70-year history of the private sector (blue line) share of the economy, compared to the relative size of the federal plus state & local government sector spending share (red line) of the U.S. economy. (the chart is from the Government Spending Report). Today's spending ratio is 43% of national income.
Note the huge down-draft of the private sector (blue line) share of the economy during the 1940s, which resulted from the equivalent upward jump of the government spending share of the economy (red line).
That red jump was the World War II war-time economic surge to support men and factories transferred from private sector to military needs - - equivalent to a total economic shift of more than 30% of the entire economy.
Now - - what happened at the end of the 1940s, right after the war? Did our leaders do the right thing? The apparent answer is YES. The chart shows that by 1947 the red government line dropped back near it's pre-war level, as said economic resource demands were transferred from government's economic share back to the private sector (blue) from whence they were 'borrowed' for war-time purposes.
By returning the private sector line to near its pre-war level the private sector, once again, had recovered its pre-war capacity to economically support future such surge requirements should they be needed at another time. The size of the post-war government cut-back was a very proper result - - protecting our future.
Now to the problem - - What happened after 1947 to preserve future war-time surge capacity? Answer: it deteriorated, remarkably so.
After 1947 this chart shows the government spending started ratcheting upward, from 22% share of the economy to today's 43% level nearly twice as high, as shown at the right edge of the chart. And, as a result, the economy remaining to the private sector dropped from a 78% share down to about 57%. This means the war-time surge potential has been reduced about 21 points since WW II.