Skip to comments.No, Paul Krugman, WWII Did Not End The Great Depression
Posted on 08/26/2011 9:19:33 AM PDT by SeekAndFind
Its a recurring fantasy for left wing academics fascinated by central planning that in cyclical downturns government should act decisively on a scale equivalent to war. Nobel Prize recipient Paul Krugman exemplifies this intellectual longing to steer our lives.
Krugman effortlessly slides into a war footing espousing intervention comparable to Americas crusade against Hitler, who, take note, centrally planned an economy himself:
World War II is the great natural experiment in the effects of large increases in government spending, and as such has always served as an important positive example for those of us who favor an activist approach to a depressed economy.
After WWII until its glaring failures manifest in the Seventies, Keynesianism inundated economic thought. Paul Samuelsons textbooks became mainstays across the academy. Samuelson championed mathematical analysis, which transformed macroeconomics into a pseudo science spawning waves of budding planners infatuated with statistics.
From this basis the myth prevails that WWII finally overcame the Great Depression. History has revised Hoover, easily the most meddlesome peacetime president before FDR, into a laissez-faire reactionary. The New Deal a disastrous example of everything not to do during downturns became beneficial, only it supposedly wasnt aggressive enough.
(Excerpt) Read more at forbes.com ...
This is like saying gasoline does not power an internal comubustion engine.
WWII created TEMPORARY unemployment reductions.
Look at Sanders’ charts on economic growth and unemployment. We are lagging for the same reason FDR’s economy lagged - too much gov’t!!!
The article says Smoot-Hawley came BEFORE the crash?
Constatly proves he's as prize worthy a Carter, Gore, and Obama.
Well, that’s wrong. And, also the WWII did help us get out of the depression. If you destroy Europe and they can make things, your gonna do well, no matter what.
I believe that is correct!
Then FDR raised taxes for three years in a row. Great idea.
It is a generally accepted principle that the Depression did not end until early 1942.
Henry Morganthau, FDR’s Sec. of Treas. wrote FDR in May, 1939 that “we did not keep our promises” because the unemployment rate was stilll near 20%.
RE: This is like saying gasoline does not power an internal comubustion engine.
So, if WW II is to gasoline as the economy is to the engine, how do we get out out of our current economic stagnation if we were to learn from history?
If you fight your own war, then any economic effect is just wealth transfer or additional debt. Just look at Iraq/Afghanistan. Not good economically.
Krugman assures us liberals have a conscience. Whether they have any common sense is less certain.
World War 2 did not end the Great Depression. During the war we still could not buy a new car, we could not buy tires for our old car, we could not buy any appliances, we could not buy gasoline, we couldn’t even buy sugar or meat.
It was the ENDING of World War 2 that ended the Great Depression.
This is the corollary of the broken window theory. If you break someone else's window, and you are the only window maker, it helps you. Is there a net overall economic gain, no.
I always wish I was on one of these show where libs like Benanke and Mathews claim that WWII got us out of the great Depression and that it is proof that government spending works(to end recessions.)
I would reply :”Well if you really believe that war ends recessions then why did scream murder about Iraq? In fact since we are in three wars now, how many are enough for you?”
The trick is to turn the tables on them. Of course instead Republicans just reply by reading the simple cheat cards given to them for every point a Dem makes.
The “Broken Window Theory” ALWAYS destroys wealth, and it results in a lower standard of living. There is nothing good about destruction.
But I thought after the war that is when the economy really grew and lead to prosperity for many. Was I taught wrong?
All I know is that there was a depression before the war and recovery after it. I don’t remember any guy looking for work. Yes there was the great GI bill and the 52-20.
[Wikipedia. - Another provision was known as the 5220 clause. This enabled all former servicemen to receive $20 once a week for 52 weeks a year while they were looking for work. Less than 20 percent of the money set aside for the 5220 Club was distributed. Rather, most returning servicemen quickly found jobs or pursued higher education.]
What the war did was to rebuild our production facilities to fight the war and to supply the world with goods after the war. Exporting was the key to recovery as it is today.
We have to make more of what we import or continue to sink.
That’s only true if you look at the standard of living in aggregate. If all windows are made in china, and a bunch of windows are broken in the US, the world as a whole loses, because wealth is destroyed. But, if you just look at GDP for China, it will have gained, and if you just look at the US, it will have taken a double hit.