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John Armaos asked: "I've often heard WW2 got America out of the Great Depression but I rarely hear the why. Anyone have any thoughts on that? I'm not sure I see how a war can improve an economy? Was it the production of military equipment that America sold to other warring nations during WW2 that helped the economy?"
Collectivists -- Rand called this type "muscle mystics" the people who worship brute force -- claim that war brings prosperity (at least to the survivors). I just finished re-reading Brave New World (1932). Huxley's prediction of television was easy. It was advertised by RCA on the back of a Scientific American from 1929. In Charlie Chaplain's Modern Times (1936), the boss contacts the foreman via television. When people claim that World War II got us out of the Depression, they are not perceiving the hidden losses.
Bastiat's "Parable of the Broken Window" sums it up.
The claim that war brings prosperity is false. It fails in many ways, on many levels. When you buy a car, it is to make your life more efficient, to allow more activity, or at least more pleasure; and you willingly go to the dealership (other seller; ultimately the manufacturer), bidding against other buyers to acquire one. A tank is the opposite of that. No one wants them because they don't do much for you. In fact, their only purpose is to destroy the lives and property of others. Tanks are a deadweight loss. You buy a box of .30-06 to go deer hunting. We can assume that good hunting feeds you. Artillery shells and aerial bombs feed no one.
The word "shoddy" comes directly from the fake wool sold to the Northern armies by dishonest businesses during the War Between the States. No word describes the junk you so carelessly buy for your own business because you do not. You spend your own money wisely, we hope. Massive government programs launched in emergencies achieve the opposite.
What World War II did was make a lot of people very active -- the ones who lived. If you do not have a Red Book (Guide to US Coins by Yeoman and Bressett), I'd be happy to send you one. They are annuals and I have several recent ones around here. Coinage production skyrocketed as the government created more and more fiat money. Half dollars 1938 about 6 million, 1942 about 60 million. Silver was about 50 cents an ounce and coined at $1.29 -- and that was "hard" money, not the fractional reserve stuff.
From 1936 to 1938 unemployment caused by New Deal meddling rose from 3.5 millions to perhaps 9 million. By 1942, the US Army had over 5 million men in uniform. So, a lot of unemployed men just disappeared. They did no useful labor for five years. Over 400,000 were killed. Their places were taken by others who did useless, counterproductive, destructive work, being paid for by fiat infusions of cheap tokens.
At the end of the process, much of the civilized world was destroyed or in ruins, except the USA. So, relatively speaking, we were well off. The Dow Jones Industrial Average did not return to its 1929 level until 1954. Granted that the 1929 level was inflated by cheap money, as was the 1954 measure, the fact remains that World War II only prolonged the Depression.
In fact, if you look at it all objectively, in terms of gold as money and standard of living as personal conveniences, it might be argued that we never got out of the Depression, that we are, at best, at some marginal improvement over 1928.
(Funny thing -- or not so funny -- I got some of my numbers from The Bureau of Labor Statistics. They said: "Between 1932 and the end of the decade, the Bureau’s wage survey activity was primarily geared to the information needs of the new Federal agencies created by the New Deal; and the Bureau expanded, with a doubling of staff and budget between 1934 and 1941." Do you think that putting people to work at the BLS got us out of the Great Depression?)
(Edited by Michael E. Marotta on 12/09, 6:59am)
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