In the past, when arguing the many faults of FDR and his many terms in the Executive Branch, I may have flippantly stated that the only thing that got us out of the Great Depression was WWII.
I was wrong.
Don Bourdreaux at Cafe hayek has the facts and figures.
The official unemployment rate did fall (from 14.6 percent in 1940 to 1.2 percent in 1944), but it did so overwhelmingly because of military mobilization rather than because of improvement in the economy’s performance. As economist Robert Higgs wrote about the war years, “Official unemployment was virtually nonexistent, but four-tenths of the total labor force was not being used to produce consumer goods or capital capable of yielding consumer goods in the future.” So it’s not surprising that, according to Higgs’s estimates, personal consumption per capita in 1945 was only a paltry 2.5 percent higher than it was in the still-deeply-depressed year of 1940.
Regardless of WWII’s merits on other fronts, almost surely it was no great economic boon.
You may see this facts in the WSJ in the not too distant future, as they were part of a LttE he wrote to them regarding something stupid he saw there.
He also points to a good book that I have seen but not yet bought or read (though I’ll be taking care of that soon enough now) titled: Depression, War and Cold War by Robert Higgs
I love the first comment:
“Of course World War II ended the Depression. It distracted FDR from economics.
Had WWII not occurred, we’d still in the Great Depression.”
Was just guessing at this the other night when talking to my kid about FDR and WWII. Is it true then, as I guessed, that it was the Marshall Plan that picked up our economy? Seems I read that with all the returning vets after the war, that unemployment went back up for a period. This is even obliquely referred to in the movie, “The Best Years of Our Lives”, made at that time.
I wouldn’t know, Fred, but it would be as good a guess as any. I do remember my grandmother, a “Rosie the Riveter”, saying more than once that she didn’t like having to stay at home after the war was over. Nor did she complain when my grandfather would come home beat-tired after working at the foundry. She knew how tiring it was first hand.
In terms of growth there is a point to be made that WWII did not “grow” the economy. Looking only at the growth of 1945 is an incredibly stupid way to make the point that WWII didn’t have an economic impact on the Depression.
What massive mobilizations, research projects, infrastructure investment, and networking of brilliant people did was set them up for success after the war. The technology that WWII dumped into the “Military Industrial University” complex was a staggering kick in the pants.
If you compare the post WWII economy of the US with that of the UK, it becomes very clear that the US did in fact get an economic benefit from WWII that the UK did not.