You took out millions of young able bodied men from the normal workforce of jobs that still needed doing (farmhands, insurance agents, schoolteachers, tailors, assembly line men, radio djs, taxi drivers, you name it)
Demand for many jobs did not fall (see above) but with volunteering plus a draft, MILLIONS of men, young and old, left home for training l, then Africa/Europe/japan
Figures are quoted differently today, but the basic premse was that by 1944 if you wanted a job you could get one. There were actual labor shortages for war-specific jobs (see Rosie the riveter, entry of women in the labor pool)
That’s the great secret. The new deal by about '37 had improves little in terms of employment (though relief checks were temporarily pleasing)… It took siphoning millions OUT of a competitive labor pool to bring employment to a healthy level
PS: govt planners knew this and were INCREDIBLY fearful of a mass depression after WWII (see: post-wwi globally for an example). But the opposite happened… Mini recessions, but from the 40s to about 1969 American economic power was unparalleled, since european factories were gone, and since a postwar America invented new jobs (“build a Levittown house! Build lots more cars! Cone to a centralized shopping center!”, etc)
War = less men to compete with for jobs.
Thanks for this. Not that it matters. Facts don’t matter in the conservative argument against the New Deal.
Here’s the graph of GDP during the 30’s. It’s eminently obvious.
GDP grew dramatically from 1933 to 1937, exceeding 1929’s GDP by 1936. The idea that the New Deal did not have marked, demonstrable economic success is pure conservative fantasy.
Look at today’s economic performance - conservatives have claimed that Obama’s policies would bring on Armageddon. Reality, on the other hand, shows that the stimulus has been successful beyond expectations, that the jobs picture has steadily improved, and that GDP has rebounded dramatically.
That won’t matter, because this argument is never about facts.
You don’t build a tank intending to destroy it. You build a tank to use it. Some tanks will be lost in combat. Some won’t. But, the assets invested into making that tank are not wasted, even if the tank is destroyed. The assets were consumed in a meaningful way, and you get some return on your investment…operational training, maintenance training, time in combat, time spent in transit, etc.
Buying cars just to let them rot wastes the assets for zero return.
No one’s arguing that building a tank and using it isn’t a better use of money than building a car and letting it rust. But you still haven’t explained how it’s different in the sense of economic indicators like GDP.
Also, comparing it to building cars and letting them rust is just one side of the equation. What then, if there wasn’t a war and you took the money you spent to build tanks and planes, and spent it on cars and didn’t let them go to waste? (Pretend there isn’t a war so you don’t get distracted by letting the Nazis take over Europe, etc) What’s the functional difference between that kind of government spending and the kind that was done to build up the armed forces?
In other words, when you’re building tanks - who’s buying them? Certainly not the public. (building new cars also provides some of the same intangibles you talk about with tanks - manufacturing experience, etc).
Reducing the labor pool by paying a bunch of those unemployed men to fight in a war is another good factor in reducing unemployment, but guess what - those wages of those soldiers are being paid by the government.
Obviously this isn’t the kind of thing you can keep up forever because of the deficit issue, but in drastic economic situations, it’s a way to get things moving. It’s truly bizarre thinking to say that putting more money into a system doesn’t increase economic activity.
One is necessary and appropriate. The other isn’t. Government should be small, taxes should be low, and spending should be limited. If there’s a war on, ya do what it takes to win. Then you go back to small government, low taxes, and limited spending.
Because that level of government spending in peacetime is going to amount to massive government giveaways which, once started, become almost politically impossible to stop.
And because the government is not the people’s parent. It has no duty to house, clothe, or feed it’s citizens, nor should it have such a duty.
But that’s an ideological issue. To solve the immediate problem of pulling an economy out of a depression, would it work? If not, why not? And what is different about military spending that it would work when other kinds of spending wouldn’t? Those are the questions that’re being asked here.
Yes. I thought this was well known, yet no one in this thread mentions it explictly until Voyager at post #13. (Perhaps some earlier posters assumed that Dopers were aware of the “well-known” confirmation between Keynesian theory and “the facts on the ground” during the 1930’s, so glossed over it, but other posts demonstrated again that “fiscal conservative” translates as “just another misinformed right-winger, but who uses long words.”)
Googling I didn’t find a single graph showing the relation between federal deficit and employment but here’s a table showing U.S. GDP and federal deficit for more than a century. It shows the deficit cuts Voyager mentions. Just as interesting perhaps, it shows that Reagan’s deficits were bigger, as percent of GDP, than Roosevelt’s.
I disagree. The OP argues that the New Deal wasn’t big enough, and could possibly have been more effective if it were bigger. That isn’t a strictly economic position to take. Policy…or ideology if you prefer…is also an important consideration in deciding whether public funds should be expended and if so, how they should be expended, for what purpose, and in what amount.
But he does so by explicitly comparing the massive government expenditures involved in military buildup to the smaller ones designed to stimulate other areas of the economy. The justness of the cause of WWII doesn’t have anything to do with whether it worked to stimulate the economy.
There’s a complication, though, in that in 1937 the Fed also tightened its monetary policy, so it’s hard to separate the fiscal causes of the later Depression from the monetary causes.
If memory serves, military spending on a war usually produces a recession when it’s over, because of the difficulty the returning soldiers have in finding employment before peacetime production can ramp back up. WWII was unique in not having such a recession in the US because it was so destructive to the rest of the world. US firms enjoyed an unprecedented competitive advantage.
Spending public funds is a policy decision. Whether a particular expenditure will or will not stimulate the economy is only part of the equation used to make the decision.
I’m certainly no economist, but I think the OP is basically right. If massive government spending helped during World War II, it probably would have also helped 10 years earlier. Obviously it’s preferable to spend money on something worthwhile, but the mere fact that you’re spending money on something has some positive benefit. For starters, you’re reducing unemployment.
If you look carefully at the facts about the ‘Reagan Era’ you might see many things that contradict the popular story.
Yeah, people wonder why I treat Conservative ideologues with contempt. The Conservatives don’t notice I do the same to Liberal ideologues. (you can substitute the names of other ideologies to cover all bases)
Oakminster: let’s set aside the issues of the just war for a moment.
Let’s say the government was compelled to spend one trillion dollars in order to stimulate the economy. The catch is that the funds must be spent on either Bibles or Hustler magazines. Are you saying that printing a trillion dollars worth of Bibles would more sucessfully raise employment and GDP because Bibles are simply better than porn mags?
I’m saying what should the money be spent on? Screen doors on submarines? Wrong answer. Vetoed. New highway that would substantially increase capacity? Hmmm. Maybe. Tell me more about it.
Could be I got a little target-locked on the idea of building cars with public funds just to let them rot in the desert.