WWII and economic recovery

In the comments, George Brett (I know! George Brett reads this blog! Awesome!) said:

don’t some economists attribute the recovery from the great depression almost entirely to WWII rather than the spending projects he implemented leading up to the war?

A really good point, and yes, as far as I know, some economists see WWII as the engine that

Some idiot standing on top of government provided economic stimulus

Some idiot standing on top of government provided economic stimulus

brought the American economy back. But I don’t really know my history well enough to cite any specific economists who think that the New Deal was helpful, but I’m pretty sure that many do. At the very least, the infrastructure projects of the New Deal (dams, roads, public art, etc) were a good investment that helped the economy become more productive, regardless of how it recovered. 

 

And economic opinion aside, WWII contributed to (or primarily drove) the recovery from the Great Depression because it was a massive spending project from the government – the only entity that could pour that much money into an ailing economy. I actually wrote about this before, and quoted TNR’s Jon Chait:

The point of stimulus spending, by contrast, is simply to spend money–on something useful if possible, wasteful if necessary…World War II was an effective stimulus that, economically speaking, consisted of 100 percent waste. If war hadn’t broken out, we could have enjoyed the same economic benefit by building all those tanks and planes and dumping them into the ocean.

Advertisements

2 thoughts on “WWII and economic recovery

  1. Tom says:

    Paul Krugman is one high-profile economist (and there are plenty more, but many of them aren’t as accessible, content-wise) who discusses how the economic policies Roosevelt enacted did a good deal to get us on our way out of the Depression. He adds the important caveat that in 1937, when FDR et al tried to balance the budget (under pressure, I might add, from those on the right concerned about deficits and debt), we were thrust back into the same conundrum we’d been in. Only with the immediacy of national survival at stake (ie, WW2), could the federal government ignore calls for a balanced budget (and they were few and far between at that point) and engage in the kind of “socialistic” spending programs that eventually won us the war and got us on the road to prosperity.

  2. […] 10, 2009 In the comments, Tom addresses what George Brett and I were wondering about, namely whether economists see […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: