In the Paul Krugman clip we mentioned yesterday, the Nobel Laureate ends by repeating the popular assertion that what finally got us out of the economy was WWII. This is a popular riposte among New Deal detractors, and heck, if a liberal fellow like Krugman is defending the economic benefits of war, how can it not be true?
Fortunately, the idea that dropping bombs and human death is somehow good for the economy is just a really ghastly and morbid version of the broken window fallacy — kind of like arguing that hurricanes are good for the economy (which nobody except TV talking heads takes seriously). As a thought experiment, imagine if we could mobilize a big war effort, rev up the bomb and tank factories, but instead of destroying infrastructure and sending soldiers to die, we just dropped the bombs into the sea. That’d be a lot better, wouldn’t it? But do you think anyone would argue the benefits of that with a straight face?
In Price Fishback’s Freakonomics piece (discussed yesterday, as well), he notes that if anything, WWII gave meaning to suffering — sacrifice:
The official statistics on private consumption during World War II suggest that real consumption expenditures rose, but they use official-controlled prices that misrepresent the true price of consumer goods in the period.
After relatively minor adjustments to reflect the real prices, real consumption in the middle of the war was lower than it was in 1941. Most in the military were risking life and limb in foreign lands. On the home front, people could not buy new autos, tires, and many appliances at any price. Rationing programs sharply limited access to meat, sugar, gasoline, and a wide array of other products.
Life during World War II was largely a continuation of the deprivation of the Great Depression, with two exceptions: Fighting the war put many in the frame of mind that they were sacrificing for a much larger goal of winning the war, and people accumulated savings because there was not much they could buy at the time.
The point about risking life and limb is a big one. While it’s often stated that WWII drastically reduced unemployment — it did — many of the technically unemployed were in the military, risking death. Granted, killing Nazis is about as close as you’ll ever get to a legitimate, “good” war, but the point stands, that taking someone out of an unemployment line and into a battle line is hardly an improvement (someone will get offended by that, feel free to freak out in the comments).
The good news is that with Obama coming into power, we feel somewhat confident that we won’t enter into a silly war with the ulterior motive of helping the economy. Unfortunately, we can’t say the same about leaders in Russia, China, or the numerous revenue-parched petro-states out there. If they want to go to war on the belief that it will lift their economy out of a funk, we may not have the luxury of not getting involved.
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