If Keynesian spending of WWII ended Depression, why haven't Bush's wars helped us?

[NAO]

Note: I'm just playing "The Devil's Advocate" here. I am left of the left-wing of the Democratic party. The questions I'm asking are absurd, yet the fact that I don't know the answers to them genuinely bothers me. Here goes:

Many progressives are arguing for Keynesian-type deficit spending on infrastructure as stimulus for the economy.

Paul Krugman recently wrote about how FDR's programs boosted the economy. He says that while the public works programs boosted the economy somewhat, World War II was the giant economic stimulus that really got things going again. Quoting Krugman: "What you see is that the fiscal stimulus provided by the WPA and all that was relatively small — and pulled back in 1937, with disastrous results. But when Dr. New Deal turned into Dr. Win the War, the economy got some serious stimulus."

So if WWII stimulated our economy enough to end The Great Depression, why hasn't Bush's massive "Global War on Terror", with it's massive defect spending, provided adequate economic stimulus?

Shouldn't Bush's War(s) have been a more potent economic stimulus than any public works/infrastructure/Apollo Energy programs that Obama might enact?

Are Keynesians saying that the problem is that Bush was not doing enough defect spending?

How were FDR's giant military expenditures different that Bush's giant military expenditures? How is it that people can say FDR saved us by massive defecit military spending, and at the same time that Bush destroyed us by massive defecit military spending?

[MissMillie]

1. this was the first time ever we had a tax cut

during a time of war

maybe that's it.

[malaise]

2. Don't forget that

Europe was broke after WWII

[The Velveteen Ocelot]

3. WWII created an enormous number of jobs

because the U.S. military was pretty thin by the time we entered the war. For that reason it was immediately necessary to produce many thousands of planes, ships, bombs, etc., which employed a whole lot of people. The current "wars" aren't employing anybody other than some mercenaries. We are just pouring money down a sewer.

[Veritas_et_Aequitas]

6. Quite right.

[BeatleBoot]

8. And back then, planes, ships and bombs required Raw Material

Putting folks to work in the steel industry and manufacturing.

Little Bush's war pales in comparison to WWII, but I state the obvious.

[MadMaddie]

12. I would also add

that during WWII many companies were retrofitted to produce products for the war.

The * policy dictated only rich companies got contracts. The companies weren't necessarily qualifed, the companies could have been created 1 month before the contract was given.

This is one of the many reasons why the administration failed.

Almost every American was impacted by WWII one way or the other. Iraq has impacted the military families and those that paid attention to what was going on. The rest of America went shopping....

[nadinbrzezinski]

4. You've got to distinguish between Keynseian policies, such as the WPA

and a command economy of WW II, which did not bring out the country out of the depression

The jobs numbers are not there, and strictly speaking the US was coming out of the Great Depression by 1939 and WWII didn't help, and was partially responsible for the 1947-52 crisis... a mini depression, even if most folks don't call it that way

Thom Hartmann had a long program on that, and it is worth looking for it on the pod and listening to it, about two to three weeks ago

Still digesting exactly how those two things don't relate, but Ike's farewell address also makes the point that when you build bombs you don't build wealth

[applegrove]

5. Remember how there was a mini recession right after 9/11? Spending on

war probably kept that from becoming a big recession. But lots of the War spending was going on outside the USA. Anyhow it doesn't work any more. If the war in Iraq was ended and all that money were to be spent in America on infrastructure that used american raw materials..then we would see a bump.

[leftofthedial]

7. they methodically siphoned most of the profiteering to cronies

[nadinbrzezinski]

9. So did WW II why the Truman Commission and why Willy's Jeeps went under

they did not, but they still suffered

by the way, we need a truman style comision

[leftofthedial]

10. WWII had profiteers, but it employed millions upon millions of Americans.

bush's "war" (not really a war at all) saw employment drop. The costs of the invasion and occupation of Iraq were borne by workers and the middle class who saw none of the benefit.

Our economy is a demand-side economy. The invasion and occupation of Iraq were supply-side scams.

[nadinbrzezinski]

11. Hartmann was covering that ... and made a very solid case

as to why WWII did more damage to the economy than good.

I am still working on the pod, which is somewhere in my machine... but after I finish doing that I will do some more readying on it

Since WW II was the only exception to the rule that war is damaging to the economy... and if that is the case, it is the sole exception. All other wars, taxes or no taxes, are bad... see Vietnam and the 1970s WWI saw a slight contraction until 1921

Spanish American War, saw a recession after the war

Civil War... lets not go there...

Korea, also led to a small recession ending in '61 or so, and starting in '59 or so

[leftofthedial]

13. If I'm not mistaken, the period between WWII and Korea wasn't exactly booming,

but I'd bet the GI Bill had something to do with the later boom.

[nadinbrzezinski]

14. you are correct, '47-50 or so

it was a recession. Some folks would like to call it a depression, but it just does not meet the technical definition

But it was due to all the people out of jobs, and tanks no longer required.

That was one of the points Hartman made

He slaid that sacred cow, but also said something interesting... the myth that WW II brought the country out is a right wing meme, to try to kill the it was the new deal and WPA that did it. And he made a solid case for that

SLY... and was also used for the Taft Hatley that created right to work states

[ben_meyers]

18. Exactly, here is what that notorious right winger

Paul Krugman(Nobel Prize winner) has to say about WW2,

What saved the economy, and the New Deal, was the enormous public works project known as World War II, which finally provided a fiscal stimulus adequate to the economy's needs.

This history offers important lessons for the incoming administration.

http://www.iht.com/articles/2008/11/10/news/edkrugman.php

[Blue Meany]

16. Well, sure but we came out of World War II as almost the only

industrial country in the world and that helped the US economy a lot. So I guess today the solution to our problem would be to go to war with China and destroy all their factories, but first we have to get them to loan us the money to buy the weapons components from them.

[nadinbrzezinski]

17. Critical point you said there, we still had an industrial base

the rest of the world didn't

That does not mean that we didn't have a serious crisis after the war ended

[baldguy]

15. In WWII, 2% of every tax dollar spent went to profit.

Now, it's about 60%.

[Posteritatis]

19. Spending during WWII...

Wasn't just spending on the war itself. It was spending to tool up the entire industrial system needed to wage it - everything from primary resources to the ships and aircraft that got things to the points where they were used, the transportation networks, the harbours, the airfields, entire cities in some cases.

None of that stuff was in place, and staggering amounts of work, immediately-related jobs, secondary ones (commerce, housing, civilian industries showing up or being retooled in the wake of the conflict) and so on and so forth. An airfield or a harbor in the right place is going to be tremendously useful even in peacetime, and the towns or cities that often sprung up next to or near them would amplify that.

That's before even getting into the on-the-job training people would get in the process of all that. A lot of it involved unskilled or semi-skilled labour, but it was still an opportunity for people to see and learn a great deal, and it was probably a bit easier to see if you could do something with what you learned in 1945 than it was in, say, 2005.

There hasn't been nearly as much of that going on in this war, partly because a lot of the infrastructure's still in place from the previous one, partly because the equipment involved is so specialized that a much smaller pool of people is involved in building/maintaining it, and partly because a lot of the money's just getting sucked up in expendables like fuel, ammunition, spare parts, etc., which are far more expensive and also far more specialized than they would have been back then.

And, as others are pointing out, the profiteering is a wee bit more, uh, effective this time than it was during WWII.

[Juche]

20. You can't compare those two wars

The war on terror is a war against a couple of third world countries. WW2 was a war between global superpowers (US, Germany, Russia, Japan, Britian, etc). If you are comparing WW2 to the war on terror, the wars in Afghanistan & Iraq would probably be comparable to the conquest of the Ukraine, not the war in general. The war in Iraq has involved about 500k soldiers, aka 0.2% of the population. WW2 involved about 13% of the population in the military. And the US wasn't as heavily affected as European countries.


Also war spending creates (roughly, from what I've read) about 7 jobs per million spent. Infrastructure creates 18 jobs per million. Plus infrastructure lowers cost to consumers and businesses so our long term economic growth is more likely. War damages long term economic growth by destroying infrastructure.