The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

Does Rand Simberg Contradict Himself?

Posted on | August 20, 2011 | 6 Comments

by Smitty (via Ed Driscoll)

I just don’t understand this, in the context of questioning whether WWII ended the Depression:

. . .there was rationing of food and goods on the home front. The real reason that we recovered was that once the war was on, FDR was too distracted by it to continue to tinker with the economy

I’ve read Amity Shlaes, but the more the topic of the Depression vs. WWII comes up, the less clarity there seems to be. How did wartime rationing not count as economic tinkering?

As with the beginning and the end of Creation, this seems to be a topic of the size and complexity that those inclined to argument can arrive at almost any desired conclusion. Simberg’s analysis doesn’t seem to include the larger 20th Century truth that what we saw was a conflict that began with the October Revolution and ended with Perestroika. WWII, Korea, and Vietnam were the decreasingly less brutal outbursts of tension. My point here is that the economic effects of WWII with respect to the Depression occurred in a Cold War context; the boys did not come home from Japan and Germany. There was no traditional U.S. beating of swords into plowshares. Rather, Bretton Woods and the National Security Act of 1947 altered the question significantly enough to obviate it.

So, while by no means coming out as a supporter of FDR, crack-head Keynsian Economics, or historical ignorance, the least-worst answer to the question of whether WWII ended the Depression might be: *yawn*.

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Comments

6 Responses to “Does Rand Simberg Contradict Himself?”

  1. Bert Spence
    August 20th, 2011 @ 10:36 pm

    Smitty, the best way to think about the economic effect of WWII is from a Bastiat-Austrian point of view.  Set the stage:  Hoover and FDR did exactly the wrong things in response to the crash of ’29 that became the Great Depression.  The parallel here to Bush/Obama is scary.  So what should have been a year, maybe 18 months of restructuring of a government-induced boom-bust cycle (think 1921) turned into a malaise that would not go away.

    Instead of recognizing his mistakes and deregulating, cutting taxes, and refusing to inflate the currency, FDR doubled down with the New Deal and confiscation of gold.  And, as the Dems often do, a war.

    Did the war “stimulate” the economy?  No.  It killed off a lot of people and destroyed an immense amount of wealth.  The nation and the entire world was set back, economically, generations.  What looks like a “boom” post-war was simply the starting over phase in a somewhat less-regulated market.

    I mentioned Bastiat because in this context you have to think about the unseen.  Yes, all kinds of people went to work, and many made personal fortunes, rebuilding what had been destroyed.  But what we have to think about is where we would have been in standard-of-living terms if the war had never happened.  Without the horrendous economic policies that created the boom-bust cycle to begin with, there would not have been a war that killed off 50 million productive people.

    So, really, there is no way to view WWII as an economic benefit.  Only Marxists believe that you can prosper by killing off millions of people and then living off what they produced before they died.

  2. Adjoran
    August 21st, 2011 @ 12:37 am

    The war certainly had an effect on the US economy.  Beginning with Lend-Lease, we were able to get some factories rolling again. 

    Bert is quite correct that WWII destroyed huge amounts of wealth and ended many very productive lives prematurely.  It was a terrible cost to the world.

    But for the USA, being the major industrial power which remained largely untouched (except the loss of life of soldiers in their prime of life) meant we had to handle much of the early phase of rebuilding worldwide, plus we had the leverage to structure the post-WWII world economy to a more favorable regime for us. 

    So in effect we benefited from the destruction in a narrow way because our economy was turned back on.  But in the long term, as Bert points out, we all lost value due to the war.

    It’s the old glazier’s fallacy of the broken windows.  It doesn’t help the economy, and the glazier only gets money that might have gone to the cobbler or tailor or been saved to lend to others for expansion, but the glazier DOES benefit, at least in the shorter term.

  3. Anonymous
    August 21st, 2011 @ 1:35 am

    I fail to grasp the importance of the question. War is a net loss for economies. The aftermath, however, with massive infrastructure damage needing to be repaired, is a huge boost to productivity, as the vanquished countries need to spend lavishly on rebuilding, they dig deep into their own currency to pay the builders, is a net boost to the economies of the builders.

    So, what is the point? That if we destroy infrastructure, nations will dig deep to rebuild? So we should launch a nuclear attack, so that we can create customers for out uniquely undamaged productive sectors? The entire debate is nonsense, if sense is about building our economy. I know that Paul Krugman and his ilk would approve massive destruction to reinflate the bubble, but would any sane observers agree?

  4. Anonymous
    August 21st, 2011 @ 1:35 am

    I fail to grasp the importance of the question. War is a net loss for economies. The aftermath, however, with massive infrastructure damage needing to be repaired, is a huge boost to productivity, as the vanquished countries need to spend lavishly on rebuilding, they dig deep into their own currency to pay the builders, is a net boost to the economies of the builders.

    So, what is the point? That if we destroy infrastructure, nations will dig deep to rebuild? So we should launch a nuclear attack, so that we can create customers for out uniquely undamaged productive sectors? The entire debate is nonsense, if sense is about building our economy. I know that Paul Krugman and his ilk would approve massive destruction to reinflate the bubble, but would any sane observers agree?

  5. Anonymous
    August 21st, 2011 @ 1:43 am

    While your points are correct what really turned the economy was Republican control of congress in 1946. They eliminated much of the prewar and wartime controls on production, generally reduced regulation, pushed unions back a notch and reduced taxes. Really a remarkable achievement considering they lost control of congress in 48.

  6. M Simon
    August 22nd, 2011 @ 3:56 am

    Wars speed up the application of technology. For instance computers went from ideas to rooms full of equipment because of the war. Servo systems were put on sound mathematical grounds. Lots of other stuff.

    Worth the speed up? Probably not to those alive at the time. To me? Yes. I would have probably missed participation in the computer revolution if not for the war. As it was I had reached 33 by the time I got my hand in. Just in the nick of time. My very small claim to fame: I designed the I/O board that went into the worlds first BBS. Plus I got to help the guys figure out some work arounds for some hardware and software problems.

    Oh. Yeah. I was a wartime baby. 1944. My dad would have never met my mother otherwise. So there is that.