Simple enough. WWII did FDR two huge favors. First, it pulled several million people out of the bread lines and put them on the front lines--by the war's end some 16,000,000 Americans served; the surplus labor was effectively withdrawn from the labor market.
And when the war ended that "surplus labor" was back out on the labor market again...another word for that is unemployment BTW. Yet we didn't return to the Depression.
celticlord said:
Second, instead of government make work, the war effort put people to work in companies like Ford, and GM, and Boeing, producing all that war materiel. War turned the government into a legitimate consumer of American industrial output, which it could not have been in peacetime.
What you consider "legitimate" is irrelevant. The economic result of the stimulus spending would have been the same whether the government bought things from Ford/GM/Boeing for the war effort, or whether they bought things from Ford/GM/Boeing and then set it all on fire.
And this does not answer the question of why we didn't return to the Great Depression when all that government stimulus collapsed following the end of the war. Instead, we had only a minor and short-lived recession.
celticlord said:
It is also crucial to point out that, as the sole functioning industrial economy after WWII, between rebuilding Japan and rebuilding Europe, there was considerable demand for US output in the years immediately following WWII, demand produced by the devastation of WWII.
The vast majority of the US economy was still domestic in 1945. And other nations (that WERE devastated by the war) also experienced a post-war boom, despite the collapse of their governments' economic stimulus for THEIR war efforts.
While you are correct that economic stimulus - whether it's related to a war, an economic crisis, whatever - is in some respects a short-term fix, the example of WWII is a good example that it can be more than that as well. And at any rate, the WWII stimulus lasted long enough to fix the economic problems associated with the Great Depression.
celticlord said:
It was done during the Great Depression, and was a total failure.
The economy bottomed out in 1933 (when the New Deal began), and grew every year until 1937. When FDR reversed some of the New Deal policies, it contracted again.
celticlord said:
FDR's own Treasury Secretary acknowledged as much in 1938.
Well then he was incorrect. What's your point?
celticlord said:
While making recessions "less nasty" may be the goal of stimulus, all it accomplishes is spreading the "nastiness" out over time
That's a good thing.
celticlord said:
rather like pulling a band-aid off slowly vs. pulling it off all at once. It tends to obscure rather than fix any systemic imbalances in the economy, because it props up the economy as it exists when a recession begins--just as Dear Leader's Wall Street bailouts and mortgage rewrites are propping up the housing industry today.
The systemic problems can still be fixed. There's no reason we need to wait for an economic crisis to do it.
celticlord said:
This delays the true recovery by postponing the necessary bottoming-out every recovery requires; people have to come to a juncture where widespread dramatic change is eagerly sought after and desired. FDR's "New Deal" was about as "new" as Dear Leader's promise of "change"--not at all. Just as Dear Leader is picking up with TARP where the Bush Administration left off, FDR picked up with his efforts where Hoover left off.
Right. FDR and Hoover had exactly the same approach to government. Are you kidding me? :roll:
celticlord said:
If FDR had just left matters alone, the economy likely would have been booming by 1936.
Instead we got the New Deal, and the economy actually WAS booming by 1936. In fact, it was booming by 1934...less than a year after the New Deal began.
