Never forget, never forget, and I think it’s very important for Democrats especially to remember this, that if Hitler had not come along, Franklin Roosevelt would have left office in 1941 with an unemployment rate in excess of 15 percent and an economic recovery strategy that had basically failed.Economist Robert Higgs has ripped apart the notion that war is good for an economy. And, in particular, he has focused on World War 2. On release of Higgs' book, Depression, War, and Cold War: Challenging the Myths of Conflict and Prosperity, the publisher wrote:
[Higgs] provides clear evidenceFDR’s New Deal actually prolonged the Great Depression and that World War II did nothing to create prosperity...Higgs also demonstrates how little-known changes in weapons procurement policy in 1940–41 transformed the role of defense contractors in the political economy, why the U.S. civilian economy foundered during the Second World War, and how historians and economists have disregarded or misunderstood the economy’s rapid postwar return to genuine prosperity.Summers is correct that FDR's pre-war New Deal economic strategy failed, but he is incorrect that world war boosted the economy. As Higgs shows in his book, the private sector did not recover until after the war. The war period was just another government manipulated period where some statistics may have looked good because young men were coerced into fighting and dying for the state.
“War is the quintessential government activity,” writes Higgs. Employment figures were stellar during World War II only because a number of men equivalent to 22 percent of the prewar labor force were drawn into the military, mostly by the draft, at below-market wages. Making- the critical distinction between wartime prosperity and genuine prosperity, he confirms that the economy did not actually recover fully until after World War II.
Remarkably, the death of young men is never recorded as a notch against GDP, but the building of bombs that are dropped in far off lands is always counted as a plus for an economy.
Well he is is Paul Samuelson's nephew so buffoonish utterances run in the family.
ReplyDeleteHow hard is this stuff to figure out? Resources are either scarce, or not scarce. They aren't scarce at "normal" times and then not scarce whenever Hitler shows up (meaning the government can arbitrarily orchestrate the economy and thereby lead to a stimulative "boost" whose benefits outweigh its costs).
ReplyDeleteAnd I ask again, how hard is this stuff to figure out? The purpose of voluntary economic exchange is to satisfy subjective determinations of felt unease. Put more plainly, the purpose of voluntary economic exchange (aka, the economy) is to satisfy consumer desires. The only economic activity which is "valid" and beneficial, in that sense, is the economic activity which is directly responding to voluntarily demonstrated consumer desire.
For example, it would not be correct to build enormous steel rods, twenty miles into the sky, and then tabulate the materials and expense accrued in constructing these rods and calling it "economic production" and "economic growth" if, as is likely to be the case, 20 mile tall steel rods reaching into the sky are not desired by consumers who have no willingness to pay for their construction or "use".
Similarly, it would not be correct to look at the construction of thousands of tanks, airplanes, millions of rifles, bullets and explosives, the fabrication of millions of uniforms, helmets, rank insignia, etc., and tally this all up as "economic production" and "economic growth" when none of those things supply the means toward satisfying any demonstrated voluntary consumer desire.
This is so basic. If Summers doesn't get this he has no business referring to himself as an economist and neither would anyone else who has referred to him as such.
That's an incredibly dumb comment for an economist to make. How did Larry Summers ever have a job?
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteOh Bobby- put your big girl panties on and stop your whining. The fact is that American military might has provided the breathing room for the world's largest economy to flourish in good times and bad-- without which you and your peacenik buddies would be speaking German right now.
ReplyDeleteI give the death of FDR more credit for the recovery then the war. Hopefully, FDR is as close as we will ever come to having a fascist dictator run this country.
ReplyDeleteWhile I would never credit the war for pulling us out of the depression it certainly did provide a benefit to the US and US Businesses as it eliminated most of our foreign competition. It also presented an incredible opportunity for American businesses to profit from the rebuilding of war torn Asia and Europe. Sadly, we took the competitive advantage we got from not having fought the war on our lands and squandered it by not innovating and modernizing to be able to compete with our foreign competition which would soon have more modern manufacturing facilities then us.
"Remarkably, the death of young men is never recorded as a notch against GDP, but the building of bombs that are dropped in far off lands is always counted as a plus for an economy."
ReplyDeleteExactly!
The mentally retarded public school tax livestock who masquerade as conscious human beings will always believe that war makes them wealthier...They are just too stupid to believe otherwise.
ReplyDeleteI've always thought that one of the major factors in the American boom after WWII was simply that the U.S. had an enormous intact manufacturing base, abundant resources, and was the world's number 1 oil producer, while the industries of the rest of the world were a smoking ruin.
ReplyDeleteThey had no choice other than to buy American.
Break out the ol' 33RPM vinyl of Bob Dylan's "Masters of War" and remember a time when people had spines.
ReplyDeleteAnd if yer too damn young, try to imagine it!
"Remarkably, the death of young men is never recorded as a notch against GDP, but the building of bombs that are dropped in far off lands is always counted as a plus for an economy. "
ReplyDeleteWell said!
@E.G. Palmer
ReplyDeleteDon't forget the Federal government's "help" via the Marshall Plan; which was really just a roundabout way to massively subsidize the former war profiteers.
You guys have to remember that the phrase "good for the economy" translates to "good for the ruling elites." If you remember this, it always makes sense.
ReplyDeleteWar is good for the ruling elites because they own all of the arms factories.
Disasters are good for the ruling elites because they own the insurance companies and they get all the good government building contracts.
Economic stimulus is good for the ruling elites because they own all of the banks that get the fresh dough.
Any outcome which funnels money from normal people to the aristocracy is considered "good for the economy."
Anon@1:58
ReplyDeleteyour sort would be the first to start goose stepping through Times Square at the behest of our new German overlords.
Breathing room? for whom? Lockheed? Goldman Sachs?
Anonymous moron wrote-
ReplyDelete"The fact is that American military might has provided the breathing room for the world's largest economy to flourish in good times and bad"
And how has it done that? By using the threat of or implementation of violence to extract resources from client states. Name one war where the benefits outweighed the costs.
"without which you and your peacenik buddies would be speaking German right now."
Hmmm, if the US hadn't entered WW1 to bail out the NY/London banking nexus, the war would have ended much sooner, Germany wouldn't have been saddled with enormous war reparation debt (which directly resulted in the election of Hitler to stop the raping of the German economy), and the US wouldn't be in the middle east today. All of these wars have served the banksters and the military/industry complex, and impoverished and killed "the little people". How someone as stupid and ignorant of history as you are can even read a website like this without blowing out your 3 remaining brain cells is astonishing.
Dale Fitz
Dale Fitz,
ReplyDeleteFurthermore, in response to the other anonymous, who cares what language anybody speaks? Does this moron realize almost half the country spoke German as a first language prior to the Revolutionary War and that there was much discussion about establishing German as an official language and even drafting various declarations and government documents in the language early on the in the history of the United States?
@Taylor
ReplyDeleteThank you. I was going to say I didn't care if I spoke German...but held my tongue, thinking it wasn't my place to comment on such a sensitive topic.
Lila Rajiva,
ReplyDeleteI think you have just as much right to point out a logical fallacy as anybody else. If someone like Anonymous is sensitive about a "cultural" issue like that, it's his problem, not yours.
In fact, if there is a sensitivity, that's even more reason to strike the root if you ask me. Next time, don't bother waiting for me, just go for it!
Actually, from a neocon perspective, it would have been much more efficient if we had just surrendered to Germany in 1945.
ReplyDelete"...may have looked good because young men were coerced into fighting and dying for the state...
ReplyDeleteWenzel, do you really think this is what WWII was all about? You are as ignorant as Summers.
This is the mentality of despicable US politicians: war is good for the US. He is hinting that US will not hesitate to create or stimulate war in other countries because that will save the US economy. They can go in to rob the countries. When war spread to the world, all economies are destroyed, US economy will become relatively good even if there is no physical improvement from the current state.
ReplyDeleteIn your zeal to criticize, you have missed Mr. Summers' point. He is simply saying that at that point in Mr. Roosevelts term, the unemployment rate was 15%. Get a life.
ReplyDeleteSummers had it half right , Hitler didnt get us into WWII, FDR did by cutting the oil flow to Japan. Brain dead Japanese thought war was a good economy booster too so Instead of expanding trade, the Japanese expanded their empire and declared war on China before WWII. FRD couldnt convince the american people to fight Germany, so he cut off oil to Japan to make it look like he was forceing the Japanese to end their hostilities against China, when in reality it gave him the key to dragging the US into WWII, with Japans oil cutoff and our Fleet congregated in one area unprotected, FDR had a pretty good sense Japan would invade, and sure enough they did. War is young men dying and old men bloviating, nothin good ever comes of it, mankind is made lesser by it's existance.
ReplyDeleteFDR knew that the attack at Pearl Harbor was coming, and withheld the information from the Pacific fleet commanders.
ReplyDeleteSee "Day of Deceit" by Robert Stinnett where he uses FOIA to get the records of FDRs meetings where intelligence leaders presented the information, and FDR actively decided to allow it to happen so that the US would enter WW2. He was a piece of shit, just like his buddies Winnie and Uncle Joe Stalin. Hitler was just another facet of the same coin, no better or worse than the other 3.
Excellent points. Why is it there is hardly a discussion of post WWII economic recovery? True that building weapons is not real wealth creation. The US was so prosperous post WWII because we were the MANUFACTURING ENGINE of the world with Europe and Asia in "ruins". Who provided the steel and other goods necessary for rebuilding (a consumer driven need) - we (USA) did! Is it no wonder that our economic issues today can be linked to the decline of US manufacturing? A country cannot remain (become) wealthy only dealing in services. Goods must be created and sold for real wealth to occur - the fallacy our our economy today - a consumption driven economy vs one that exports goods in exchange for the wealth of others. If Washington were to get out of way of business (I.e. Excessive regulations and taxes) then economic recovery would only be a "when" vs an "if".
ReplyDeleteWars are primarily about the economics of power, territory, trade and money, which are pretty much interchangeable factors. Most of the benefit goes to the ruling classes, except that which trickles down to those below. Why? Because they are the ruling classes. What's the point of being on top otherwise.
ReplyDeleteLeadership personality and moral issues are window dressing in the main. This has been true for ever, and, as far as the eye can see, probably will remain so. It is the primitive way the human race in organized societies, known somewhat jokingly as civilized societies, deal with economic conflicts.
It is much easier for the political terrorists to go to war during a central banker terrorist-created economic downturn when the little tax cattle scream for their Owners to "do something". The political terrorists always want to plunder other political terrorist-controlled areas similar to what is happening to Rupert Murdock today, or the NY Mafias of the 80s.
ReplyDeleteI don't see where in this specific quote Larry Summers is saying that the war was good for the economy. He might believe it is but this quote says nothing in that sense.
ReplyDeleteHe is just stating the obvious, that is, the economy looked better during WWII than it would have been without it and by consequences, FDR "new order" looked better.
The war forced the gov't to release large amount of money (by indebting itself, or printing, or else) into the economy. Just like the current QE and QE2, it's just a magic a trick and doesn't bring any long term economic improvements, that is, it doesn't create prosperity as "demonstrated" by Higgs (see quote).
Higgs also refers to wartime prosperity, which is exactly what was experienced, and I agree this is not the same as actual, long term prosperity.
As an employee of the "military industrial complex" for 40 years, I'll make 2 contributions I'm knowledgeable about:
ReplyDelete1. There never was a "military industrial complex" until after the Korean War. Eisenhower coined the term when he was leaving office as President. For WWII and all wars before it, commercial industry mobilized for wars, and went back to their businesses when they were over. That is fact.
2. Few know the hideous effects of wars better than us, except our sons (and daughters) who suffer them and the doctors and nurses who treat them. Of the thousands I have worked with I cannot name one who ever wanted us to go to war. When we build the instruments of war that deter it successfully, we all win. When that fails and we have to fight, everybody loses.
The misinformed invective here misses the mark and does all of us a disservice. You think you care more about your country than those of us who dedicate our entire lives and careers to protecting it? Direct your venom where it belongs: a corrupt Congress and a corrupt executive branch (probably a few bankers and bureaucrats too). Then get involved and do something about it. Have you ever gone to visit your Congressman in his local office? It's quite easy to do, actually.
In my business we do everything possible to bring soldiers back home in one piece, and we hate war passionately. I've met too many wounded vets to think otherwise.
Rocketman, I know that you think you are doing God's work, but you are in reality in bed with the devil. You are providing the tools for our totalitarian overlords to continue to rain hell down on all the little brown people of the world, and to use that military might to suppress dissent at home. You can rely on whatever twisted logic you want to sleep better at night, but that won't change anything. Better to put your talents to use building products that make people's lives more livable instead of weapons that kill the unknown and unseen innocents of stone age countries on the other side of the globe. I pity them, but maybe I should pity you more. You have innocent blood on your hands.
ReplyDeleteThis is what passes for intelligent, reasoned discussion? As an atheist, I say, god help us all.
ReplyDeleteI wonder how the number of American men killed in WW2 affected unemployment stats. One could certainly pose the question as to whether that is the reason politicians drag their nations into wars.
ReplyDeleteDoes anyone notice that everyone that is under Obama or Sotero or Obumbo or whatever his real name is are all crooks, financial terrorists and just scumbags of the earth hell bent on destroying the US? When are people going to wake up before it is way too late....if it isn't already??
ReplyDeleteNo recovery is possible due to 13 T, TRILLION in the side lines was just spent. The "users" are spending it after more BORROWING, remain classed as DEBTOR to the people, who are CREDITORS.
ReplyDeleteMoney from sweath, is private money, and remains so.
CORPORATE licensed enterprises are taxable sources for the District of Columnbia territory to profit from these Corporations, their taxable "agents" on federal zones, and from foreign Corp. INCOME.
"INCOME" is partly defined as "municipal" by Congress, because is federal zone tax. period.
Compensation for labor is NOT taxed, but Compensation for SERVICES is taxable, as it applies to Government services. This "kickback" tax is for PRIVILEGES.
A license to have a CORP. is also a privilege, as the CORPORATION EXPERIENCES WIDE PROTECTIONS.
The territory of the District of Columbia is where the DEBTORS RESIDE, RESIDENCEY.
They enjoy also WIDE protections from PROSECUTION, such as DEBTOR JAIL.
This economist / Historian diffidently got it wrong, the Us did not enter the war with troop on the ground til 40-41 and in small numbers, but we did build tanks planes guns and bomb here in this country and shipped they to England, so they could fight the Nazis. Which ramped up our manufacturing and that's what pulled us out of the depression not us going to war we just ended the war A year and a half and we were done.
ReplyDeleteGovernment always wants you to believe that more administration is required and war stimulates econmy. How does it come that during the so-called Great Depression consumption of butter and meat rose to record levels? And have you ever heard that destroying products such as tanks and bombs and ultimately workforce of millions of young healthy men would make a nation rich? It is this kind of rotten brainwash that got us and other nations into the current economic aka cultural mess.
ReplyDeleteThink about all the raw materials wasted in war for bombs, bullets, fuel etc. and how much those same resources would have improved the lot of the working person had they been employed instead in building houses and other infrastructure of benefit to the masses.
ReplyDeleteWar itself is NOT good for an economy except that it does remove a large number of young people from the work-force and drive employment in the civilian sector up. Some sectors of the economy do manage to profit from war as they supply the goods of war - but it is done under a heavy national debt load that takes years to pay back after a true economy returns. In the case of the USA, the post WWII economy began to percolate as if by magic (for a couple of decades) largely because ALL the other world economies and the cities and ports and factories that supported them were in ruins. Russia, China and India were in socialist mode and not competitive for a half a century after the war.
ReplyDeleteI have to assume Summers believes that, without the Hitler factor, that FDR would have lost the 1940 election.
ReplyDeleteTherefore, by implication with the FDR administration continuing, some mainstream economists would conclude "unemployment was way down in 1942, therefore GDP was up and it's all good!"
Yes, when the 1940 Selective Service Act had accrued 12 million men out of the workforce into uniform, GDP does look better. But for we who endured the Great Depression and then WW2, it wasn't quite prosperous. Rationing (for some*) and shortages anyway, and general low wages, we didn't see any improvement.
Not many people appreciate the several years of financial politicking who weren't there -- FDR always bought the swing states with benefits, the sure states got less and the enemy states got bupkis.
* I remember my honest, naive and hard-working parents being incensed when someone told them how to game the ration system.
As Gerald Celente of Trends Research has stated on many occasions: "When all else fails they take you to War"
ReplyDeleteSummers is not merely suggesting that war is a good thing for the US economy, he is hinting in not too subtle way that our fearless leader the "Man of Piece" has fundamentally transformed himself into a Latter Day Warrior of fierce countenance.
Suppose someone proposed to the government that the way to revive the economy is to borrow massively and put the whole economy on full production. The government would buy all the cars, trucks, locomotives, ships, planes, tractors, computers, clothing, food, cement, lumber, glass products; everything and dump in in the ocean. They would take him away in a white coat. But full professors holding endowed chairs at prestigious universities say the World War Two was what ended the Depression and everyone takes it seriously. Remarkable!
ReplyDeleteExactly right. Everyone needs to read this.
ReplyDeleteto all above comments good and bad,
ReplyDeletehave a read of richard maybury's uncle eric series books wwI and wwII. they tell the details of fdr and his cousin sirWinston devising all the plans for war. also, the atrocious brits use of nightime bomb raids on civilian germany which is
somehow viewed as less criminal than hitler's civilian killings!!!!!!! go figure!
Prior to Pearl Harbor, FDR had made an agreement with Chrchill that WHEN we (The U.S.) went to war (Not IF), we woulod send our troops to Europe first. Does it make sense-we are attacked at Pearl Harbor, but send out troops to defend Europe?
ReplyDeleteAnon, as I mentioned earlier in my comments, "Day of Deceit" by Stinnett is full of insider "revisionist history" about why and how FDR got the US enmeshed in WW2. There are some great articles and reviews of the book that will give you an overview of the content of the book- Mises.org and LewRockwell.com have several articles that examine the events.
ReplyDeleteDale Fitz
I think people read too much into Summers' comment. He only states that, without the rise of Hitler and the state of war, America would not have taken the exceptional step of electing FDR to a third term. Like all previous presidents, he would have been gone in '41 and his legacy would have been the dismal economic status. I think people are inferring more than Summers implied by thinking he was saying the war saved the economy.
ReplyDeleteHitler had the good economy. While American soldiers were well fed gearing up to fight the Nazi's, the soldiers families were struggling to eat a single meal to provide the calories for a days worth of work. National Socialist Germany started peaceful economic endeavours through infrastructure and manufacturing while the western allied powers stole productive mechanisms from their populations to stop Hitler's economic miracle from becoming a world wide phenomena. War materials were needed so that Western ingenuity was stunted while bombs and bullets were stockpile because the internationalist could ensure a ready stockpile to stop an honest economic system. Hitler wins, if you really analyse it. But don't expect your kids to ever read anything remotely close to the truth as the internationalists have an economic interest in dishonest fiat currency systems as exemplified by the Federal Reserve System.
ReplyDeleteAnon December 1, 2011 is correct. National Socialist Germany would have been the solution for the entire globe if you could remove the London Banking Cartel from their predatory position of bleeding the working folks of their labour. Any agent of the banking families that monitor these message boards, you are tagged. We know where you live. You are the first targets. And We Are Armed and Pissed, and you are a legitimate target.
ReplyDelete