Tuesday, December 23, 2008

World War is not the solution to economic crisis

This comment on Tom Sowell's article today, Another Great Depression? -which describes the problem, gives the most succinct answer I've ever seen as to what ended the Depression:
Location: FL
Reply # 17
Date: Dec 23, 2008 - 6:33 AM EST

Subject: George
Please cease spreading the false notion that WWII saved our economy. What saved us was the destruction of our competition and the goods and profits we built in the 50's. The same war crushed England France and Germany as players on the world stage. Theories have value only according to their ability to predict results. The theory of relativity was hotly debated until the advent of instruments able to confirm its predictions arrived. Economics is no different. Sowell occupies a big place because his theories have predictive value. Make work projects only make things worse. Does a man up to his ears in credit card debt reduce it by digging holes on the beach for the tide to fill? Work is not the answer, profit is the answer. Whichever country manages it the best will emerge from this world wide slump the quickest and best. In the 30's it was Germany, and it made Hitler the most admired politician in the world.

The war did end unemployment by sending millions of young men overseas to kill and die, but we didn't get much in the way of an increase in production of anything but killing tools. Nothing you'd care to have lying around the apartment, say (I'm assuming normal space restrictions-as much as I'd like to have the Yorktown in my living room, my wife won't allow it).

As to how Hitler did it? First, he repudiated Reparations payments. Second, he didn't - he convinced the people of the virtues (in both meanings) of martial discipline and sacrifice instead. They did without.

As did we, during the war.

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