[Darryl_P]

Good post.

I think wars, including WW2, are necessarily detrimental to any economy simply because stuff gets destroyed and people get killed so the potential to make more stuff becomes reduced. Fairly straightforward and along your lines from what I can see.

A possible counter-argument, however, might be that the euphoric, optimistic attitude required to make a very strong economy came about because of the war. One could argue that the positive effects lasted much longer and therefore outweighed the negatives.

So if you're looking for a mechanism, it's:

- war destroys lives and other stuff, but when war ends there's euphoria which leads to optimism which leads to high motivation which leads to productivity which leads to a strong economy.

My counter-counter-argument would then be that it was not the war which caused the boom but the optimism and high motivation which could have been achieved in any number of other ways with a much lower cost.

In the case of WW2, though, the economic benefits are mostly an illusion because of the lack of backing of paper currency. All this flimsy worthless stuff floating around and mainstream economic theories assume it has value. Imagine what will happen when people realize it really doesn't have value! Yikes! [img]/images/graemlins/shocked.gif[/img]