To libertarians / Rand clones

[Borodog]

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So, by what specific mechanisms does war improve the economy?

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You keep using the word "war" when I keep addressing "World War Two".

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So, World War Two was not a war? If it was, in what magical way was it different from other wars? How about answering this question then: By what specific mechanisms did World War Two improve the economy?

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I have briefly and accurately explained, using statistics and standard economic indicators, how World War II pulled us out of the Depression and led to sustained economic health and growth. Not "war", but World War II.

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[censored]. You haven't explained anything. You've waved your hands about and asserted that World War Two inproved the economy. I asked by what mechanisms it did so. See, that would constitute an explanation. Your argument is akin to seeing a pot of water sitting on the stove. Some ice cubes are dropped into the pot, and later the water boils. "The ice clearly made the water boil!" you cry. Absurd say I, providing an explanation of how ice can't make the water boil. You then provide me with temperature data from before the ice was dropped in and afterward, as though the two different temperatures explain the boiling of the water!

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However, you refuse to accept GDP, GDP per capita, inflation, unemployment, technological efficiency, the growth rate of technological efficiency, national income, gross private investment, and consumption expenditure, as any indication of economic health and growth.

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For reasons that I have carefully explained and you still continue to ignore. I ask AGAIN: If I hire all the unemployed and put them to work printing dollars that I then pay them with, leading to low unemployment, increased GDP, and inflation, has the economy been improved or helped? If not, how can you POSSIBLY claim that such meaningless aggregates are an effective measure of economic health?

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You also imply that the removal of "Raw Deal" policies was what brought us out of the depression, but refuse to elaborate any further.

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Why should I move on to that when we're stuck on the point where you can't propose any mechanism whereby World War Two could possibly have been good for the economy, nor can you refute my arguments that it could not have been.

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while merely displacing production from consumer goods to military "goods." You have not refuted ANY of
these points.


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I shouldn't need to refute it.

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Brilliant! "I can't refute it, so I'll turn my nose up and claim I shouldn't have to."

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Any intelligent person can surmise that the abysmal consumer good production during the Depression was displaced by an uncomparably greater amount of (necessary) military production, not an equal amount.

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Then "any intelligent person" should be able to propose logical economic mechanisms to show this. Which you apparently cannot do.

[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]

[BCPVP]

It sounds like the broken window fallacy. I'm not sure why Riddick is still arguing.

I've laid out specifics as to WWII and the economy, and all you've laid out are strawman exaggerations. You claim my argument is weak because employment+technology+capital is not a macroeconomic mechanism, and that the economic indicators of such are entirely coincidental, nor do they indicate economic improvement to begin with. I'm going to pretend you are simply correct on all of those points and throw in the towel.

But now its time for you to get specific. What really happened that pulled America out of the Great Depression? What specific "New Deal" components that, when repealed, led to our economic surge in 1940? How did World War Two hurt the American economy?

[The Don]

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This means nothing unless people are producing something worthwhile. Again, the ditch digging analogy.

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Tanks, bombs, and planes were very worthwile in 1941 when three countries decided to declare war on us.

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‘Worthwhile’ was a bad word. I should have said ‘leads to prosperity’ or something of that nature.

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Which ones (industries) were created by the war?

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The computer industry, for one. The airline industry would be another. Was this a serious question?

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So it is your assertion that these would not have been created in the absence of war?

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Again, the money had to come from somewhere. In this case it was the taxpayers wallets.

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Half came from taxes, half came from bonds. How did this comment in any way address inflation which you quoted?

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There are three ways that the government can pay for things: taxes, new money (inflation), and bonds. Although inflation wasn’t high, the government was forced to raise taxes in order to get the necessary revenue. The other way they did this (as you stated) was through bonds. How do you suppose the government pays back this loaned money? This is done by passing it on to future taxpayers, or by printing new money. Both are bad.
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New and increased technological innovations:
Which ones?

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Again, are you serious? How about the the microwave, jet engine, radio communication, underwater communication, sonar, radar, ultrasonic waves and electromagnetic wave theory, submarines, improved antibiotics (penicillin), just to name a few off of the top of my head

I seriously have to stop reading your post after I just read that question. I might as well be explaining World War Two to a child.

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Again, you believe that these would not have been developed (aside from submarines and the like) in the absence of war? I was merely asking that in anticipation of this particular response so I could make this point. In a market economy, developments will be made based on what people demand. Any such innovations which were developed during war time would have been developed outside of war time, should they have been demanded.



You have still failed to address the simple fact that it can be logically deduced as to why war is bad for the economy. As Borodog stated:
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I've provided you with specific logical explanations for how war spending can ONLY either come from funds that are then not spent elsewhere (broken window fallacy) or from printing money , which cannot increase the wealth of the country and can only redistribute wealth from the populace to, for example, arms manufacturers, while merely displacing production from consumer goods to military "goods." You have not refuted ANY of these points.

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You keep relying on aggregates to make your point. Numbers mean nothing if you don't interpret them. Do you believe that WWII was special, in that by creating things to be destroyed during this particular period, people were magically better off afterward?

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‘Worthwhile’ was a bad word. I should have said ‘leads to prosperity’ or something of that nature.


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All goods in an economy don't need to "lead to prosperity", they simply need to be final goods which are consumed or inventoried. The ditch digging analogy has no relevance to military goods because a ditch is not a good and therefore isnt counted in production like military goods.


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The other way they did this (as you stated) was through bonds. How do you suppose the government pays back this loaned money? This is done by passing it on to future taxpayers, or by printing new money. Both are bad.


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This is ridiculous. Corporations issue bonds, and they have to pay them back later. Are bonds bad for corporations?

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Any such innovations which were developed during war time would have been developed outside of war time

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Ridiculous. The developments I outlined were demanded by military commanders, not civilian consumers. Civilian applications only came about after the previously unnecessary R+D had been done in war time urgency.

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You have still failed to address the simple fact that it can be logically deduced as to why war is bad for the economy.

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I know that wars are generally bad for an economy. The 1939 economy was not a normally functioning economy.

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You keep relying on aggregates to make your point. Numbers mean nothing if you don't interpret them.

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I interpret labor, technology, and capital to be inputs that lead to economic output. All three terms are described in the aggregate. And in an depression era when all three come together to produce very little, and suddenly, almost overnight, all three come together to produce a lot, oh nevermind it was just America naturally going through the business cycle, had nothing to do with any war.

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the potential to make more stuff becomes reduced.

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This is precisely opposite of what happened in 1940. Any economy's potential to produce "stuff" is entirely based on its labor, technological efficiency, and capital. All three skyrocketed in America because of World War II.

[tylerdurden]

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Any intelligent person can surmise that the abysmal consumer good production during the Depression was displaced by an uncomparably greater amount of (necessary) military production, not an equal amount.

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Ah, so the key is to deprive the population for an extended period, then relieve the deprevation?

Do you refute that the depression started in the first place because of this sort of misguided tinkering?

pvn, I am not quite as anti-government as you but i am not too far off. I have even specifically ordered "Socialism" from the Mises Institute to support them instead of Amazon.com. So please stop inferring what I do or do not advocate. I am merely interpreting what happened in 1940 that pulled our economy out of the gutter, and apparantly it was not World War II.

[The Don]

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This is ridiculous. Corporations issue bonds, and they have to pay them back later. Are bonds bad for corporations?

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No. I am shocked that you can't tell the difference. Corporations pay them back with THEIR money which they made consentually -- not that which they used force to attain. I am not paying for corporate debts, but I am paying for government ones. Of course, corporations also lack the ability to create money and inflate the money supply too.

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Ridiculous. The developments I outlined were demanded by military commanders, not civilian consumers. Civilian applications only came about after the previously unnecessary R+D had been done in war time urgency.

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So if nobody actually wanted these innovations, then why is it such a great thing that they were developed?