Date Written: 3/21/2023
Question: Evaluate this statement: “World War II was a time of great prosperity in the United States.”
A common misconception people have is that war benefits the economy. World War II in particular is often claimed to have had positive effects on the U.S. economy. People claim that it brought us out of the Great Depression. If only the government provided statistics are considered, then this assessment would seem reasonable. However, if some logic and economics is applied, then it becomes quite clear that World War II did not have a positive effect on the U.S. economy.
To start, let’s consider the unemployment rate. It is true when WWII started the unemployment rate fell drastically, but we must look at why. When WWII started the U.S. government drafted 10 million men into the armed forces and an additional 6 million men, that were draft-induced, joined voluntarily. The employment rate fell so much because 16 million men were employed in the armed forces. Is it possible to say that these people were better off because they had these jobs? Most of these people were forced into the armed forces because the only alternative was prison. Do these jobs benefit the economy? These people weren’t employed in productive endeavors. Their job was to kill and destroy in foreign countries. So, the fact that the unemployment rate fell during this period isn’t a benefit for the employee or the economy.
Does it make sense that when 16 million men (equal to 28.6% of the labor force in 1940) were removed from the economy that it improved? Additionally, all of these experienced skilled men were replaced with inexperienced women and teenagers. Would this make the economy more productive? It simply doesn’t make sense that an economy with such human-resource constraints could improve.
Not only were 28.6% of the labor force out fighting the war, but another 11.4% of the labor force were also domestically producing weapons of war. So, a total of approximately 40% of the labor force were working in/for WWII. Most of the stuff produced for WWII was ultimately wasted because it was destroyed in the war. So the 40% really isn’t benefiting the economy.
Only 60% of the workforce was producing goods that consumers want; only the government is concerned with buying weapons of war. The 60% that is actually improving the lives of the public also has to pay the salaries of the 40%. The government either directly employs the 40% or is the sole buyer of the products they produce, so the government is the source of their salaries. The government can only get money by stealing it from the public in the form of taxes. (To learn how taxation is theft click here.) Therefore, the 60% is taxed to supply the salaries of the 40% who aren’t producing anything consumers want. It is not prosperous to only have 60% of the workforce producing the things consumers want.
Another nail in the coffin is if war is so good for the economy why don’t we go to war against ourselves? If we bomb and destroy all the cities, think of all the jobs it will create. Many people will need to be employed to rebuild cities. Obviously there has to be something wrong with this way of thinking. It is a net negative for society to do this. It is true that many people will be employed to rebuild the cities. However, many scarce resources will be lost in the destruction and many more will be used to rebuild. Plus the labor of all these people is valuable. Instead of rebuilding cities they could have been doing many other things that could advance society. Clearly war is not a good thing in this case, so what makes it different when two different countries go to war?
The Problem With the Government’s Statistics
Why is it that government statistics say that the economy is improving during wartime even though logic tells us that this is impossible? The GNP (Gross National Product) rose during WWII. This is the most commonly referenced statistic that shows that the economy improved during WWII. GNP is determined by adding up all the prices of the goods bought and sold. So, the GNP figures are dependent on accurate prices to be correct.
During WWII the government was very involved in the economy. They set price controls for many things. In layman’s terms they just arbitrarily slapped prices onto things without any regard to their true value to consumers. Prices only have meaning when they are left alone, so that they reflect the voluntary exchanges between buyers and sellers. During WWII Prices were distorted because of government intervention. So, the GNP figures were also distorted and inaccurate because the prices were messed up.
For example, let’s say the government arbitrarily set the price of macaroni and cheese to $1,000,000. Then it bought 100 million boxes of macaroni and cheese. All other consequences aside, this would crazily distort the GNP as the government would be spending a ludicrous amount of money. However, this wouldn’t be a good indicator for how well the economy is doing for obvious reasons. The same thing is true when government interferes with prices to a lesser degree, which is what happened during WWII.
In conclusion, war doesn’t benefit the economy. The statistics can’t be blindly believed as they can be wrong. With a little critical thinking and economic knowledge it can easily be deduced that war doesn’t benefit an economy. War can only destroy and it should never be perceived as a benefit to the economy or society.
Nicely written.