WWII and the Great Depression

Discussion in 'Economy' started by ccravens, Jun 27, 2012.

  1. ccravens
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    ccravens Rookie

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    Hello all - first time poster (and new member), long time lurker.

    I've read on the economics topics a number of times of posters claiming that the massive government spending during WWII put an end to the Great Depression.

    Usually it is done by Keynesians/Krugmanites trying to prove that massive government spending is needed to end the current recession, because that is what it did during the early 1940s.

    While it did solve the unemplyment problem, I was always taught that many factors were used to measure an economy's health, not just employment. Things like GDP, inflation rates, prices, value of stocks and bonds, etc. etc.

    The problem I have is this: it is hard to think of your economy as "growing" and a depression as "over" when 29% of your labor force is conscripted, there is rationing, shortages, price controls, an inability to buy consumer goods, and a longer work week.

    Many would argue: after the war was over, in 1946, when government spending fell by 67%, we experienced a tremendous economic boom. Why? because the normal economy was producing the consumer goods people wanted. That's when the Great Depression was over.

    If we don't correctly learn from the past, it seems we'll be doomed to repeat it.
     
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  2. expat_panama
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    expat_panama Silver Member

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    There was a time that I went along with the spending-cures-unemployment theory. It wasn't easy because it meant I also had to push the 'doesn't-work-means-more needed' theory also.

    Over the past few years it's been a lot easier to see how job losses both then and now come from a Washington led 'war on employers'. The fact's driven home by comparing the inaugural speeches of '33 and '09. Both rants stress the 'greed' of the previous decade and go on to promise fairness (AKA getting even) with the rich corporation owners.

    Roosevelt's war on employers didn't end until he died 11 years later. Since then we've amended the constitution to halt FDR/BHO-style power abuses so we shouldn't have to wait so long this time.
     
  3. CrusaderFrank
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    CrusaderFrank Diamond Member

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    FDR Dropping dead was the best thing that ever happened to the economy in the 1940's
     
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  4. Rshermr
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    Rshermr VIP Member

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    Classy, as normal, Crusader. And so profound, as normal, crusader.
     
  5. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    I've always had a problem classifying WWII as a stimulus, since it was 5 years long. And the amount of spending was obscene, from a starting point of 10 billion in 1940 to approx 107 billion in 1945, I don't think that instance qualifies as a reasonable example of a stimulus. We didn't have many moochers then, everybody worked doing something. Different time, different business climate, different attitudes, what worked then may not work now.
     
  6. MikeK
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    MikeK Gold Member

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    The factors that brought about and sustained the Great Depression are essentially the same as those which caused our current economic problems. Those factors are diversion of the Nation's wealth resources to a small segment of the population and the hoarding of that wealth. FDR imposed a progressive income tax with a 91% maximum rate and he redistributed the recovered wealth to the working class by creating much needed make-work programs, such as the WPA and the CCC, which repaired and vastly improved our national infrastructure. My own father was employed in these projects which enabled him to support his family through the Depression years.

    It was a slow process but the distribution of that money to people who immediately spent it brought about the circulation a national economy needs to thrive and the end result was the period of phenomenal prosperity between the 40s and 80s which gave rise to the American Middle Class.

    The beginning of the end of that economic energy came about when Ronald Reagan, the man from General Electric, introduced Reaganomics, the first symptom of which was the Savings and Loan scandal, and it's been downhill at an increasingly rapid rate from then on -- because what was sold to us as trickle-down economics has in actual fact operated to siphon-up the Nation's wealth to a small group of high-level scam artists. The only thing that will repair the damage done to the economy and put America back to work is to go after Wall Street and the Banks, investigate and prosecute the sonsabitches who have grown fantastically wealthy by all sorts of deviously fraudulent schemes, recover what was stolen via massive fines, and imprison those found guilty of malfeasance and fraud. And anyone who doesn't believe there has been a lot of that need only obtain and watch a video called Inside Job.

    Watch Inside Job on-line, free, here: http://www.filmsforaction.org/watch/inside_job_2010/ and LEARN!
     
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    Last edited: Jun 29, 2012
  7. Unkotare
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    Unkotare Diamond Member

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    WWII didn't end the Great Depression. The end of the war and the end of government controls over the economy did.
     
  8. MikeK
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    MikeK Gold Member

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    The economic boom began in the late 1940s and you are almost right about the reason for it.

    It didn't take place because of the consumer goods people wanted, but rather because they had the money to buy the things they wanted. And they had that money because of tax increases on the upper income levels and the government make-work projects (thanks to FDR) that put money into working class hands -- including my own father's. The resulting circulation of that money is what stimulated the economy and fostered growth.

    Today's economic problem is very similar to that of the Depression era and the same solution is needed to correct it. Our treasury has been looted by white-collar criminals and that hoarded money must be recovered from them and circulated. Investigation, prosecutions, and elevated tax on upper income levels is the way to do that.
     
  9. Annie
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    Annie Diamond Member

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    It did seem obscene, until the last 3 years.
     
  10. ccravens
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    ccravens Rookie

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    Your post was a gross oversimplification, and just plain wrong in the 3 areas you tried to tackle: causes for the depression, the 40's-80s "growth," and the period you refer to as "Reaganomics."

    Period 1.The causes of the depression being unequal distribution of the wealth? Hardly. Read a few textbooks, and you'll see that the culprits were: the Feds easy-money policy which created the stock market bubble; the market crash; the Hawley-Smoot tariff; the Revenue Act of 1932; the massive government spending under Hoover and FDR, which displaced the private economy.

    Your father would have been better off without all of these factors; then the depression would have been OVER years before, and he wouldn't have had to depend on the New Deal for his living.

    Period 2. Redistribution of income thru taxation gave us "the period of phenomenal prosperity between the 40s and 80s which gave rise to the American Middle Class." You must be kidding, right? For one thing, you must not know that there were very real economic problems and recessions during that 40 year time period. Are you reallysaying there was no middle class before? Interestingly enough, it was the tax cuts and sound money policies of both JFK and Reagan that got us out of the recessions of their times.

    Period 3. Your gross misreading of history continues. To believe that there was prosperity between the 40's and 80's that Reagan brought to an end is just plain wrong. Either you are uninformed or just lying. Have you never heard of the 11 year stagflation of the 1970s? Don't you remember it, or were you too young? Unemplyment, interest rates in the 20% range, long gas lines, the "WIN" buttons, etc.

    It was Reagan who came in during the early 80s, and through tax cuts and a sound currency ENDED the period of stagflation that idiots like Nixon, Ford and Carter had presided over. THAT started the period of prosperiety, from the early 80's to 2008; the greatest period of sustained economic growth in modern history.

    Sounds like you listen to economic conspiracy theorists at worst, MSNBC at best. But the real history is out there, if you cared to explore.
     
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