Did World War 2 End the Depression?

dudalb said:
And is something that those who want a total economic collapse because they think it will result in a 'better world with the old system gone" should think about. Severe depressions almost always give birth to wars .
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Very astute, and it is true that an economic collapse leads to anti-(anything) sentiments within a country, and is not something the educated hope for. BUT....good news....we are the first to be killed off in any such purge of the undesirables.
 
Corsair 115 said:
Yes, but weren't people saving because rationing and the demands for war production meant there were relatively few consumer goods to purchase during the war?
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Partly, but another factor was that it was cool (patriotic) to save. ("Back the attack! Buy US Bonds!")

If people hadn't been doing that, and had instead been trying to spend the consumer goods, prices would simply have gone up to meet demand instead. The black market was never more than an economic bit of noise, precisely because people, by and large, were willing to voluntarily save.
 
Did the Germans start seeing a lessening of the effects of the depression earlier than the rest of the world due to their increasing military buildup?
 
Nick Bogaerts said:
Lend-lease. We're still paying you for it. There was very little in terms of repayment until 1945, and then you started shelling out for the Marshall Plan.
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Actually IIRC the UK finished paying that off a few years ago.

But it wasn't the war per se that ended the depression in the US, it was the fact that the US was the only country left with a large intact industrial base after the war. This put the US in a dominant position for decades afterwards.
 
WildCat said:
Actually IIRC the UK finished paying that off a few years ago.

But it wasn't the war per se that ended the depression in the US, it was the fact that the US was the only country left with a large intact industrial base after the war. This put the US in a dominant position for decades afterwards.
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I think you're making the same mistake that Hans is; the depression was well over in the US by 1943. The postwar boom that followed the war is not "the end of the Depression."
 
drkitten said:
I think you're making the same mistake that Hans is; the depression was well over in the US by 1943. The postwar boom that followed the war is not "the end of the Depression."
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Had there been no post-war boom the debt from the war would have kept compiling, the depression may well have come right back.
 
WildCat said:
Had there been no post-war boom the debt from the war would have kept compiling, the depression may well have come right back.
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Which is different than saying the post-war boom ended the Depression. There's a big difference between a "boom" and a "depression"; I think it's likely that without the post-war boom, we would have just seen a return to normalcy.

The question is whether or not the increased industrial base (as a result of the war debt) would have been able to sustain the debt loads on the basis of domestic consumption alone. I think it would have, especially given the tremendous post-war debt loads that were incurred (for instance, by the Marshall Plan).

My back-of-the-envelope summary would be that the war got the USA out of the Depression, and the postwar boom paid for the reconstruction of the world via the Marshall Plan.
 
I wonder if a WWII type effort, in regards to the global ecology, might bring the economy around? Or is the violence required, to get folks moving?
 
quarky said:
I wonder if a WWII type effort, in regards to the global ecology, might bring the economy around? Or is the violence required, to get folks moving?
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That's two separate questions. A huge enough investment in almost anything could get the economy moving again. But I don't think people would be willing to invest without another Pearl Harbor-type scenario. "Save the whales" doesn't have the same compelling ring.
 
I was thinking more of global heating; bad weather; rising sea-levels...a total package.
 
quarky said:
I was thinking more of global heating; bad weather; rising sea-levels...a total package.
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But not (IMHO) immediate enough to scare people. We can't get people behind anti-cell phone laws....
 
The war delayed the recovery because there was not much of a market for consumer goods.

That the New Deal instituted a minimum wage put a lot of money back into the hands of working-class people. The Truman commission came along to prevent the war from putting it all back in the hands of defense contractors, so the little guy still had some money and opportunity to invest when the war was over. Small companies actually started up.

Today, the defense contractors are bloated from the sacrifices offered by their adoring investor class, out of the pockets of working people. Companies are disappearing, swallowed up by bigger fish, slamming the door on people looking to start competing businesses.

War is good for the ecconomy only if you are selling more weapons than you are expending, and you keep your factories safe from the ravages of invasion and bombing raids, and keep the war profiteers locked in the dungeon until it is all over.
 
My father in law, a strict adherent to rebulican/con dogma, said to me a few weeks ago that it is, "pretty well agreed" (he didn't say who was doing the agreeing) that the New Deal prolonged the depression, making it "twice as long as it would have been" had they done nothing at all. Of course, every con/repub likes to say that it was WWII that truly ended the depression and it is true for all the reasons stated above. However, is it not interesting that these same people who hail WWII (with all it's ugly consequences) as the reel that pulled the world out of depression the same one's who, like my FIL, consistently piddle on the New Deal as simple " (wasteful; oh, yes, always wasteful as if we get nothing for it) government spending?" My friends, what the hell would you call mobilizing for and fighting a massive war? Is that not government spending? What about the reconstruction efforts post-war? We ran massive deficits but it surely helped "end the depression" as well as kick-start a new economy. Once again, the idea that government spending can't help in a recession/depression doesn't square with the facts and history and even their own ideologies. If the government spending that helped spur new technological advances (vis a vis the military) then, why can it not spur new innovations now? The free-market may work fairly well but even the best mechanisms need a shock to the nuts every now and then.
 
Originally Posted by Tailgater
16 million American worker bees went to war and about 400k+ didn't come back out of roughly 130 million people (about 40% of todays population). 1943 unemployment was under 2%. The war may not have been the root cause of the end, but it helped finish off the unemployment. See Drkitten link post 2.
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Er...check your maths.

Steve
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Huh? Over 400k troops died out of a US population of 130million and at least 16 million were employed by the military. What math is there to check? That would be like a 40 million going to war (and being employed) and 1 million not returning today.

ETA: oops, what Corsair said.
 
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drkitten said:
More or less. Even a fairly biased source admits that. Actually, a study of the real growth rates of the GDP suggests that from 1933-1941, the economy was already in a strong recovery (10% growth per year, which is simply phenomenal) but it hadn't hit the consumer level yet.

WWII is when the consumer finally got money into his or her pocket.

The problem. of course, is determining why.



Here's where the economists really start to differ. There are a lot of things that go into it.

* Unemployment dropped as the military sucked up all available manpower and then some.
* Federal spending shot way up.
* Investment in capital/production went up. People were saving

Perhaps most importantly,

* exports shot way up as the Allies bought huge amounts of "stuff" from us, whether that be food, oil, or munitions.



Hell, yes. But we need to spend it better (over the long term).

At the moment, it's still 1929, or maybe 1930. We've not yet seen the bottom (which historically happened in 1933) and there are some immediate issues (like the credit freeze) that need to be dealt with.

Once the credit freeze is dealt with, we are going to need to some capital investment of the sort that produces jobs and exports. While I support the Citibank bailout (because we need to unfreeze credit first), that's not going to produce jobs and exports by itself.
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Pretty much sums it up.
 
The war helped end the Depression only to the extent that it hastrened the redistribution of wealth. Had it not been for the Truman Commission that might have been otherwise. Had we had the equivalent of Black Water and Haliburton around during WWII, we would still be paying them for services not rendered and they would pretty much own our butts.

Ever notice that the working man has usually had the hardest of times, throughout history, when the richest of us had the most money?
 
drkitten said:
Something else.

Economic downturns tend to be correlated with high wealth inequality. Economic booms tend to be correlated with lower wealth inequality.

The cause/effect relationship is not clear.
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Couldn't it be as simple as the fact that the middle class has less ability to whether the storm?

What I mean is, the middle class has less savings than the wealthy, so if they hold debt during a boom, they are solvent, but the amount of time they can pay debt is much shorter than the wealthy class, if they take a pay cut, or lose their job?
 
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