In one of my first posts, I criticized Paul Krugman and George Will over their description of depression era economic policy and its effectiveness. Although I believe my reading of the economic literature is correct, I wish I had offered my opinion as another hypothesis of events that had some empirical support.
I also disagree with their assessment that WWII was a great public works program that ended the Great Depression. After reviewing a few sources, I am less sure that the opinion I will offer is the majority opinion, but I believe that it is correct.
War is never good for an economy. It may be the least bad alternative or it may be the morally right action, but it is never good for the economy. I am not only worried about an incorrect interpretation of WWII, but the implication that if war can be good for the economy once, then it might be good again.
Those who argue the economic virtues of WWII generally point to two apparent economic accomplishments of the war: unemployment fell and gross domestic product grew. The graph, "U.S. Economy: 1938-1945", a nostalgic "guns and butter" graph for those of us who studied economics during the Vietnam War, illustrates this position. This graph has made up numbers and breaks down production into two goods, guns representing armaments, and butter representing consumer goods. In 1938, the nation was in the interior of the frontier. As the war progressed, unemployment fell, and production increased. We ended up at a point labeled 1945. The expansion of the production frontier from the blue line to the red line represents economic growth.
Why is this analysis flawed? Value in exchange occurs only when it is voluntary. When another country threatens our physical safety, or our way of life, we have been denied our freedom to select the mix of guns and butter that we desire. We do not build armaments or go to war because we enjoy it, but because we must. I hope that I am correctly stating American values.
Unemployment did decrease during the war. In 1939 between 7 and 8 million workers were unemployed. In part that was accomplished by drafting a big chunk of our labor force. By the ended of the war, approximately 12 million men were in uniform. I doubt that hundreds of thousands of the newly unemployed are lining up at recruiters offices. They apparently value their unemployed civilian activities more than their potential employed military activities.
War is also tough on resources. Output did increase as illustrated on the graph, but those resources were used to make goods that are only desirable if we are threatened, tanks, artillery, bombers, etc. Furthermore, use of these resources generally leads to their destruction. They might add to GDP, but they add little to national wealth. We have also failed to mention what I believe to be the biggest loss, about 400,000 dead and 1,000,000 injured.
Growth in our economy should be measured by the increase in the value of goods and services we wish to consume. The production of consumer goods did not grow during the war, and a large number of those goods were rationed. Because we could not purchase goods that we wished to consume and we were compelled to produce goods we did not wish to produce, it could be argued that the price mechanism was not functioning and GNP was improperly measured.
Three conditions must be met to conclude that war is good for the economy. It must be fought in foreign lands, must be won, and a low value must be placed on American dead. Unemployment is growing and production is declining. Certainly we could find a war that meets the first two conditions, and if we are careful, we could minimize American deaths. Should we reinstitute the draft and expand the War on Terrorism as part of a stimulus package?
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I donit think we need to reinstitute the draft because it will cause more deaths. I know if there was a draft that it would lower the unemployment rate and give peole jobs but it would also increase the number of injuries. I also think if there was a draft that it would be some sort of an excuse to people that lost there jobs not to go out and look for another one. This peole even more lazy than they are.
ReplyDeleteI think a war and a draft is not the answer to an economic problem. While war might increase the number of jobs available, the draft would not only affect the unemployed by creating jobs or sending them off to fight, but also specialized workers. The draft will affect the production of certain goods and services because we must send specialized workers along with the unemployed to fight in the war. In other words, the Production Possibilities Frontier would show a decline in the quantity of certain products able to be produced efficiently because we have lost qualified laborers. Therefor a war and a draft might help the economy with unemployment, but cripple the ecomomy in other areas.
ReplyDeleteMaddie Harper
I don't believe that wars are entered into as a way of escaping an economic downturn. The risks far outweigh the benefits with an unknown outcome like war. Certainly the draft is not on the table at this time and should only be considered when a national crisis like, World War II, faces our nation. Now is not the time for reinstating the draft or for employing a "civilian national security force" on the taxpayers dollars. If we have that much money left over for bailouts and new spending, we should have never been taxed that much in the beginning!
ReplyDeleteOne thing we should keep in mind is that war is not creating a new product. The demand for wartime products is needed even while we are at peace as a tool of prevention. The quantity demanded is simply on the lower end of the demand schedule and is increased as the threat of war looms. -Damon Scott
As we try to anylise the "gains and losses" of any section of the economy, I believe that we must first compare apples to apples. In Chapter 3 we read that the specialisation in trade benefits concerned nations by allowing nations to "spcialise" in a certain, or several, trade. In the case of war, one must ask what to do with the products that were produced for war purposes.
ReplyDeleteThis question has been a continual cause of debate as our war industries sell war equipment to ally nations. One of the problems with this strategy is that war must continue in order for our comparative advantage in the weapons industries to be maintained.
As we discovered in chapter 4 we loose our competitive advantage when the market for our weapons fails due to peace between our alli nations and their rivals.
The next choise? Find new markets for our weapons industry, or re-direct the assets dedicated to that industry and focus them on a different industry in which we have the competitive advantage as well.
I agree with the reasoning you put forth- the economy was not operating through markets, but rather through semi-control. I hold with what I said in class today, though. The correlation between the booming economy and the war cannot be thought of as causal relationship.
ReplyDeleteJobs can be created without resorting to a draft and the economy can improve without resorting to war.
- Chelsea Schermerhorn, Bruceville-Eddy HS
The draft is just another way for our government to try to run away from our countries problems. Granted the draft would be pulling the majority of the unemployed off the streets but in return how many of them would we bring back and put into American soil while their loved ones grieve their deaths. I have to agree with Dr. Wilson on the issues at hand, how can any war bring economic growth. So we lower the unemployment rate but what happens to all the income that citizens make it goes right back into the government, in the form of taxes, to send to our armed forces to pay for their goods when we sit back and can't afford the consumer goods that we want to buy to live a happy and fufilled life. Thats not helping the economy at all. I recall when we all got our first stimulus package for the government it was to go out and buy goods to put the money back into corporations to keep them out of bankruptcy, but not back into goverment hands where its used for something other than the people themselves.
ReplyDeleteKrislyn Combs
I agree with Damon Scott where he talks about how wars are not entered into as a way of escaping an economic downward slope. It may create new jobs but they are still temporary and dangerous. The draft for example is not active right now and should only be considered when a national crisis faces our nation and we are needing more people.
ReplyDeleteThe assumption that war would help the economy doesn't even make sense. If that were the case, why would we ever not be at war?
~Shantelle Brooks-CHS~
I agree that war can only help the economy if it includes the three things- not detroying own hole land, winning, and having the least amounts of deaths. Although I can not help but to think that in World War II that the unemployment decreases but the deaths in soldiers increased. Every cause has effect and this negative cause led to a positive effect. Although, my opinion, the effect has to make a more powerful impact on the people than the cause which involves the effect. As in World War II is making more jobs to produce guns, for only when needed, worth having the most deaths in a War for the United States? I just see it as more emotional way than economical. I had a grandfather that was drafted in the WWII and was killed. That is why to separate my economical and emtional views. I believe that we should only have a draft if we do not have enough soldiers that volunteer. I just do not see how death, injuries, and family destoryed can actually help the United States's economic growth.
ReplyDeleteThis blog is a good one, it is thought provoking. War has happened since the beginning of time, I believe no matter what, it will happen. You are correct about the unemployment, but I have looked at the trends, no matter what huge economic and financial problems (like the depression) have been solved by less worrying and more working. I do believe in smaller cases, dealing with some unemployed that aren't even trying to work, this is a great idea! Jessica G.
ReplyDeleteI think the opportunity costs, including many more American deaths and decrease in value of goods, would outweigh the benefit of having an economy that looks as though it is improving. As Dr. Wilson has stated, unemployment would decrease as young men were drafted into military branches and their previous jobs became available to other unemployed Americans. However, suppose a young man working as a tailor is sent to the army and his position is given to an unemployed accountant. Then the clothes would obviously not be of the same quality that they originally were. In other words, the specialization in the production of goods would decline ultimately leading to decrease in the value of goods. Something else to think about is all of the care that must be provided for veteran soldiers when they return from combat which was a huge mess after the Vietnam War. Although the stimulus package chosen may not be the solution to an improved economy, I believe reinstating the draft would do very little (if anything) to help the economic dilemma.
ReplyDeleteCatherine L.
I agree with the statement that when war breaks out that uneplyment decreases. But once the war is over so many go back to being unemployed. If there is another draft many young men and women would be sent over. A large amount of them would have to leave their jobs to do so, which leaves companies short handed. This gives the opportunity for the unemployed to step up, but what if so many of them are drafted too? Companies would then have to find better ways for productions, but that might be difficult if the economy is focused on the war. And if companies do find methods to do so, once the war is over many people will be coming back to no jobs. This might increase unemployment. So I think it is safe for me to say that I don't want the reinstitution of the draft.
ReplyDeleteI think that war does not improve the economy, but instead creates a facade of improvement, or at best very temporal improvement. There is less competition at home for jobs will men are away at war, and thus there is a lower unemployment rate. But what happens when the men and women in armed services come home? We're right back where we started with unemployment. And i cannot foresee the draft ever really helping our economy. If i were a qualified and successful man in the business field and i were drafted, my job would be given to someone else. That person may not perform as well as i do, causing business to decrease because the determinate of demand as been sacrificed. This in turn will cause numerous problems. Ultimately, i would say that war, and esp. the draft, would not be beneficial for our country's economy.
ReplyDeleteI agree with your argument to a certain extent. However, even though war is statically not good for the economy. I believe it ignited the U.S industries through arm productions. Also, the war provoked more scientific research that improved weapons and those technological advancements were later used to improved domestic technology (Prosperous 50s'). Moreover, the aftermath of war II resulted in U.S rebuilding the west and Japan in order to prevent those countries from falling communism. Whatever the reason these actions result in business opportunity and jobs for the U.S. Nevertheless, even though WWII did not statically end the depression, the events and outcomes certainly did help us become the prosperous nation we are today.
ReplyDeleteDavid Vargas~CHS~
I agree that unemployment would decrease as men were drafted into the military. I think even though unemployment would be decreasing, the quality of goods produced would be decreasing also. Specialization is beneficial for those who purchase the goods, but if men are drafted then the goods are not produced as well as they could be. I feel that the reinstitution of the draft would not help our economic situation.
ReplyDelete-Cara H.
I also agree with Dr. Wilson on the fact that a war does are economy no good, it only hurts us in many ways. If the government began drafting again one of two things would happen in my opinion. One the good that were being produced would decreases because there is not enough men working as employs anymore. Two the women could step up again like they did in WW2 and take over the "men job's" while there at war which might help the economy stay balanced.
ReplyDeleteCasie Petty
MCC-test 1
Having war does not help the economy and neither does a draft. All the draft does is deploy men and young men to fight and put their lives on the line in a war they may no nothing about. So sending them to risk their lives for a war they do not even car about is wrong. Also including a war in a stimulas package is only allowing a war to be drawn out longer than it has to be. What amount of money is going to fix the situation that has gone wrong in a war that could not be fixed with out the money or the war all together? In the end war is just an easy way to deal with a countries problems and a quick fix to an economic down fall.
ReplyDeleteThe first thing you have to do is way the advantages and disadvantages of being in a war. It does cause more government spending and stops trades from enemies, but also increases jobs and possibly more trade with other countries. What David Vargus~CHS~ said is what i strongly believe in also, the reason why the war in Iraq is not improving the economy is because it has no productivity. The war has pretty much turned into oil control, this war has not created no where near as much jobs as WWII did. Im sure the effects after WWII like new jobs, new countries to trade with, new technology developed, and being known as world power helped us get out of the depression. How did we get all this, by going into WWII.
ReplyDeleteMike Glatter
Connally HS
I don't believe that war does the economy any good. Although the production possibilities frontier graph shows the combination of output the economy can produce given the available factors of production and the available production technology to have increased, the other effects of war are negative on the economy.
ReplyDeleteWhile I am not an expert in economics, I do have some opinions on this debate.
ReplyDeleteI agree with an earlier post saying that the correlation of the war and the rise in the economy can't be overlooked as coincidence.
But, even if the war didn't bring us out of the depression economically, you have to look at the psycological standpoint. With the United States winning the war and the boys coming home, confidence was high. Couldn't this confidence have easily spread to the economic sector, and investments have begun again?
While I do see your point that the products that were made were destroyed for the most part in the war, couldn't the economy still have prospered? After all, the steel on tanks comes out of the ground, and someone has to get it out. Wouldn't the hiring here (in the private sector) been a significant boost to the economy?
I don't think that we should go hunting a war now just because we are having hard economic times, because, as you said, the economic recovery is not worth the lives lost. Wars should only be fought to defend us and our allies. Having said this, I don't think that a war is always bad for the economy.
If you believe that the war didn't get us out of the depression, what did get us out?
Sincerely, Jacob White
I do agree with some of the statements on whether or not war will stimulate the ecomony.
ReplyDeleteI agree that the private sector will supply some short term jobs which in turn will bring some stimulation to the economy.
But is that really the answer to an economic down fall. Are we not trying to stimulate the economy for a longer duration? It seems to me that war only will stimulation the economy for short periods of time. My question would be does it stimulate the workforce in the whole or only parts of it?
Just because we stimulate the economy with war is it worth the long effects on the households of our soldiers.
Many families of soldiers are effected on the down side instead of the up side of ecomonics. When a death, injury, or illness occures, to me this would effect our economy in the negative light instead stimulate it. War is never the answer for a long time problem.
S Davenport
I don't think we should re-instate the draft, it may lower unemployment but at what cost. A person should have a choice to risk their life for a war that they may or may not believe in. Although the economy grows during war time, families lives are destroyed and devastated over the lost of love ones. The economic growth to me would seem short lived because the progress that was made during war time would be consumed after the war to help the wounded soldiers be rehabilitated or to help the ones that did not make it back families during their time of need. War caused economic growth but again at what price.
ReplyDeleteLaQurinda N. Rhymes
I actually do agree with many of the earlier posts which believe war will not help our economic situation.
ReplyDeleteI don't see how the cost, time, people involved lives lost could be efficient on the poor economy we have now. I also don't agree with the idea of reenlisting the draft policy. Sure our production would increase but the worth of the goods would go down in my opinion, especially the quality.
I do feel as if war brings our country together but not at the expense of loved ones fighting and losing their lives to restore our broken economy.
Drafting people for the war on terror could meet all three of the conditions that Dr. Wilson proposed. I say that because it would lower unemployment and raise production, and if we(Americans) produce more UAV drones(unmanned aerial vehicle) it would lower the injuries from war and increase produce by opening new plants for producing these UAV's. Basically with UAV's someone can 'fly' an airplane and fire missles and protect our troops in Irag and Afganistan all the while the pilots are in the comfort of an old converted railroad car in Arizona or New Mexcio. Though I do agree that war is never a good option unless we are defending ourself or our allies, but to raise the economy-that would be stupid. I also agree with Ashley that if we were to bring back the draft that it would decrease the quality of our goods. For example Russia during the cold war minimized quality for quantity in there production items.
ReplyDeleteI do believe that WWII did get us out of the Great Deppression because of the vastness of jobs that were created/openned because of people who joined, got drafted, or died.
But nowadays with the quality or our tanks, guns, and airplanes surpass those of any country. So by raising quality we lower producing because of the life length of our equipment.
So the best thing to do would be to bring back the draft.
-Grayson Palmer
I believe that the draft should not be reinstated. It would cause more unemployment, and a loss of more money. The war in Iraq has made our economy worse because it is very unproductive. And, it is being dragged out for too long, which is causing our economy to go down. However, I do think that WWII did help to get us out of the Great Depression. After the war, more people were employed because there were more jobs available.
ReplyDelete-Shelby Rimlinger
If we want the economy to get back to the way it was before the collapse of the Lehman Brothers Co., we should not have the draft reinstated. The war has caused a lot of damage to the economy and is the leading cause of of many deaths in the United States. Although it would cause the unemployment rate to decrease, it's all just temporary and it wouldn't last forever.
ReplyDelete-Le Ta
I don't believe a war is good for the economy, therefore I feel that reinstatement of the draft would not help our economic situation. In my opinion, reinstating the draft would lower employment, but at what expense? It's certainly not worth the disadvantages such as lost lives.
ReplyDeleteWhile I can see how some people may relate back to wwII and think that it helped the economy back then then war is good for the economy. In reality it is short lived. Yes production of fire arms was up but once war is over then that will end. Yes unemployment was down, but tons of our people were at war and coudn't work those jobs so it opened employement for others. this too is short lived. Once war is over and all of those people come back, will they be able to find employment or will they return to raise the unemployment rate. Also, when we are threatened to be restricted by other countries in wether we will receive goods from them that of course will make us produce them ourselves, but at what cost. Yes production goes up but so will the cost of the specific item . I don't believe that war is good in any aspect. I do believe we need to fight wars and defend ourselves and those who cannot defend themselves, but to relate it as a good thing for the economy is pretty much saying it is good to kill off some of our people to better the life of those who don't want to be in the military.
ReplyDeleteThe draft definitely would not help. We already saw the devestation of sending inexperienced and undertrained troops over seas. Many of my friends in the national guard where sent over seas with very minimal training or evaluation and unfortunately their families were never to see them again. Is that the price we need to pay to improve the economy I think not. In short, their is no quick fix that will solve all of our economic issues. It is a combination of all things and unfortunately some of those decisions made by our top officials aren't always the wisest to be made.
I really appreciate this blog, and the thoughts that it stirs.... it made me realize that honestly, I don't believe that economics should be factored into military practices, and the decision to enter, or not enter into war. The actual measured impact war has on our domestic economy is questionable at best, and probably completely faulty, after reading the blog.
ReplyDeleteFar more important a factor is the worth of lives... both our troops, and also worth considering are the considerable lives lost on the other side of the battle.
Reading this blog made me realize how much war actually impacts the economy as a whole. It is important as a nation to defend ourselves sometimes at the risk of an economic downfall. However, reinstating the draft, in my opinion, would not be the best idea. I believe this because there are many people who sign up everyday to train and become prepared to deal with war. With the draft, troops would be rushed into something they are not fully prepared for. Either way we would be fighting a loosing battle with the war, as well as at home. We would have a higher employment rate but it would not be permenant. We could loose the lives of many of our troops, which would devastate the families back home, and drive the economy further down.
ReplyDeleteI believe that the draft should not be reinstated as a ploy to boost the economy. I do not believe that the life of any one should be given for economic gain and as in the possiblties frontier of World War II this is shown to be the case. I believe the unemployment rate would be good while in the war but once it is over things would return to the same in a few years.
ReplyDeleteI believe that reinstating the draft and expanding the War on Terrorism as part of a stimulus package would only cause American agony due to the number of lives on the line trying to fix something that will not last forever. I think there are people who take action and there are people who watch the action be done. I have a great amount of respect for all people in any branch of the military who lay their life of the line for us here at home. Reinstating the draft would decrease the unemployment rate,but I don't think it would be a good idea to send someone into a war if they do not choose that life for themselves. War is expensive and has increased the death rate in many families across America.
ReplyDelete-Allyssa Welch
I agree that three points stated above, (war fought on forein land, winning, low death toll) do help define a 'succesful war', however, I do not think that reinstituting a draft will have a complete positive impact on America. I dont believe that the loss of someone's life is needed in order for a boost in the ecomomy. More jobs could be created, but afterwards, what would be the fate of soilders who came back home only to find that their jobs have been taken by someone less qualified as them?
ReplyDelete-Rosalva Medina
I definitely do not think that drafting our citizens would in any way improve our economy. Even though it is true that more jobs would be available for other unemployed workers, these workers would be temporary, and once again our country would have many unemployed still. In a way, it might seem as if war would improve our economy, and it might… but only for a short period of time before we are further behind than where we initially began. Sure, in a perfect world and time, war would help us... as Dr. Wilson points out, only if we win, fight on foreign land, and have the least amount of American deaths as possible. Unfortunately, we do not live in a perfect world and time so therefore, we should not risk our soldiers and economy assuming and hoping that everything will just happen as planned.
ReplyDelete-Britney May
I do not agree war may help the economy while in the war, but it can also hinder it after the fact it is a temporary fix to a problem that can eventually come back and hurt the economy worse. Instituting the draft can help the unemployment rate for a time being, but after the war is won or just over it can cause a higher flux in the unemployment rate. With all the troops that will return with nothing more then what they learned in the military. Then on top of that it cause the economy to start producing more goods, but they are goods that will be used to help the war effort and not serve the american people or add to the nations wealth.... War is also not a game you do not get chance after chance to have it come out in your favor. So there is no garantee that we will win the war or that there will be a low casulites of the war. If anything there could be high casulties and mass amount of troops injured that will not have a chance to return to work in America after the war is overand will just add to uneploted people in the states... Plus it means that more of our taxes go to take care of the troops that are injured during the war...
ReplyDelete