WW2 as an economic model.

[BlueStreak]

In recent months there has been a lot of talk about FDRs policies, WW2, the effects of these two things on the economy and how they relate to the current situation.

In the late 1930's defense production began to increase in order to meet the demands of the "Lend/Lease" program. By 1944 defense production reached levels previously unparalleled in human history. In the decades following the second world war, defense production dropped, but only briefly, as weapons had to be produced in order to maintain the arms race, and service the Korean and Vietnam wars.

Now, bear in mind, up until the late 1960s or so, the heavy industries of most of our international competetors, Germany, Japan, France, Italy, etc. layed in ruins.

This period from the late 1930s until the early 1970s or so, was also undeniably the most prosperous periods in American history. We had an economic expansion that was the envy of the world.

Now, I stand back and look at this era, and I can't help but wonder;

1) Could it be said that this model represents "massive government spending"?
And could the same result be acheived through "infrastructure" spending
instead of, or in addition to, defense spending?

IMO, Yes.

2) Could it be said that this model also represents "isolationism"?
Given the fact that our industries had little to no competition during
this era, and our government maintained steep import tariffs, I would have
say; "Yes".

However, with todays model of "Globalization" the game has changed a bit, hasn't it? Isolationism on the level of the 1950s would be far more difficult, if not impossible. But we can build and/or repair infrastructure, we can build schools and repair/expand our highways/railways/airports, etc.

So, maybe this "massive government spending", as scary as it sounds, isn't such a bad thing? So long as we spend the bulk of it domestically, rebuilding our cities, industries, and other things that benefit American citizens, that is.
And, by extension, buying the things that we must from other countries should help lift beleagured economies abroad as well.

Maybe if the current administration spent more time billing the "stimulus" as "investment", there wouldn't be as much uproar as we have today?

Just a thought.

Whadda ya say?

Regards,
Dave

[Zeke]

Originally Posted by Blue Streak

Maybe if the current administration spent more time billing the "stimulus" as "investment", there wouldn't be as much uproar as we have today?

That's what they did.

"The American Recovery and Reinvestment Act of 2009."

(The turgid with bile Republicans were the smear campaign of fear: because their since-Reagan military spending cow might be gored. That and, well, they're idiots.)

[piece-itpete]

Curious - why hasn't the almighty Obama Pelosi & Reid (the three stooges) taken care of the military spending problem?

Anyway it doesn't quite hold up. For starters any tariffs at all, you get a trade war which would be disasterous for the economy. Second, there was so much pent up consumer demand after ww2, which we can't replicate.

I'd have a lot more respect for the porkulous bill if the majority of the dough actually went into infrastructure. I did indeed vote for a statewide levy a while back that was specifically earmarked for bridges and roads, but the politicos don't like that - it interferes with their handouts.

Pete

[Fast_Eddie]

Originally Posted by piece-itpete

Curious - why hasn't the almighty Obama Pelosi & Reid (the three stooges) taken care of the military spending problem?

Gotta fix the wars before you cut the spending.

[Charles]

You can't spend yourself rich, especially when you're already broke.

We need to come up with a way to get industry up and running and people back to work producing wealth so we have a tax base. Government spending doesn't create wealth, it siphons it off.

Chas

[Zeke]

Originally Posted by Charles

We need to come up with a way to get industry up and running and people back to work producing wealth so we have a tax base.

Then, we need either a war, or a nation or two to rebuild after we've pummeled them: whether they required it or not.

Oh, wait...

[noonereal]

Originally Posted by Zeke

Then, we need either a war, or a nation or two to rebuild after we've pummeled them: whether they required it or not.

Oh, wait...

how does spending on a war rather than infrastructure help us?

What were the economic benefits of Vietnam for example?

[Zeke]

Originally Posted by noonereal

how does spending on a war rather than infrastructure help us?

What were the economic benefits of Vietnam for example?

1. Iron? Steel? Shipbuilding? Munitions? Overseas infrastructure, built by us, at a profit?

2. Nothing, considering how we tried to do that on the cheap and never committed. Oriskany, Intrepid, Hancock, Ticonderoga, Bennington, Yorktown, New Jersey, etc? We used 25-year old ships against a 3rd World "power"...

[noonereal]

Originally Posted by Zeke

1. Iron? Steel? Shipbuilding? Munitions? Overseas infrastructure, built by us, at a profit?

So the war goods we sold benifited us? That I agree with. Can't we do that (as many countries do) without being part of the conflict?

2. Nothing, considering how we tried to do that on the cheap and never committed. Oriskany, Intrepid, Hancock, Ticonderoga, Bennington, Yorktown, New Jersey, etc? We used 25-year old ships against a 3rd World "power"...

How could the Vietnam war have benefited us economically if we did not "do it on the cheap?"
If we built new ships for ourselves aren't we just redistributing income with no long term gain? (unless we use them to seize the wealth of another country)
If we build them for other nations isn't that a win win? (unless they turn and fire on us)

[Charles]

Originally Posted by noonereal

how does spending on a war rather than infrastructure help us?

What were the economic benefits of Vietnam for example?

At least building infrastructure can be used for the creation of wealth. The best I understand, the interstate highway system was built to make the transfer of war materials more efficient.

And while we need a military, it doesn't actually create wealth. It does create jobs, and the connected may grow wealthy, but it is funded by taxes on the producers of goods and services, and by the government taking on additional debt.

We do have to pay, or at least create the illusion that we are paying, interest on that debt.

Chas