Conservatives actually believe this [View all]

[cthulu2016]

Last edited Sat Jun 2, 2012, 05:58 PM - Edit history (3)

In the ongoing refutation of Keynes in favor of supply-side economics the conservatives have one big stumbling block. No matter how you slice it, World War II appears to have ended the Great Depression in America. And no matter how you slice it, government spending during WWII was massive.

But it turns out they have a theory about that. I see it in comments sections a lot. I think this is a fair statement of it:

In 1939 unemployment was over 20%. During World War II unemployment dropped to 2%. If Keynes was right this drop in unemployment caused by government spending should have created massive demand, but statistics show that Production of Consumer Goods and Consumer Consumption was up only slightly. It was only when FDR died that Truman's pro-business policies led to a surge in Domestic Consumption.

Okay, let's think about this. Can anyone think of a reason why domestic production of consumer goods increased only slightly during WWII?

Perhaps because the entire freaking industrial capacity of the nation was diverted to making things for the war. It's amazing that production of consumer goods increased at all! I would have guessed it declined. Almost every factory stopped making whatever it was making and switched to making bullets, bandages, planes, uniforms, etc..

And knowing that, can anyone think of a reason why domestic consumption of consumer goods increased only slightly during WWII? Well... firstly because you cannot buy things that are not being manufactured. And because everything was rationed. And because a few million men drawing government paychecks were not in the United States to spend them. Here's a mind-bender...even though the depression was over sales of automobile tires actually declined. Take that Keyenes! Actually,tires were rationed. People drove on tires with patches on patches on patches. I'll bet civilian miles driven dropped sharply too, since gasoline was rationed. Women making good money for the first time in their lives working in defense plants still had to draw lines on the back of their legs with a pen to simulate seamed stockings because all nylon went to parachutes.

Plus, all manner of domestic consumption was considered unpatriotic. A lot of workers' increased pay went right into war bonds, since there wasn't anything to buy anyway.


But what I wanted to get to is the third leg of the argument...

"Production and consumption of consumer goods did not pick up until FDR died and Truman's pro-business policies were implemented."

Is there any reason, aside from pro-business policies, that the production of consumer goods might have picked up under Truman?

THE WAR ENDED. Sheesh! The factories went back to making consumer goods. General Motors stopped making tanks and went back to making shiny new cars for people to buy. Nylon stockings became available. Aluminum cookware became available. Copper, which was used in all electrical devices, all appliances, all radios, etc. became available for use in products other than war machines. (Copper was so needed for the war that we made pennies out of steel one of the years.)


I swear, these folks are not even trying.