The Case That Wars Fuel U.S. Economic Booms
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In the great debate about the stimulus package -- which, underneath all the cant is really nothing more than a debate about how America's scarce wealth should be divided -- one of the right wing's favorite mantras was their claim that the New Deal did nothing to end the Depression. Instead, they argue, it was World War Two that ended the Depression.
So far, the liberals' counterargument is to throw out a bunch of statistics arguing that the New Deal did work. Both sides take their argument to the real of hypothetical realities: either the '30s could have been worse without the New Deal (liberals argue) or the 30s would have been better off without the New Deal (right-wingers argue). But let's stop and consider the Republican right wing's argument about World War Two's effect on its own merits: if it really was the war that pulled America out of the Depression, that is hardly an argument in favor of endless tax cuts and small government. The wartime economy was the very opposite of the Adam Smith model of free trade and minimal government interference -- it was, instead, New Deal economics to the tenth power, in which the government managed and controlled just about every single facet of the citizenry's lives. And then of course there's the war's outcome: America emerged victorious and largely unscathed with comparatively little cost in lives compared to the war's other major participants, while all of America's global competitors essentially committed mass suicide and were left prostrate at our militarized feet.
The Republican right unintentionally raised a very serious issue, but no one seems to want to call them on it, not even their own supporters. The can of worms they've opened leads to this: what if America's booms and busts are tied not to monetary policy, taxation levels or government regulation, but rather to our success or failure as an imperialist war machine? What if our wealth is a consequence of our ability to plunder the world's wealth, often by default thanks to our competitors' suicidal behavior?
Consider this very simple, surface chronology of the past 100 years (and why not stick with the surface -- after all economics, despite all of its complex statistical mathematics, has turned out to be little more than glorified astrology):
1914-1918: World War I. America ends up on the winning side at comparative little cost in American lives, no destruction to the homeland or to our economy. Whereas America's European competitors commit mass suicide both demographically and economically. This is followed by:
1920-1929: One of the greatest boom decades in American history. No great wars, no new mass suicide by competitors. That is, nothing new to plunder. This leads to:
1929-1939: The Great Depression. No new wars, no new imperial expansion, and with it, feeble economic expansion. This is followed by:
1939-1945: World War II. America ends up on the winning side at comparative little cost in American lives, no damage to the American homeland. America's European and Asian competitors commit mass suicide both demographically and economically. Global markets (minus Communist world) are America's for the taking. Which leads to:
1945-1960: American economic boom. America's economy makes up half of the world's GDP in 1950, and rides its biggest sustained boom in U.S. history, including an unprecedented rise in living standards.
1945-1960: French and British empires, already weakened competitors of America's empire, decline and collapse for good, allowing the American empire to expand further by filling the vacuum. America fights Korean War 1950-52; wisely halts it to a draw after just 2 years, meaning little net gain or loss. Communist empire expands -- communist countries by nature are uncompetitive against the U.S. economically, except inasmuch as they deny markets to U.S. goods and keep the empire in check. This leads to: