The Economy

[Jester]

Well, if you measure from the bottom everything looks great. The 1938 economy was still not nearly what the economy was in 1929.I'll concede that 1929 may have been the top of the hill, but also 1933 was the bottom of the valley. Neither is probably the correct position to view the entirety.

As I said from the start, constructing counterfactuals is difficult, and you need some theory to base it on. If you start with an Austrian theory that says all government intervention is definitionally wasteful, then obviously, the 1933-1939 recovery is just a pale shadow of what it might have been sans New Deal. If you start from a Keynesian theory, then the recovery is modest, but a vast improvement over what it would have been with balanced budgets and the gold standard. If you start from Friedman, then the recovery is entirely due to reflating the currency, and the New Deal is just a sideshow. But no matter where you start from, and under what model, you have no crystal ball. You are reliant on your presuppositions, and have no tangible evidence to go on. What evidence we do have clearly shows that the economy recovered somewhat. Either you see that as an impressive recovery from a massive crash, or you see it as a recession prolonged by unwise choices. But there is no magic to tell us which is true.

The PWA and the CWA employed over 4 million people within 2 months. I kind of look at them as unemployment compensation with some dignity.

That seems a bit harsh, but obviously we're going to disagree about this. But it seems clear to me that the government-created jobs at least served an important welfare function, and were at least economically neutral. With unemployment as high as it was, any job was a pretty good job, and infrastructure built with lazy labour is better than nothing at all. The alternative, even in the best-case scenario, would have been greater suffering in the short run, even if it was better for the economy in the long run (which I'm not convinced of.)

It's hard to measure how much of the US growth after 1944 was due to WWII positioning the US as the one remaining untouched industrial producer. In fact, the auto industry was a direct result of building peace time rather than war time vehicles.

This argument would be stronger if it weren't for the fact that Germany and Japan, the most devastated wartime powers, were also the most impressive economic successes in the post-war period, including becoming auto industry powers. But yes, being a full-fledged, un-bombed industrial power was certainly a huge help to the US economy in the postwar period.

-Jester