It's been funny to watch Paul Krugman no longer say the New
Deal brought us out of the Depression.
He conceded that it led to the double dip recession of 1937.
However, it was the demand that was stimulated with the Second
World War which brought us out of the Depression.
That's why today we need things like Joe Biden's Inflation
Reduction Act. That's why the Cares Act with
Donald Trump was so important, because demand has to be
stimulated. What if anything is wrong with
this idea? Well, absolutely everything.
And and again, this is one of those things where not just the
left gets it wrong, but even a lot of conservatives will say,
you know, like they'll be mostly on the right track saying the
the New Deal did not get us out of the Depression.
Correct. Great.
Then they'll say World War Two did.
If you say that, I mean, in addition to being wrong, you're
just handing the whole argument to the other side.
You're saying, well, Roosevelt did some domestic spending, but
if he had done more spending like we had in the war, then it
would have worked. You sure that's the argument you
want to make? So thankfully, the guy who
really started us all thinking on this, or we've been thinking
about it, but who really, really did the charts and graphs and
the numbers is Robert Higgs. And he had an article in, I
can't remember, it was a journal of economic history or something
like that. But the the main title of the
paper is Wartime Prosperity with a question mark.
And I don't offhand recall the subtitle, but you read that
article and you say, ho, whoa, wait a minute.
Yes, everybody is, is misunderstanding this.
And so he's showing on the graphs that, yes, nobody denies
that if you seize resources from the public sector, from the
private sector, you siphon them away from private consumers and
then you go blow it on something.
Yeah, OK, It will create that thing like we know that.
But the point is that thing doesn't contribute to consumer
welfare. When private entrepreneurs spend
money, they have a profit and loss test which tells them if
they are in in some way contributing to consumer
welfare. The the state does not have that
feedback mechanism. So it's expenditures have to be
arbitrary. It's expenditures are
politically determined, not determined on the basis of
consumer preferences. And so during the war, that's
when you have the, the worst of this.
Now, you may say, well, we needed to fight the Japanese.
That's it. Or, you know, whoever we're
fighting, that's, that's beside the point.
That's a completely separate point.
The, the, the point we're saying we're arguing is, was this a
source of prosperity for the average American?
Not whether it was necessary to win the war or any of that.
That's, that's a completely different thing.
Did it bring about prosperity? And he goes and looks and says,
look, when you when you siphon, you know, 10 million men out of
the economy, the ones who have the the most work experience,
who are the physically strongest.
And you siphon off you like 40% of GDP or whatever into the
waging of the war. And the official numbers tell
you the society got more prosperous.
You know something's wrong with those numbers, right?
Like if today I took all the able bodied men and sent them
away or lined them up by and executed them by firing squad,
and then we saw that all the economic indicators said the
economy was now doing better, we would know something's wrong
with the indicators. And of course they were because
they're treating public sector spending like it's
indistinguishable from private sector spending.
So he goes through and and and analyze.
So then also says you're not factoring in all the deprivation
people suffered by the rationing during that time.
That's rationing is not prosperity.
So he says the real prosperity came in 1946 when you got after
the demobilization, you started to get normal economic activity
again and the expectation of the private sector that no wild
disruptions of the ordinary flow of commerce would be taking
place. That's when the prosperity
occurs. Now, by the way, there's a very
provocative article in the old Review of Austrian Economics by
Richard Vetter and Lowell Galloway called the Great
Depression of 1946. And that's tongue in cheek
because of course, there was no Great Depression of 19461946 was
probably the single most prosperous year in all of
American history. So what do they mean the Great
Depression of 1946? They mean this is what happens
when you blindly just read some numbers off a piece of paper.
Because if you read the numbers off the piece of paper, the
numbers don't look very good for 1946.
But that's because the, the, the, the, the public side of the
spending has, has collapsed because they're not waging the
war anymore. And so some indicators of, of
prosperity look bad, but that's not bad.
Like employment was great, production was great, consumer
goods production was great. That's what you need to look at,
like things that involve the welfare of the people.
And if you look at that, you realize there's no depression in
1946. You have to be a dope to think
that you're you're looking at the numbers all wrong, as we had
been during World War 2. And I love what you said earlier
about using time price as a better indicator rather than
GDP. So yes, 400,000 American deaths
and giving half of Europe to the Bolsheviks did not stimulate the
economy. You make the excellent case
here. Hey you all, it's fundraising
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