World War Two Didn’t End The Great Depression–It Merely Postponed Its End

    Do not think about, write about or deal with  human behavior without determining the effects of incentives.

     One of the shibboleths of the left is that World War 2 ended the Great Depression. This has always puzzled me because one of their poster boys, FDR, was in charge for most of it. If FDR were such a great leader, why did it take a war?

Paul Krugman: “Space Aliens Could Save U.S. Economy”

By Mary Theroux

As Dave Barry used to say, I’m not making this up.

Deeply mired in the fatally flawed myth that World War II ended the Great Depression, Nobel Laureate Paul Krugman yesterday proposed that an invasion by space aliens would well provide the economic stimulus this country needs:


    If you look at the policies of stimulus and control, one would think they’d already invaded and in charge.

As Dr. Robert Higgs has more than ably shown, the Great Depression continued, and deepened, throughout the New Deal and throughout World War II. The World War II years were a time of shared privation, with virtually every item that we take for granted today either rationed: e.g., meat, gasoline, sugar, clothing; or not available at any cost: e.g., new cars, appliances, etc. The American standard of living throughout World War II remained at an excruciatingly low level that no 21st century American would accept. Meanwhile, unemployment disappeared simply because 16 million able-bodied people were sent to war, paid below-market rates and subject to danger, death, and maiming they may not have preferred to unemployment.


     Americans didn’t notice this low standard of living because of the mobilization induced by the Japanese sneak attack. Patriotism was supreme, as it needed to be, for the mobilization required to win the war.

As I earlier detailed in “One More Time: World War II Did Not Bring Us Out of the Depression,” the Great Depression ended in 1946, when 10 million individuals were returned to the ranks of the unemployed, and federal spending plunged 40% in the aftermath of FDR’s death and the abandonment of the New Deal.

If Dr. Krugman would quit reading Keynesian theory and start reading history, he could earn his Nobel and look for salvation not from aliens but from the creative engine fueled by free individuals unencumbered by regime uncertainty and widespread diversion of productive resources to government programs.


    “…widespread diversion of productive resources to government programs.” Not the way to prosperity except for the favored few to whom the resources flow.

Cheerio and ttfn,
Grant Coulson
Cui Bono–Cherchez les Contingencies


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