Eric Walker <eric.wal...@gmail.com> wrote: People will argue that consumers cannot afford the additional hit to their > pocket books. I think this misses the point, since they're already bearing > the price in other, less obvious ways, including monetarily. >
Exactly. We often end up paying more than we would if the price was built in to the product, because we waste resources. > When WWII came along, and there was a huge industrial mobilization > underway for the war effort, it placed a great burden on the US federal > budget. But I believe that all of that expenditure, which was no doubt > wildly inefficient and directed towards all kinds of silly things, ended up > serving as a massive stimulus, and the US did quite well economically after > that. > There was a lot of wasted money. Some of the "goods" produced, such as battleships, had little value as scrap after the war. There are two revealing quotes from the people planning war production. I don't recall who said them -- In response to a Senator asking whether the U.S. was producing "too many tanks" a general said, "It is better to make a thousand too many than one not enough." I have read that toward the end of the war, the U.S. had more destroyers in the Pacific than the Japanese had airplanes. That was maniacal overproduction, I think. Another person writing years after the war said something like: "We did not worry about how much it was costing. We figured the American people were more concerned about getting their sons and husbands back home alive than they were about saving money." That was a sensible attitude. If I had been a millionaire in 1942, I would far rather have lost every penny of my fortune than lose my son. The war did cause tax rates to go up to 90% for the richest people, a rate that continued to 1964: http://www.businessinsider.com/history-of-tax-rates People did pay the dollar cost of the war. The national debt did not actually decline in absolute dollars, but as a percent of the GDP it fell considerably. That is the only meaningful measurement. It fell during the Great Depression, which surprises me. See: http://www.advisorperspectives.com/dshort/charts/policy/debt-to-gdp.html?federal-debt-gdp-ratio.gif Here is the debt in inflation adjusted dollars, showing that it never actually declined: http://www.advisorperspectives.com/dshort/charts/policy/debt-to-gdp.html?federal-debt-tax-brackets.gif Large, direct financial costs of WWII were still being paid from 1940 to 1964, with things like the Marshal plan, not to mention the Cold War and nuclear weapons production, so it is no surprise the debt did not decline. - Jed
