-Caveat Lector- The Myth of War Prosperity
by Robert Higgs February 6, 2003 Letters to the Editor The Wall Street Journal To the editor: Bob Davis and Gref Jaffe?s article (Feb. 4) on the likely economic consequences of a U.S. war against Iraq errs by giving past wars credit for creating positive economic effects. This hoary fallacy, it seems, just can?t be killed. The strongest case for it has long been World War II, which Davis and Jaffe claim ?clearly was a boon for the U.S. economy.? But a boon in what sense? Unemployment fell during the war entirely because of the buildup of the armed forces. In 1940, some 4.62 million persons were actually unemployed (the official count of 7.45 million included 2.83 million employed on various government work projects). During the war, the government, by conscription for the most part, drew some 16 million persons into the armed forces at some time; the active-duty force in mid- 1945 numbered in excess of 12 million. Voila, civilian unemployment nearly disappeared. But herding the equivalent of 22 percent of the prewar labor force into the armed forces (to eliminate 9.5 percent unemployment) scarcely produced what we are properly entitled to call prosperity. Yes, officially measured GDP soared during the war. Examination of that increased output shows, however, that it consisted entirely of military goods and services. Real civilian consumption and private investment both fell after 1941, and they did not recover fully until 1946. The privately owned capital stock actually shrank during the war. Some prosperity. (My article in the peer-reviewed Journal of Economic History, March 1992, presents many of the relevant details.) It is high time that we come to appreciate the distinction between the government spending, especially the war spending, that bulks up official GDP figures and the kinds of production that create genuine economic prosperity. As Ludwig von Mises wrote in the aftermath of World War I, ?war prosperity is like the prosperity that an earthquake or a plague brings.? Robert Higgs [send him mail] is senior fellow in political economy at the Independent Institute, editor of The Independent Review, and author of Crisis and Leviathan and the editor of Arms, Politics, and the Economy. Robert Higgs Archives Find this article at: http://www.lewrockwell.com/higgs/higgs16.html SAVE THIS | EMAIL THIS | Close Check the box to include the list of links referenced in the article. Forwarded for your information. The text and intent of the article have to stand on their own merits. ~~~~~~~~~~~~~~~~~~~~ In accordance with Title 17 U.S.C. section 107, this material is distributed without charge or profit to those who have expressed a prior interest in receiving this type of information for non-profit research and educational purposes only. ~~~~~~~~~~~~~~~~~~~~ "Do not believe in anything simply because you have heard it. Do not believe simply because it has been handed down for many genera- tions. Do not believe in anything simply because it is spoken and rumoured by many. Do not believe in anything simply because it is written in Holy Scriptures. Do not believe in anything merely on the authority of teachers, elders or wise men. Believe only after careful observation and analysis, when you find that it agrees with reason and is conducive to the good and benefit of one and all. Then accept it and live up to it." The Buddha on Belief, from the Kalama Sut <A HREF="http://www.ctrl.org/";>www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance—not soap-boxing—please! These are sordid matters and 'conspiracy theory'—with its many half-truths, mis- directions and outright frauds—is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRLgives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credence to Holocaust denial and nazi's need not apply. Let us please be civil and as always, Caveat Lector. ======================================================================== Archives Available at: http://peach.ease.lsoft.com/archives/ctrl.html <A HREF="http://peach.ease.lsoft.com/archives/ctrl.html";>Archives of [EMAIL PROTECTED]</A> http://archive.jab.org/[EMAIL PROTECTED]/ <A HREF="http://archive.jab.org/[EMAIL PROTECTED]/">ctrl</A> ======================================================================== To subscribe to Conspiracy Theory Research List[CTRL] send email: SUBSCRIBE CTRL [to:] [EMAIL PROTECTED] To UNsubscribe to Conspiracy Theory Research List[CTRL] send email: SIGNOFF CTRL [to:] [EMAIL PROTECTED] Om
