Did World War 2 really “get us out of the Depression?” According to Paul Krugman it sure did:

Think about World War 2, right, that was actually negative social product spending, and it brought us out.

Really? Spending vast swathes of capital, labour, life, sweat, tears, infrastructure, time and effort to fight a war “brought us out.” Well, that’s news to me. World War 2 was one huge festering conflagration, diverting productive resources to global destruction. Now that was the fault of Hitler, not Chamberlain, or Churchill, or Roosevelt, or indeed Krugman. But the point stands — the opportunity cost of World War 2 was all of the productivity, all of the infrastructure, all of the life, all of the goods and services, everything that could have been created in lieu of fighting the war. Sure, the years following World War 2 were boom years — but that’s precisely because societies mobilised to compensate for the years lost to destruction, infernos, genocide and bomb building. In reality, the 1950s were a lost decade — lost in making up for the destructive excesses of the 1940s.

The Parable of the Broken Window

“No!” Cries the Krugmanite. “Stop misquoting our beloved Krugman! All he is arguing is that WW2 mobilised us to end the destructive austerity of the 1930s! And he never, ever advocated for building bombs (or ginormous space lasers) ahead of creating real productivity!”

Really? The point is not that Krugman ever advocated war over productivity or infrastructure. The point is that he advocates it over doing nothing, which is still wrongheaded. War spending is more destructive than doing nothing because it diverts away from potential productive investment and labour that could be realised, if not for the diversion of productivity into bomb-building and weapons factories, etc. Additionally it very often destroys pre-existing production and infrastructure around the globe. So unless war spending can be explicitly and concretely linked to a specific and material threat of complete annihilation, it is a waste and a racket.

And is it really the case that there are many establishment politicians in Washington who are against the government mobilising spending? The reality of the American fiscal picture, as I showed in detail here, is that it is a permanent war economy. America’s greatest exports are war and weapons. When it comes to war and weapons, there is no austerity, and that is a sacred cow even to elements of the Tea Party. Look at the world’s top 10 nations in terms of military spending:

Is that a portrait of fiscal restraint? Or is that a portrait of ever-expanding military spending, flying in the face of the fact that the United States won the Cold war, and has no serious global rivals? And has this huge fiscal spending on war and weapons created a resilient and prosperous economy? No — there has been no real growth in the United States since 2007, unemployment is persistently high, food stamps participation is rising, reliance on Arab oil and Chinese manufacturing is ever-present, road infrastructure is worsening, and so forth. That’s because spending hasn’t been targeted to what people need, like alternative energy infrastructure, but instead to the destructive and perverse racket that is ongoing warfare. And if Krugman wants to claim that WW2 “brought us out”, then there are war hawks like Rick Perry who will be spoiling to take him at face value, and ignite more and worse wars around the world in the name of economic growth and “bringing us out.”

So, I give you Bastiat, the originator of the Parable of the Broken Window, on war and its terrible destructive cost to humanity:

It is the same with a people as it is with a man. If it wishes to give itself some gratification, it naturally considers whether it is worth what it costs. To a nation, security is the greatest of advantages. If, in order to obtain it, it is necessary to have an army of a hundred thousand men, I have nothing to say against it. It is an enjoyment bought by a sacrifice. Let me not be misunderstood upon the extent of my position. A member of the assembly proposes to disband a hundred thousand men, for the sake of relieving the tax-payers of a hundred millions.

If we confine ourselves to this answer – “The hundred thousand men, and these hundred millions of money, are indispensable to the national security: it is a sacrifice; but without this sacrifice, France would be torn by factions, or invaded by some foreign power,” – I have nothing to object to this argument, which may be true or false in fact, but which theoretically contains nothing which militates against economy. The error begins when the sacrifice itself is said to be an advantage because it profits somebody.

Now I am very much mistaken if, the moment the author of the proposal has taken his seat, some orator will not rise and say – “Disband a hundred thousand men! Do you know what you are saying? What will become of them? Where will they get a living? Don’t you know that work is scarce everywhere? That every field is overstocked? Would you turn them out of doors to increase competition, and weigh upon the rate of wages? Just now, when it is a hard matter to live at all, it would be a pretty thing if the State must find bread for a hundred thousand individuals? Consider, besides, that the army consumes wine, clothing, arms – that it promotes the activity of manufactures in garrison towns – that it is, in short, the god-send of innumerable purveyors. Why, any one must tremble at the bare idea of doing away with this immense industrial movement.”

This discourse, it is evident, concludes by voting the maintenance of a hundred thousand soldiers, for reasons drawn from the necessity of the service, and from economical considerations. It is these considerations only that I have to refute.

A hundred thousand men, costing the tax-payers a hundred millions of money, live and bring to the purveyors as much as a hundred millions can supply. This is that which is seen.

But, a hundred millions taken from the pockets of the tax-payers, cease to maintain these taxpayers and the purveyors, as far as a hundred millions reach. This is that which is not seen. Now make your calculations. Cast up, and tell me what profit there is for the masses?