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.