Paul Krugman: World War II was a miracle!

Thank God for the Nazis, says New York Times columnist Paul Krugman, for saving FDR from his own timid, cowardly, tight-fisted economic policies!

The president in question is Franklin Delano Roosevelt; the year is 1938. Within a few years, of course, the Great Depression was over. But it’s both instructive and discouraging to look at the state of America circa 1938 – instructive because the nature of the recovery that followed refutes the arguments dominating today’s public debate, discouraging because it’s hard to see anything like the miracle of the 1940s happening again.

I’m sure that, if asked, Krugman would express dismay at the millions of dead. Still, it was a miracle!

I’ll compress Krugman’s argument: the Great Depression hit. By 1938, FDR had done next to nothing — nowhere near enough — to revive the economy. Also by 1938 (like today). FDR’s whole lotta nothin’ (like President Obama’s whole lotta nothin’) had turned the public entirely against government overspending.

Once more: having done nothing, the President’s policies turned the public against the government doing more.

Logic, Krugman-style.

He continues:

Then came the war.

From an economic point of view World War II was, above all, a burst of deficit-financed government spending, on a scale that would never have been approved otherwise. Over the course of the war the federal government borrowed an amount equal to roughly twice the value of G.D.P. in 1940 – the equivalent of roughly $30 trillion today.

Had anyone proposed spending even a fraction that much before the war, people would have said the same things they’re saying today. They would have warned about crushing debt and runaway inflation. They would also have said, rightly, that the Depression was in large part caused by excess debt – and then have declared that it was impossible to fix this problem by issuing even more debt.

But guess what? Deficit spending created an economic boom – and the boom laid the foundation for long-run prosperity.

No: the war created a demand for manpower so great that, soon enough, domestic industry was reduced to recruiting women to run its factories.

Women! In the workplace!

It’s true: the war was financed with deficit spending. But that spending paid wages; it paid for materiel, which in turn created wages for workers to create that materiel. What was unemployment during WWII? Low, I’m betting. Five straight years of near-full employment, and the economy revives. Go figure.

Is Krugman suggesting that FDR — and Obama — should have made up enough jobs to fully employ nearly every able-bodied American for five full years? Just made them up?

Sure, the government created millions of jobs during WWII…because of the war. The war was a singularly unifying national experience. Everyone understood what we were doing and why. Everyone understood why we were sacrificing. There was purpose in it, beyond politicians in Washington D.C. handing out re-election pork.

Krugman thinks Americans don’t know the difference? He doesn’t know the difference?

He writes:

The economic moral is clear: when the economy is deeply depressed, the usual rules don’t apply.

President Obama should simply have created a U.S. Department of New Jobs and started handing out pre-approved applications. And I’m sure that, five years from now, the government would pull it all back. Lay off thousands upon thousands, pay down the massive debts. Because the “threat” would be over by then.

Via Memeorandum. And cross posted at The TrogloPundit, which I don’t usually do, but it’s a slow day and I don’t want to do a lot of blogging.

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