I know that Austrians don’t think so, but could someone give me a basic argument as to why not. I am actually confronted with this question a lot and I don’t think I am well versed enough to answer it.
Consumer production was sacrificed to increase military production. That made people poorer. Once the war was over and consumer production replaced military production, the depression ended.
And then you have to consider all the death and destruction. Building things just to immediately blow them up is no better than not building them in the first place.
First we have to consider that the purpose of jobs are. The purpose of jobs is to create things that we want; things like pizzas, i-pods, and TV’s. If pizzas and i-pods and TV’s rained down from heaven, we wouldn’t need to work anymore. The purpose of jobs isn’t to have everyone work. If that’s all you want then here is the solution: Have one-half of the country dig holes, and have the other half of the country fill them up. Or have one-half of the country produce tanks, and have the other half of the country blow them up.
One common thing people get wrong is they think that there are only a limited amount of jobs available for people to do. Actually, there are an unlimited amount of jobs, because people have an unlimited desire for goods. Think of jobs as like having a wish-list with all of the things that we want and dream of on the list. The more jobs we accomplish at the beginning of the list, the further down the list we can go.
Think of it like Swiss Family Robinson. At the beginning of their list are tasks like “Get Coconuts,” then “Build House,” then “Build Raft” then maybe far down “Create Work Of Art.” The more things they can produce, the further down the wish-list they can go. When a company like Walmart is able to give us what we want for less money, we then have money to spend on something further down our wish-list. Like a new bicycle for instance. And guess what that means for the bicycle company? They now need to hire new people to make more bikes which everyone is now buying because they can suddenly afford it. So jobs just shift down the wish-list.
This actually cuts through the baloney in that scene in I, Robot, where Will Smith tells the executive that his robots are crapping on the little guy because they are doing jobs like furniture-making that people used to do. He doesn’t get that if robots made all of our goods, then the goods would be so much more abundant and therefore cheaper because greater supply lowers prices. And the furniture-makers could move down the list and start making works of art or whatever. Think about it, 99% of the jobs people used to do, like farming for example, are done by giant robot machine combines that can do in 5 minutes what a man took a day to do. So why don’t we have 99% unemployment today?
So in reality, there is no such thing as a fixed amount of jobs that the government needs to “stimulate” through war or whatever. In other words, there should never be unemployment, for there is always something to work on that’s on the wish list. The only reason there is ever unemployment is because of government intervention like the minimum wage, unions, and the Federal Reserve causing the business cycle.
Tom Woods has a great explanation from his book 33 Questions About American History (You’re Not Supposed To Ask):
Consider this approach, which I have used in my own classroom. In a classroom with five equal rows of students, the first four rows represent the working population during the latter 1930’s, while the last row represents the roughly one-fifth of the labor force that was officially unemployed. (The average unemployment rate from 1933 to 1940 was 18% - nearly one-fifth of the labor force.) That one row does not contribute to production at all. The other four rows are engaged in producing consumer goods – which, for simplicities sake, we shall limit to food and clothing. A modest portion of the earnings of the first four rows is devoted to relief payments to the unemployed fifth row.
Now, think about the working population during the war. During the war some 40 percent of the labor force was either serving in the armed forces, employed by the armed forces on a civilian basis, employed in the defense industry, or unemployed. The last two rows of students, therefore, now represent this bloc of the labor force. Now only the first three rows are producing food and clothing. One full row has been diverted from the production of those things, so there are now fewer of them for everyone, and they will tend to be more expensive than they would have otherwise been. To top it off, it is out of the paychecks of the students in the first three rows that the students in the last receive their salaries. Ask the students in the first three rows, who represent the productive economy, how prosperous they feel now. Is the class as a whole more prosperous? Of course not: we have simply redistributed resources, and in ways that produce enormous deadweight losses for society in general.
Fewer, dearer goods and less money with which to buy them: there is your wartime prosperity. And that is not to mention all the wealth that could have been produced if the requisite labor and material inputs had not been diverted into war production.
If it ended the Depression, then why was there ANOTHER Depression in 1946?
^ there wasn’t.
A short and easy to understand explanation:
War is good for the economy?
http://www.vforvoluntary.com/files/war_is_good_for_the_economy.pdf