Warfare as Economic Stimulus

She had two babies
One was six, one was three
In the war of '44
--Paula Cole

The New Deal did little to 'solve' Depressionary unemployment. By the end of the 1930s, the jobless rate remained in double digits. Folks were bracing for another leg lower in the economy.

Facing his third election in 1940, FDR began to shift government spending toward the military. His rhetoric began to challenge isolationist policies grounded in the horrors of WWI.

By the time bombs were raining on Pearl Harbor, policy makers had already placed their bets on the viability of an economic stimulus plan grounded in warfare.

It seemed to work. Unemployment fell as people went to work either fighting the war or building goods to support it. Factories hummed at a pitch not heard for more than a decade.

No one seemed to question where the capital was coming from to support this effort. Or that the goods being produced did nothing to advance standard of living.

And, of course, we won the war.

Come end of 1945, the US was in a sweet position. The only industrialized country with practically all of its productive capacity outstanding...Pent up demand for both consumer and capital goods...Head chair at post war treaty tables, including the one that was to select a reserve currency for the world...

The lesson seems clear, doesn't it? When a country has been enduring a prolonged economic slump and other policy measures have not worked, crank up the military machine and engage in war.

And hope you win.

With the Fed's recent actions signaling how desperate policy makers are for progress, might the current regime consider war a viable economic stimulus plan?