President Bush has found himself in the unenviable position of having to address the problems of a recession and a war at the same time. While I consider the circumstances that led to these problems to have been unavoidable I have also been struck by how odd the situation actually is.
Consider the following: Franklin Roosevelt was elected in 1932, promising the people of the U.S. a "New Deal," which would create government programs to cure the economic ills of the nation. His administration struggled with the economy for ten years, creating the CCC, WPA, IRA, TVA, and other programs in an effort to ease the suffering and revive the economy. While there was some success in easing the suffering of the poor, overall revival of the economy seemed hopeless. Most historians agree that had it not been for our involvement in the Second World War, and the massive increase in production it entailed, the economy might have taken much longer to recover.
Likewise, World War I proved to be a boon to the American economy.
The same could be said for the Korean War and Vietnam, although to a much lesser extent.
Why then, with the U.S. fighting a war in Afghanistan, and the government spending massive amounts of money acquiring weapons to replenish those being used, is the economy still so sluggish? The Enron scandal definitely hurt the stock market, but how long should the effects of something like that be felt?
The defense industries of the 1940s employed a far larger segment of the population than it does today. The massive spending of World War II benefitted a much larger percentage of the population than it does today. Our high-tech weapons are created by a relatively small number of professionals. The money being spent to buy new weaponry for the military doesn't benefit as many people as it did sixty years ago. Could this be one reason that, contrary to conventional historical thought, the war is not "helping" the economy? Is the war not large enough to have any impact?
It sounds rather ghoulish to think of a war being beneficial to the economy. But do you think there is any relevance to any of these thoughts and conclusions?
Shuckins
