Ok, so if my understanding is correct, Higgs argues that World War II did in fact stimulate a recovery, just not in the sense that Keynesians believe. The war essentially allowed for a renewed confidence in America's ability to produce, which, in combination with "forced savings," allowed for prosperity to return at the war's completion. Is that accurate?
If this is true, my question is, wouldn't Austrians have predicted that the massive wartime money printing and subsequent runaway inflation set the stage for an even greater collapse upon the war's completion? If not, couldn't "forced savings," whatever that means, save our economy today?
With the recent great success of Austrian economic predictions, what were Austrians predicting during WWII?
What private investment existed to collapse? The fall was in public investment in the armaments industry. In terms of effect on consumer spending and general wellbeing, for all intents and purposes the economy remained depressed during the Second World War. We didn't see an 'Austrian bust' because inflation during the war didn't result in malinvestment in the private sector, and thus the readjustment process was already starting from scratch (no necessary collapse of previous investments).
The Great Depression ended WWII.
The Great War ended Depression II.
"The Great Depression ended WWII."
Well, there was considerable inflation during the war years. And you have to take into consideration that afterwards Harry Truman cut spending by 2/3 and started rescinding onerous taxes and business regulations, and I believe monetary expansion stopped after the war. Combined with the fact that every other country in the developed world was destroyed, America had a pretty good economic standing regardless of some of its destructive regulations that would contribute to its decline in later years as other nations started rebuilding themselves.
Depression II Great the war ended.
The ending of the war allow the economy to recover.
To paraphrase Marc Faber: We're all doomed, but that doesn't mean that we can't make money in the process.
Rabbi Lapin: "Let's make bricks!"
Stephan Kinsella: "Say you and I both want to make a German chocolate cake."
So, before the war ended and prosperity resumed - were there any notable Austrian predictions or commentators of any kind on the issue?
If Truman cut spending by 2/3, shouldn't that have allowed prosperity to resume vis-a-vis the purging of the misallocation of resources in the form of a deep and sudden recession?
WWII seems like quite the Austrian predicament - would it be accurate to say that Keynesians may view WWII as the nail in the Austrian coffin?
Austrian economics is such a sound philosophy, so why is it that I can't find a single clear and concise explanation of the economics surrounding WWII? I see the endless debate by Austrians over the miscalculation of numbers like unemployment, GNP, and consumption, and Higgs argues that people just felt wealthier but they weren't really - why isn't there a single clear and concise Austrian voice on this matter that doesn't have to resort to toiling with semantics to argue the case, but rather deals with bold and irrefutable philosophy on this specific issue??
Funny you should ask...There was a Mises Daily published on this a little more than a week ago:
(also, Tom Woods has spoken a lot on this...)
Thomas E. Woods: The Truth About American History (specifically "The Great Depression, World War II, and American Prosperity, Part 1 & 2")
So Tom Woods did a good job proving there was no recovery during WWII - but he was asked by an audience member at the end of "The Great Depression, World War II, and American Prosperity Part 2," why when government spending was drastically cut immediately after WWII, was there no Austrian bust? I jumped for joy when hearing this question. Then, Tom replied, "that's a good question, I don't know. I'll have to roll that around in my head a bit. Next question." No! That was my question! Still unanswered...
That sounds more like it, thanks. I'm still curious as to what the Austrian voices were predicting at the time - if predictions actually anticipated a recovery after WWII and spending ended.
World War II brought an end to the unemployment crisis because many able-bodied men were conscripted into the army, and others could take advantage of the opportunities created by the demand for large scale production of tanks, airplanes, guns etc. Also, with men being drafted, many women joined the workforce, which wasn’t a common occurrence during the war, and hence families had more income coming in.
This looks suspiciously like spam to me.
I was just trying to help and add a great resource about World War II in the discussion.