One of the most enduring myths of popular economics is that war is good for the economy. One ofthe most enduring myths of the twentieth century is that World War II ended the Great Depression. In a series of important papers that culminated in his book Depression, War, and Cold War, Robert Higgs has argued convincingly that the War didn’t end the Depression, and economists have known since at least Bastiat that war does not encourage the national labour, on net.
Now, Steve Horwitz directs us to some research one of his students is doing: through a series of ads placed by a Canton, NY-area firm, we see an interestif story emerge. The opportunity cost of the military hardware we used in World War II was not zero. We got bombs, tanks, planes, and bullets, but at the expense of consumer durables. In other words, Grandma wasn’t able to get a fridge because the resources and labor that could have been used to produce it were employed making war materiel.
Whatever the merits of war, we do ourselves a serious disservice if we say “at least it’s good for the economy.” It isn’t.