1943

In 1943, 1944, and 1945,  the US put ~35% of GDP into war production, which helped win the war but, in general, produced stuff that had very little utility in civilian life.   Judging by what some people are saying, throwing away so much GDP  should have significantly increased the civilian death rate – but it did not.  For that matter, the Great Depression didn’t materially increase death rates.

1943-1945 should have tanked the economy and blasted health, according to them,  but that didn’t happen.  Not even close.

Why not ?

 

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50 Responses to 1943

  1. Bert says:

    WWII didn’t tank the economy because the economy then revolved around supplying basic needs: food, shelter, clothing, simple transportation. Not insanely elaborated consumption: exotic restaurant food, Macmansions, trendy fashion, tourism to unpleasantly crowded places.

    What surprises me is that so little thought has been put into ways to mitigate the economic effects. For example, rather than bailouts, institute timeouts: for businesses that must close, until they can reopen legally freeze all previously required payments as of March 15 so that, for example, no landlord can charge rent to a closed business, and no bank can collect mortgage payments from a landlord, etc.

    Or offer younger people the option of volunteering to be artificially infected and quarantined until they test positive for IgG antibodies. At which point they would be given a certification allowing them freedom of movement and association. The West Hunter hive mind could certainly develop a better plan than the current options of an 18-month lockdown versus let her rip.

    • bomag says:

      From one angle, we are all now rentiers, backstopped by a few megafarms; megamines; and megafactories.

      I suppose as long as John Deere keeps the 500 horsepower tractors running, we’re good.

    • ASR says:

      I agree! These are very different times and the US economy is very different. The USA moved from an economy primarily based on production to an economy based on consumption and finance, gradually from the 1950s into the 1980s, and then rapidly from that point forward. My sister was complaining of the “food shortages” she’s dealing with now, when we both spontaneously broke into laughter. Back in the 1950s, when we were children, we would have regarded the “shortages,” of which she was complaining as unimaginable luxuries.

      I like to hope that we come out of this crisis with a recognition that sending our productive capacity overseas in return for cheap consumer goods and high profits for the 1% was a disastrous and unforgivable failure on the part of this country’s establishment. We gave up the country we inherited after WW II for a mess of potage.

  2. Alex says:

    It mobilized resources in a way that could then be steered towards civilian production afterwards. This is why some people thought the USSR was going to beat the US. It and other Communist countries were adept at mobilizing resources for rapid heavy industrialization, so a lot of indicators improved rapidly (including child mortality, for instance, before it later deteriorated). In the long term, they had trouble with efficient use of resources and with discontinuities in allocation. The US did not have a command economy for that long. It seems like the small dosage of “economic poison” had beneficial results. Maybe something like hormesis?
    Let’s not also forget that that the mobilization took place in a time of rapid technological advancement and pent-up demand for goods. Without productive capacity being destroyed, you could pivot quickly towards new tech, new markets, new needs.

  3. James Thompson says:

    The “basic” economy has remained pretty stable since 1834, and thereafter more and more people came off the land, for the UK in the 1870s when the prairies came online with railroads, and in spades in the 1920s. That means that the basic stuff is always there, and the rest is entertainment. L

    • protokol2020 says:

      True. The rest is entertainment and it’s quite optional. Therefore, this COVID shutdown thing might have very little impact. Some well-needed kick to the lazy techno progress, that could be all. Social progressivism will die anyway. Corona or no corona. Perhaps even faster with corona.

      If you are a farmer or something other which is useful, you don’t have to worry about it. Just don’t get ill and die!

      • jb says:

        “The rest” may indeed be “optional” in some abstract long term sense, but in the immediate sense we are talking about paychecks and careers. Losing “the rest” will be extremely disruptive in the short term, which happens to be where most people live.

      • Difference Maker says:

        Time for a tradwife!

  4. Getting hungry happens pretty quickly. Actual starvation takes a lot of going hungry before it kills you.

    • dearieme says:

      I had a friend who was an officer in the Royal Navy and then worked at the Ministry of Defence. He said that in planning for civil contingencies they assumed that after three missed meals, max, there would be trouble on the streets.

      There’s been no sign whatsoever that this assessment changed the policy of successive governments with respect to immigration.

      • James Thompson says:

        I remembers the advice as “the population is always four meals away from anarchy”. Your three meal guideline may be correct, but I think anyone able to have breakfast on day two would probably be quiet until day 3.

    • gothamette says:

      True. It’s adaptation. Modern Americans are addicted to huge portions of cheap, fatty foods. Time to de-escalate.

  5. Difference Maker says:

    It may be simply that most people were still being paid

  6. teageegeepea says:

    Measuring GDP based on government spending, “the economy” did well at that time. If you measure based on what individuals got to consume, we know there was rationing and they had little. But not to the extent that there was mass starvation or anything.

  7. Steve D says:

    I’m going to guess it’s because 16 million men were in the military and more or less treated as slave property. They had a diet a little tastier than dog food and were crammed into barrackqs. In other words, they had a radically lower standard of living. Which we would normally interpret as economic decline.

    And apparently we had enormous productive potential that was finally unleashed once FDR quit jerking around with the economy.

  8. ziel says:

    My 92-year old mother, who is lucid as hell (God bless her) says she’s never seen anything like this. Now granted she was a bobby-soxer when the war started, and 2 or 3 million young men (including my father – her eventual husband) were more-or-less socially isolated from the rest of the country for 4 years and about 400k never came back – but I’m not sure the comparison to mobilizing for WWII applies here. Maybe it should – but I think it’s a lot different to be put to work or have things to do volunteer for to help the effort, vs sitting home and doing nothing as a response. At an absolute minimum people were buying War Bonds – they had money in their pockets.

    • Toddy Cat says:

      Every historical experience is sui generis, but I think that WWII/Great Depression is probably the closest analog we have, despite some pretty huge differences. Great that you still have your mother, just aside from personal reasons, the memories of older people who can remember great historical events is one of the most valuable resources we have right now. I certainly wouldn’t trade her or people like her for a few points of ephemeral GDP.

      That being said, people are not going along with this crap unless our leadership articulates some kind of plan and gives some indication as to what the plan for victory is. Much of what FDR did back in the Great Depression and WWII was actually counterproductive, but his actions probably were constructive in the long run because he gave people the impression that a plan was in place and everyone had a place in it. It would have been even better if he had known what the Hell he was doing and hadn’t actually prolonged the depression and abandoned Eastern Europe to Stalin, but still, you take what you can get…

      • The G_man says:

        FDR had a media that covered up the fact that he was literally a cripple. You think if Trump started burning fields full of pigs it would help unify the nation as long a he gave it the right rhetorical framing?

  9. big fan says:

    Dear Greg: Please try to communicate your (and Paul Ewald’s) points about how to stop the pandemic to the decision-makers, through whatever contacts you have.

  10. peter connor says:

    The economy didn’t tank because the Government was doing the measuring and building tanks that got destroyed two months later was great production….The civilian economy was starved, but because America was a wealthy nation with hard working people, that resulted in hardship, but nothing worse….

  11. another fred says:

    There was room in the national budget to handle the debt. Total debt (TCMDO) was on the order of 1.5 times GDP at the worst and quickly dropped to the neighborhood of 1.3 because real growth was possible.

    Now, total debt is more than 3 times GDP and “growth” has stagnated. We are paying the price for amazingly stupid economic decisions made in the 60s and 70s and there is no easy way out.

    LBJ made probably the most critical decision, “stimulating” (hah!) the economy during the Viet Nam war. Nixon followed by refusing to defend the dollar (closing the gold window, instead) and the Humphrey-Hawkins Act was the final nail in the coffin of the Republic. We are slowly waking up to the fact that we are trapped in a box of our own making.

    https://fred.stlouisfed.org/graph/?id=TCMDO,#0

    (add GDP with the “EDIT GRAPH” button)

    • Anonymous says:

      Forgot to add my name again.

      If the questions is limited to the 1943-1945 window, then during that period people were willing to behave pro-socially, to act for the benefit of the group, and there were plenty of needed actions to occupy them. Now, not so much.

      People are being asked to sit idly and accept support from the government, which should work until the bills come due if the support is broad enough, but the aftermath will find us burdened with even more enormous debt and little prospect of growth.

  12. jbbigf says:

    Broken window fallacy.

  13. David Chamberlin says:

    After World War Two the United States was in a fantastic position to take off and dominate world production. After this disaster we all know who will be the position to dominate. It sure won’t be the USA. Our taxes will go to pay our debt even if the interest rate remains low. It really doesn’t bother me because I’m no longer proud of my country. Our leaders are unethical salesmen and people who aren’t very smart don’t admit it and are pissed at their shitty lives. The salesmen appeal to their frustration and anger and give the angry dumbshits simple answers to complex questions that solve nothing.

    My life is great, my family are all doing well with professions they enjoy so don’t read bitterness into this, it just is. Soon as this shitstorm passes I’l be loafing in places like Chain Mai Thailand and Krakow Poland when I’m not hanging with family here in Illinois. If you aren’t in the upper two percent intelligence wise and skill wise, you’re fucked. I don’t like it, it isn’t right, but it just is.

  14. Toddy Cat says:

    “After this disaster we all know who will be the position to dominate. It sure won’t be the USA.”

    You may be right, but I wouldn’t bet on it. History is littered with the smoking remains of regimes that wrote the US off as “decadent”. This time it may be true, but historically that has not been the way to bet.

  15. Andrew Oh-Willeke says:

    In 1943, the marginal benefit that could be obtained from high levels of spending on health care was much, much smaller than it is today. There were effective medicines like antibiotics and vaccines and insulin that were pretty cheap. The ratio of doctors per population was significantly higher, but doctors weren’t nearly so well compensated relative to other people. In contrast, in 2020, modern medicine can do amazing things but only using very expensive means.

    Also, economic inequality was extremely low in 1943 relative to 2020 and also relative to 1920. The economic resources for the war effort came at the expense of the rich because they were the ones who had those resources to lose, and because the masses need to have a greater share of resources and security devoted to them to ensure their loyalty in the face of huge personal sacrifices from drafted men and economic restrictions at home. Today, the working class is much worse off economically than it was in 1950 in relative terms, and far more insecure economically than it has been at any time since the Great Depression. In 1943, the nation’s leaders recognized that it was unacceptable to let people starve or get kicked out on the street, or to die when health care was available that could prevent that (often it wasn’t to be had at any price). In 2020, our leaders have forgotten that, at least, pre-pandemic.

    • In contrast, in 2020, modern medicine can do amazing things but only using very expensive means.

      I don’t think that’s true at all – certainly not at the level of a country.

      In fact, the most effective ways for Americans to improve their health today are quite simple (eat better, exercise more, etc.), but few want to do them and the state is not about to mandate them at any level that would be effective. When half the country will soon be obese, do you really think the expensive procedures would provide the best health outcomes for the nation?

      Also, economic inequality was extremely low in 1943 relative to 2020 and also relative to 1920. The economic resources for the war effort came at the expense of the rich because they were the ones who had those resources to lose, and because the masses need to have a greater share of resources and security devoted to them to ensure their loyalty in the face of huge personal sacrifices from drafted men and economic restrictions at home.

      The economic resources for WW2 were provided by all Americans and not just the rich. Everybody cut back. They brought war bonds; they rationed; they accepted wage and price controls; women went to work; etc.

      By the time WW2 started, most of the wealthy were already paying through their noses for the growing welfare state. The war started twelve years after the beginning of the Great Depression. In 1940, marginal tax rates were already over 80 percent. They didn’t have much higher to go.

    • The Preston Curve says:

      This is the precise opposite of what analysis of GDP/capita and healthcare suggests. Variations around the top end don’t matter for life expectancy and they do for the bottom.

      The US’s “amazing” healthcare that consumes an extra 8% of GDP compared to most countries (and I am convinced this is not necessarily a sign of a less efficient system, lest you object), probably does close to fuck all to change life expectancy significantly. Months.

      The things that matter are not as cheap as you think, and poor countries do face tradeoffs.

      If the world were as you thought, then you’d see lots of relatively poor countries with very little variation, because they can all afford the basics but not much more, but then lots of variation in rich countries which can afford top end healthcare (US lots, a poor OECD country like New Zealand not very much). But this is the precise opposite of reality, where poor countries have a quite strong relationship between GDP and health, and then richer countries not at all.

  16. Boswald Bollocksworth says:

    Look, “Cochran”, if that is your real name, if we shut down the economy for two months just to save a few million fellow citizens’ lives, we’ll have to temporarily return to per capita output levels of 2000, or even 1995. Do you remember what 1995 was like? We’ll have to watch as one of the most stable, low pressure, low risk industries-restaurants-blows up. What will we do without restaurants? How will we recover the human capital lost, when in 2021, people want to eat out again? Chefs will have forgotten everything, they’ll be burning unbutchered cattle carcasses with blow torches trying to get your steak ready. All of culinary arts will have to be rediscovered

  17. The G_man says:

    I’ll make this point delicately, but …. is it your opinion that if fighting Coronavirus would entail rationing then this is a price that America and other western countries should pay?

    I’ve been super holy about self-isolation and I’m lucky to have a nice flat with balconies, a pretty wife who doesn’t nag and two reasonably good kids who I enjoy homeschooling. I’m also fairly confident that most of my income is safe as long as this lasts no more than 18 months and all my savings are in gold, so I’ve got no particular motive to push the give-up narrative. Nevertheless, it looks like a lot of people advocating prolonged shutdown are not particularly clearheaded about what it entails economy-wise and that those who are are not being totally straight about their scale of values.

    To take an example, Greg has expressed many times his view that U.S. entry into WW1 was worth 116,516 deaths almost entirely men in the prime of their life, many of them fathers to small children. I understand there are good arguments for that, but let’s not get all righteous and pretend that it’s never worth sacrificing lives for other national purposes. What we need here is a good estimate of how many lives we are going to save vs. the costs under different containment models and we can talk honestly about what choice we are going to make. What I’m seeing here is a lot of empirically-based rationality about the virus and a lot of sarcasm and rhetoric about the economy.

    • Toddy Cat says:

      The fallacy here is that the economy will somehow manage to flourish with this thing loose in the world. Given how fearful people are of this thing, I see no reason to believe this to be true. The idea that people are going to be packing sports stadiums, restaurants, and concerts when there’s a better than even chance that you will contract something that could either kill you or permanently damage your lungs is nuts, and any president who signed on to this would be toast politically. We can talk all we want about the benefits of re-starting the economy with this thing still at large, but it’s never going to happen.

      The only way to bring back the economy is to defeat the virus. Full stop. In the meantime, Japan, South Korea, and Taiwan have shown that it’s not either-or, with enough testing, masks, and resolute action.

      • The G_man says:

        “The idea that people are going to be packing sports stadiums, restaurants, and concerts when there’s a better than even chance that you will contract something that could either kill you or permanently damage your lungs is nuts, and any president who signed on to this would be toast politically.”

        AFAICT, even the most full-on western countries are going for a policy of flatten the curve while isolating vulnerable populations, which means that you do, indeed, have a better than even chance of contracting this thing, like it or lump it. Even Israel (where I live) gave up on victory proper when the casualty count stood at 1. The only question at the moment, politically speaking, is how flat we are prepared to make the curve. Perhaps Greg needs to be clearer that he is not arguing for a stricter version of the current policy, but a completely different one.

        On the other hand, perhaps it doesn’t matter a damn thing what anywhere here says. Most likely scenario: we all crash our economies then give up after a few months because it’s too hard and everyone dies anyway.

      • dearieme says:

        “Japan, South Korea, and Taiwan have shown that it’s not either-or, with enough testing, masks, and resolute action.” Could well be.

        But you are far too confident in this. Wait until the Chinese have all gone back to work. Wait until Japan, South Korea, and Taiwan have restored foreign travel. Wait for next Spring. It’s a novel virus. We still don’t know much about with much certainty.

        • Toddy Cat says:

          True enough, we’re in uncharted territory here. But Japan, etc, certainly look to be in better shape right now, and that’s all we have to go on.

  18. The Preston Curve says:

    The Preston Curve implies that at low bounds, less than 20000 USD GDP per capita (US dollars, adjusting for PPP and inflation), a loss of, like 25% GDP per capita or anything like this implies quite a large loss of life expectancy.

    It doesn’t imply that losing 25% GDP per capita of US GDP now would do anything, since the Preston Curve goes flat long before current US GDP.

    It doesn’t have anything to say about whether your GDP is coming from producing weapons, peacetime stuff, medical, whatever. So if during WWII, GDP was simply redirected and not lost, the Preston Curve would suggest that nothing would happen, as even the US was at a low bound, GDP per capita would not actually have changed.

    But if policies of quarantine reduced say, Nigeria’s GDP by 25%, then they would have to boost survival by enormous amounts to make up for what the Preston Curve suggests they would lose. This is reasonably commonsense, as at low level subsistence, any particular saving from quarantine to fight a specific disease would have to be enormous to offset the value of productivity in producing lots of things that separate the margin of survival and death.

    So they may be a terrible idea for poor countries on that basis. But that doesn’t matter for the US, which is at a high bound of GDP/capita. Poor countries do indeed face harsh tradeoffs between GDP and life expectancy, but the US does not.

    The tradeoff the US faces is whether the cost is worth losing a premier economic position to the likes of China, and whether that ultimately destabilizes the world as a whole, but that’s another question.

  19. Howitzer Daniel says:

    The idea that shutting down the economy for two months —- the equivalent of four two week vacations – will cause a great Depression in a country that has literally millions of people who know how to work hard, and how to start or restart businesses, is ludicrous.

    Yes individuals will suffer. That is terrible. But the USA will still, one hopes, be a place where people who are willing to work hard will be able to recover from the losses inflicted on us by the bat-eating dog-slaughtering evildoers of the Wuhan Wet Market, and by the steps we take to keep our country from losing five to ten million of our fellow citizens.

    If you think I am stupid, ask yourself – what would Kolmogorov or Laughlin say about the emerging details of the rates of infection in Manhattan and the Bronx and NOLA right now? I know what he would say, and I AM NOT STUPID.

    For the record, I do not remember any body caring about the fact that when I, in my early 20s, volunteered for the military instead of going to the Wharton School of Business that I was crashing my average potential lifetime earnings by a factor of ten or twenty (for the record, that is how it turned out).

    And now, almost half a century later ….Look at me. My doctor says I have bad blood numbers, one out of ten people with those numbers is gonna die in three years from a specific type of cancer.

    And that same doctor called me last week — called me, someone with cancer indications in my blood that predict something like a ten percent chance of painful cancer death in three years —- and said, hey we are triaging, because of this disease that might kill one out of fifty old people. Would you mind canceling your next appointment, so we can prioritize others and not you?

    Of course I did not mind. Because I am not a lily-livered coward.

    And if you are bothered about being asked to do about one percent of the sacrifice that the average GI (well they were all young men, late teens and early 20s, not the sort of person most people think of as being worth sacrificing for, as opposed to vice versa) was asked to do during the recent unpleasantnesses with Japan and the Krauts, during the even more recent unpleasantness with Korea and the Chicoms, or with the phony Chicom regime based in Hanoi, well then, STOP BEING BOTHERED AND STEP UP A LITTLE.

    Be the sort of person who deserves respect.

    • Howitzer Daniel says:

      5 to 10 million is not the worst case scenario, by the way.

      Reread your notes from that time you first read Kolmogorov on probability.

  20. rjjcda says:

    During WWII, the country was united in confronting it in all ways. The mass human psychology was optimistic, and people who were negative or who committed negative acts were shunned and ostracized. rationing and hardships were not impediments to social cohesion and confidence, If mass optimism and confidence are not present, crisis will result in severe economic contraction. Human volition is the ultimate driving force in every economy, not some materialist formula.,

  21. sprfls says:

    A bit off topic: I heard you say on James Miller’s podcast that saunas don’t work. As much as I enjoy them I am skeptical myself.

    However I saw someone suggest they might work by activating heat shock proteins that mess with RNA viruses. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC321380/

    In that paper the temperatures compared were 37°C and 41°C. Saunas raise core temp maybe ~1° and skin temp ~3-5°. Anyways this is way out of my wheelhouse but I’m curious if there’s anything here worth looking into more closely…

  22. Анисимов Дмитрий says:

    For that matter, the Great Depression didn’t materially increase death rates.
    how do we know?

    why are years before 1935 missing from here?
    https://en.wikipedia.org/wiki/Demographics_of_the_United_States#Vital_statistics_from_1935

  23. If it lasts for many months longer the corona lockdowns will provide a similar test for the supposed causal link between loneliness and all-cause mortality:

    In a review of prospective studies on social isolation and health, House et al. (3) confirmed that social isolation was a major risk factor for morbidity and mortality from widely varying causes—a risk factor comparable in size to obesity, sedentary lifestyles, and possibly even smoking. These effects were evident even after statistically controlling for known biological risk factors, social status, baseline measures of health, and health behaviors

  24. Pingback: Corona as a test of loneliness and mortality – Alexander Turok

  25. Dividualist says:

    Because the US had immense industrial capacity according to John Keegan. More than the rest of the world combined. By the end of 1944 war materiel was not even shipped to Europe anymore as the warehouses were full and there was no place to put it. After the war, especially in Asia, trucks and jeeps were just abandoned for the local civilians to use.

    If you are a demand-sider, it does not matter what was produced, only thing that matters is that people were working. If you are supply-sider, 65% of the industrial capacity of the rest of the world combined was enough to cater to the needs of the US civilian population. I am a supply-sider.

    Blasted health? Modern, super expensive healthcare did not exist. Penicillin was about the only important medical product, most of healthcare was just keeping people in beds and nursing them. Health insurance was mostly about the lost wages while ill, because being in bed at home and having the doctor visit you once a week as not expensive.

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