![]() World War II institutionalized the falling standards of living of the Depression through wage and price controls, and extensive rationing of consumer goods and services. But that value cannot be measured the same as consumer or productive goods and services that do increase the standard of living for working people and their families, and are purchased through voluntary market transactions. I am not a pacifist who thinks defense spending has no value. ![]() Did the American Civil War reflect a time of soaring economic prosperity for America, when both the South and the North were producing weapons of as much mass destruction for Americans as was feasible at the time? What about the cost of the Mexican-American War in the 1840s? Did the cost of the Vietnam War represent a net addition to, or a net subtraction from, American GDP? Or the cost of the most recent wars in Iraq and Afghanistan? Perhaps this economic reality can be seen better in other military conflicts. But would not a better measure of the economic value of that military materiel, and of any coerced government transaction, be to subtract the cost of that production from GDP, rather than adding it? The cost of all that military materiel was simply added to GDP, as if it reflected increased production. But the same voluntary market transactions where consumers are spending their own hard earned money were not involved in the government’s acquisition of the military guns, tanks, ships and planes produced during World War II. The sale prices of goods and services sold in voluntary market transactions reflects the true value of the goods and services produced, because they reflect what consumers are willing to pay for them, and so reflect the benefit that consumers see in them. But these were not economic goods and services, and should not be counted as such. Yes, they did win the war, and that victory was a social good, just as removing Saddam Hussein from power was a social good. The military guns, tanks, ships, and planes produced and counted as showing rising GDP did not reflect improved standards of living for working people, or anyone else. But that just reflects misdefined statistical analysis. ![]() Statistics showed a rise in GDP during the war. ![]()
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