Transcript [00:00] The post-war economic boom is used as a [00:02] proof that war promotes growth. It's [00:04] actually proof of the opposite. When [00:05] World War II ended and the government [00:07] spending in the US dropped by nearly 75% [00:10] mainstream economists predicted a [00:12] massive collapse. The logic seemed [00:14] sound. Remove that much spending from [00:16] the economy at once and the economy [00:17] drops. Instead the economy booms. Why? [00:20] During the war people couldn't buy [00:21] numerous things they wanted because some [00:24] goods simply didn't exist. For instance [00:26] in 1942 US factories stopped making [00:28] civilian cars altogether because they [00:30] were everyday goods were strictly [00:32] rationed and prices were controlled by [00:34] the government. With supply [00:38] of basic goods dropping and rebuilding [00:40] the destroyed infrastructure creating [00:42] massive competition for raw materials [00:44] and labor prices on what little remains [00:46] went sky high. So while officials [00:48] pointed to wartime investment everyday [00:51] people were stuck paying higher prices [00:53] for fewer goods because the destroyed [00:55] factories causing that shortage still [00:57] needed to be rebuilt at enormous cost to [00:59] return to previous production. The [01:01] moment the war ended price controls were [01:03] lifted, factories retooled for civilian [01:05] production, and private investment which [01:08] had been crowded out by government [01:09] wartime spending flooded back in. [01:11] Resources and human labor were finally [01:13] freed from war production to build [01:15] things people actually needed and [01:17] wanted. The war hasn't been building [01:19] prosperity. It has been suppressing it. [01:21] The boom wasn't caused by the war. It [01:22] was released by its end. Peace was the [01:25] stimulus for wealth as people actually [01:27] experience it, not the war.
