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No modern myth dies harder than the familiar claim – today repeated in the Los Angeles Times by one Joan Mortenson – that “It was the massive spending of World War II that finally ended the Depression.”

Between 1941 and 1945 Uncle Sam drew into his military 16 million persons – that was 22 percent of the pre-war labor force.  With so many workers then militarized, mostly through conscription, there’s no evidence that wartime spending restored the labor market to health.  And while real GDP did rise during those years because of military spending, the private economy shrank.  As Robert Higgs notes, “Real civilian consumption and private investment both fell after 1941, and they did not recover fully until 1946.  The privately owned capital stock actually shrank during the war.


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