Tuesday, November 15, 2011

Debunking the Myth That Only Private Industry Can Bring Economic Recovery

Conservatives don't want the government to stimulate the economy because they claim that only private enterprise can create a recovery. When progressives point to the New Deal as a successful way of ending the Great Depression, conservatives claim it didn't really work: it was World War II that ended the depression.

The massive unemployment plight did indeed end when men were drafted into the military. As so many of the men were away fighting a war, women who had never worked outside of the home helped keep American factories going. Worries about keeping or getting a job simply vanished after the attack on Pearl Harbor.

So was it private industry that put the country back on its feet economically? No, it was the government that created jobs by asking private companies to produce whatever was necessary to win the war. Yes, private companies manufactured guns, planes and tanks, but the decisions of what resources to apply when and where were made by the Roosevelt administration.

Were corporations allowed to make profits? Yes, but only within reason. Getting rich from the war was generally condemned as "war profiteering." In 1941, then Senator Harry Truman began to travel from coast to uncover corruption on the part of companies involved in war production. President Roosevelt made sure that the government had the money needed by imposing tax rates of 92 percent on incomes over 100,000 dollars (which would be about 1.2 million in today's monetary value.)

The leadership that guided America through World War II, the country's greatest challenge in history, was not the management of a corporation but a government headed by Roosevelt and then Truman. It was under a democratically elected presidency that victory was achieved. The person holding the country's highest office was not a private individual running a corporation, but an elected official accountable to every citizen of the nation.

In the minds of some it may be acceptable for corporations to rule the U.S. if not the whole world. The recent decision by the U.S. Supreme Court that corporations are "persons" may even make it possible for them to wield such power legally. But these persons, having neither body nor soul, will never have the wisdom demanded of human beings qualified to lead the people of a democracy.

Once the war was over, the American economy, no longer fueled by war production, had to be kept from relapsing into pre-war depression. It was the Truman administration's resolute implementation of the Marshall plan that made it possible for the U.S. to have a prospering post-war economy while helping Europe and Japan rebuild what was destroyed in the war. America with its vast industrial base was able to supply the goods and services Europe and Japan needed to rebuild. With a steady demand for U.S. products, America's economy prospered for decades to come.


Anonymous said...

Great entry Howard. I wonder how conservatives would respond to this. The points you make are hard to argue against in my mind.


Howard said...

Hard to predict how conservatives would respond. If you have a reader who wants to win an argument by fair means or foul, he might resort to any number of rhetorical tricks from pretending to misunderstand the statement to denial of historical facts, etc. If you have a reader who wants the truth above all else, he would carefully weigh the facts and try to come to as objective a conclusion as possible.

Adam said...
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