That Post WW II Boom

As I said here, Russ Roberts challenged me at Beckworth's blog.  You can see it there.  This is my response, hoisted there and plopped down here.

Well, I have to say that pointing to that one infamous quote - which I have seen numerous times now - and saying - "See how wrong that is!" is 20-20 hindsight, cherry-picking, and pretty shallow. If Samuelson was generally faulty, there should be many quotes to pick apart. I hear crickets.

Since Roberts is going after Krugman, he ought to take a look at his predictive abilities, rather than dragging up a 70-year idea enunciated by someone else. That is changing the subject.

http://krugman.blogs.nytimes.com/2011/08/04/wrong-and-right/

Re: demobilization, I just did a quick google search to make sure what I thought I know wasn't off base.

I came up with these.

http://www.bookrags.com/research/demobilization-aaw-03/

http://en.wikipedia.org/wiki/Post%E2%80%93World_War_II_demobilization_strikes

http://www.mtholyoke.edu/acad/intrel/pollard.htm

At any rate, it's awfully hard to put a robust economy story together with the real GDP data in a way that makes sense.

1941-01-01    1371.5     17.1%
1942-01-01    1623.5     18.4%
1943-01-01    1887.9     16.3%
1944-01-01    2040.2     8.1%
1945-01-01    2016.6    -1.2%
1946-01-01    1798.2   -10.8%
1947-01-01    1784.8    -0.7%
1948-01-01    1864.8     4.5%
1949-01-01    1854.2    -0.6%
1950-01-01    2016.5     8.8%

Negative growth 4 years out of five, starting in '45.

FRED
http://research.stlouisfed.org/fred2/series/GNPCA/downloaddata?cid=106

I'd love to see data on the 7.5 million new jobs.

Cheers!
JzB

I checked FRED again, and returned.

Also from FRED, PAYEMS series. (All Employees: Total nonfarm)

http://research.stlouisfed.org/fred2/series/PAYEMS/downloaddata?cid=32305

.                      (thousands)
Jan 1, 1946       39839
July 1, 1947      43742

OK 3.9 million. This would be more impressive, though, if the previous 18 months hadn't seen the loss of about 2 million jobs.

July 1, 1944     41904.

The job additions from Jan, 1946 finally totaled about 7.5 million in Jan, 1951 - way on the far side of the 1948-9 recession.

1951-01-01      47289

Cheers!
JzB

 Roberts started with "the release of 10 million people into the labor market with demobilization," which became 7.5 million NEW jobs over 18 months, which actual data showed to be 3.9 million over 18 month, and 7 million over 5 years. And they weren't all new jobs.  Two million jobs had been lost in the previous year and a half.  Roberts acknowledges the effects of the GI bill and women leaving the work force with little more than a nod.  Those niggling little details don't fit the Libertarian narrative particularly well.

With a few seconds on the Google, I found this:

Unemployment almost disappeared, as most men were drafted and sent off to war.  The government reclassified 55% of their jobs, allowing women and blacks to fill them. First, single women were actively recruited to the workforce. In 1943, with virtually all the single women employed, married women were allowed to work.

Isn't that something.   Seems there was a bit of a labor shortage.  They even allowed women and blacks to work -- freaquing amazing!  But further, as the war ended, unemployment went up



From the same source we get these population figures (Civilian noninstitutional population)




So, from 1945 to 1946, the civilian population increased by 8.98 million.  Of these, 3.66 million entered the work force, while 5.3 million did not.  From '46 to '47, civilian population increased by another 2.9 million, the workforce by 2.65 million, and the non-workforce by 300 thousand.

OK - the Truman administration did a pretty reasonable job of redeploying GI's into the work force.  Credit it where it's due.  But this data in no way refutes the original Krugman statement Roberts was ridiculing:  "Pay no attention to those who invoke the confidence fairy, claiming that tough action on the budget will reassure businesses and consumers, leading them to spend more. It doesn’t work that way, a fact confirmed by many studies of the historical record."

In fact, the post WW II "experiment" is essentially irrelevant to Krugman's point.  It is, as I said above, Roberts changing the subject.  And if this fact is not immediately obvious, I suggest you ponder it at your leisure.

Well, I learned a few things about the post WW II period during this exercise, and that's pretty valuable on its own.  I didn't learn anything new abut Libertarians, though.  With them, it's the same old same old, all the time.
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Stock Market Performance Before and After WW II

Thinking more about Henderson's MIRACLE, I wonder --- has there ever been an economic MIRACLE or Boom, or even a pretty good time that was not accompanied by strong gains, or at least some sort of an up-trend in the stock market?

Wouldn't you expect that if there were an actual economic MIRACLE following WW II, there would have been a big gain in the Dow Jones Industrial Average?  Let's have a look.

What we find is that the DJI rose over the year following VJ Day (Aug 15, 1945) from about 160 to around 212 in early-summer of 1946.  Then, Henderson's alleged miracle happened, and stocks fell back down to about 165 before the end of the year.   The 212 level wasn't reached again until spring of 1950.

Big DJI Deal!

While we're at it, have a look at how the market performed during the New Deal.  As you can see above, from the 1932 daily closing low of 41.2, it rose to 194 in the Spring of 1937.  That's when FDR tried to balance the budget, and the wheels came off the still-recovering economy.  The market never fully recovered from that blow until after the war was over.

Just for kicks, I put DJI performance from the 1932 low and the 1944 low on a percentage gain scale to see how they stack up.

X-axis is calendar days after the respective lows, running out for six years.

Speaks Volumes, doesn't it.  Even after the 1937-8 kick in the teeth, New Deal performance was still far above what the first few post-war years were able to accomplish.
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Henderson Smack Down?

Over at AB, commenter MG (11/10; 1:24:27 AM)  objects to the way Mike Kimel (and I, I'm assuming) have dissected the data in order to refute Henderson.  I responded to one of his comments like this:

Pearl Harbor Remembrance

By George H. W. Bush

• This is Pearl Harbor Day. Forty-seven years ago to this very day, we were hit and hit hard at Pearl Harbor.
  
  
  • Bush addressing the American Legion in Louisville, Kentucky (7 September 1988), three months prior to the actual anniversary of the bombing of Pearl Harbor (7 December 1941).
  
  
  

Not sure this contributes much to the whole nature - nurture question.

But a hat tip to Silbey either way

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Deep Stupid #2

Pat Buchanan is amazing.

I'm not sure what his point is here. There must be one. I suspect it to be profoundly sinister.*

Here are Buchanan's actual words:

Hitler had never wanted war with Poland, but an alliance with Poland such as he had with Francisco Franco's Spain, Mussolini's Italy, Miklos Horthy's Hungary and Father Jozef Tiso's Slovakia.

Perhaps the stupid wouldn't resonate so powerfully, if I hadn't read this,** by somebody who actually knows what he is talking about, just a couple of days ago.

It came a day after the Gleiwitz incident, one part of Operation Himmler. The latter had German troops dressed in Polish uniforms attacking German emplacements along the border in order to give a casus belli. At Gleiwitz, for example, an SS unit so dressed attacked a German radio transmitter and then retreated, leaving behind dead bodies also dressed in Polish uniforms. The bodies–those of concentration camp inmates–were called Konserve, or “Canned Goods.”

A hat tip to DeLong, who comes down hard on Buchanan, so I don't have to.

If you don't want war with Poland, bozo, it's easy not to have one: if you don't want war with Poland, simply don't attack Poland.

This could also have been categorized under Republicans: All Wrong, All the Time. Those words are synonymous with DEEP STUPID.

Thursday 9/03 Update: In comments, J calls the bloggers at EOTAW hacks. Draw your own conclusions on that score. But this: "(They also ban anyone who refuses to sort of join in the chants as well)" is pretty well refuted by the dialog accompanying this article. In contrast to J, I have been impressed at times by the thoughtfulness and patience with which the EOTAW bloggers and regulars refute the ignorance and foolishness of trollish commentors.

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* Sure. Call me a cynic.
** Please read the entire article, and follow the Gleiwitz incident link.

This day in Presidential Pardons - Jan 19, 1977

President Ford Pardons Iva Toguri, aka Tokyo Rose.

Interesting story, and worth checking out.

Much better than today's other historical pardon.

Jerry Ford - not so bad.