Left-leaning economists often look back at the 1950s nostalgic. For example, Paul Krugman and Thomas Piketty longed for the 1950s, when the income and wealth gap between rich and poor was smaller than it is now. It is true that people at that time were not as wealthy as they are now, but what does it matter? Equality in suffering is better than inequality in prosperity.
Robert Kuttner, an economic reporter who often writes for the Economic Daily New York Review of Books, Let them do better. In an article titled “Bringing the Supply Chain Home” published in the magazine on November 18, he missed the days of national economic planning during World War II. In those days, our true prosperity went far beyond recovery from the Great Depression. President Biden has enough determination and popular support to bring us back to that glorious era.
I am not exaggerating.This is Kutner’s Say:
The Second World War was an emergency and required full economic mobilization. In response to the war, the US government proposed an unprecedented comprehensive economic planning system. The government requisitioned key materials, implemented wage and price controls, and underwritten the establishment of war production factories and the purchase of a large number of weapons… War experience shows how the planned economy can use the market economy (with limited government policy tools such as subsidies, tax incentives, and moderate deficits). Of the untapped economic potential. However, this kind of government intervention is far from socialism: contractors are mostly private companies, and war is a wealth for them.
Robert Higgs has pointed out the error in the concept of “World War II prosperity”, but this is not what I want to emphasize, so I will just talk about it briefly.As Higgs Say, “If a country allows 11 million people to perform military service and the number of unemployed drops by 8 million, then this performance does not represent true prosperity.”
Kutner himself admitted: “No civilian cars were produced between February 1942 and October 1945, because the car factory was transformed into the production of tanks, jeeps, airplanes, and artillery.” this Should we want to come back?
Of course, an economy geared towards wartime production can produce a large number of tanks and aircraft. Soviet Russia did the same, but this is not a sign of economic success. However, as mentioned earlier, the main topic I want to discuss here is not the economic fallacy in Kutner’s argument. On the contrary, the kind of national plan he supports depends on treating other countries as rivals. Instead of seeking peaceful relations with foreign countries on the basis of international division of labor and cooperation, mutual benefit and win-win, it is better to emphasize the development of the national economy and minimize dependence on foreign commodities.
Kutner made this clear: “Contrary to Ricardo’s concept of competitive advantage, many countries have actually successfully used subsidies and trade barriers to create technological capabilities and create more wealth over time. Just like many economic historians As pointed out, countries such as France and Germany, as well as other countries in East Asia, have established their own industries through extensive government assistance and imposing tariffs on foreign goods.”
The result of restoring trade barriers will be to make war more likely, and Kutner’s extreme hostility towards China is not encouraging. He might answer that this need not be the case. Will moving towards national self-sufficiency reduce rather than increase the chances of war because the country will turn inward rather than outward? The answer is not convincing: countries that believe that certain resources are necessary for their economic expansion will have the incentive to forcibly seize these resources if they cannot gain security through trade. Kutner was very optimistic about the US economy during World War II, but he did not mention that the rise of the entire European economic plan in the 1930s was a period of militarization and war buildup.
There is another disturbing feature of Kutner’s favorite national plan. In such an economy, everyone is focused on one goal to achieve the goals of the national plan. To achieve this goal, it is necessary to abandon personal valuation and impose the values of planners on society.This is hardly conducive to the freedom of speech that is unique to a free society; this is actually Hayek’s The road to slavery, Economic planning leads to totalitarianism.
I doubt that Kutner will be willing to pay the price. He compared the limitations of the planning in the United States with the more comprehensive planning in China. In my opinion, this seems to be a hope that we can move in the direction of China. But please judge for yourself: “China is a Leninist one-party country. In World War II, the United States was a command economy, although it did not come close to Beijing’s total economic and social control. Today, the power of the US government It is much more limited than during and after the war. Washington can provide subsidies and incentives, and can purchase domestic goods under the “Purchase of American Goods Act” to require publicly funded projects. But even if the recommendations of the supply chain report take effect, the United States is far from World War II There is still a long way to go to command the economy, let alone the degree of control in China. The more Biden’s industrial policy affects the freedom of American powerful multinational companies to purchase supplies from anywhere, the greater political resistance he will encounter .”
How unfortunate, we cannot go all the way back to the glory and glory of the World War II economy! But Kutner wants us to give it a try.