The Postwar Boom

http://www.futureofcapitalism.com/2012/06/the-postwar-boom

David Henderson, a research fellow at the Hoover Institution, has a fine article up at the Hoover Web site about "the four years from 1944, the peak of World War II spending, to 1948. Over those years, the U.S. government cut spending from a high of 44 percent of gross national product (GNP) in 1944 to only 8.9 percent in 1948, a drop of over 35 percentage points of GNP. The result was an astonishing boom." That boom defied the predictions of Keynesian economists at the time.

Professor Henderson writes: "The bottom line is that after the biggest percentage government spending cuts in American history—the cuts in government spending after World War II—the economy boomed. There are, of course, policy lessons to be drawn from the post-war experience—lessons that we can apply to today's fiscal crisis."

by Editor  |  Jun 21, 2012 at 11:39 am Related Topics:  Government Spending receive the latest by email: subscribe to the free futureofcapitalism.com mailing list