Was the U.S. Economy Better Because of World War II? Eller Research Finds Surprising Answer
Dec. 17, 2019
New research on the economic impact of World War II by Price Fishback, Thomas R. Brown Professor of Economics in the Eller College of Management at the University of Arizona, was featured in Vox on November 12 and Inside Tucson business on January 3.
The article written by Fishback notes that during the war the U.S. became the “arsenal of democracy,” when Americans produced enough material goods to raise real GDP by 72 percent. The U.S. was also “the most likely country to have experienced an economic stimulus from increases in spending because so little of the war was fought on American soil.” So it’s no surprise that the general consensus for decades has been that WWII was a fiscal stimulus.
But were Americans better off during the war than they were before it started? Research by Fishback and other economic historians suggests they were not.
Fishback finds that the “amount consumed per person was lower throughout the war than it was in 1940 when the economy was still climbing out of the Great Depression.” Although more goods were being produced, most of them were going towards the war effort.
“The U.S. would have been much better off economically had it never entered the war,” he concludes. “The world economy would have been vastly better off had the war never started.”
Fishback joined the Eller College of Management as an associate professor in 1990 and was appointed the Thomas R. Brown Professor of Economics in 2010. His research area of interest is the political economy of Roosevelt’s New Deal during the 1930s, examining both the determinants of New Deal spending and loans and their impact on local economies throughout the U.S. He also works on state labor legislation during the Progressive Era, the American Economy during World War II and changes in agriculture in response to climate, government policy and technology.