‘Mass Destruction of Capital’ as a Liberal Economic Panacea

The United States was a manufacturing powerhouse during that era [1945-1973], the other great making nations — Germany, the United Kingdom, Japan — having been bombed to smithereens and their work forces literally (literally, Mr. Vice President!) decimated in some cases. The numbers are horrifying: 9 million dead Germans, 3 million dead Japanese, more than 20 million dead Soviets. There were only — “only” — a half million dead Britons, but the country’s industrial infrastructure was ruined. Without failing to appreciate the sacrifice of those who gave their lives, the position of the United States — its cities unscathed, its dead amounting to less than three-tenths of 1 percent of the population — was enviable.

One can look back at the immediate postwar era and cherry-pick whatever policy one likes, crediting it with the generally satisfactory state of affairs in those years: the relatively high tax rates and strong unions of the Eisenhower years if you’re a progressive, the relatively small public-sector footprint and stable families if you’re a conservative. The desire to return to that state of affairs is alluring for some. Writing in Salon this week, Conor Lynch is positively wistful: “The mass destruction of capital around the world created a much more even playing field than before, while also placing the United States at the forefront of the world economy.”

“Destruction of capital” is a cute way of describing the slaughter of some 80 million people and the burning of their cities. There were good policy decisions and bad policy decisions in the postwar era, but the fundamental fact of economic life on this planet during that time was that humanity was rebuilding after the single worst event in its history, a conflagration that killed more people than the Mongol conquests and the Chinese civil war combined.

When our old friend Frédéric Bastiat described the broken-window fallacy — the nonsensical belief that we can make ourselves richer by destroying wealth and thereby providing ourselves with the opportunity to replace it — he could not have imagined how many windows would be broken less than a century later. American involvement in that war was necessary, but it did not make us any better off in real terms, despite the persistent myth that the war led us out of the Depression.