March 5, 2021

Letters: Economic Lessons From World War II

Economic Lessons From World War II

To the Editor:

In “The Hope That Flows From History” (Economic View, Aug. 14), Christina D. Romer argued that the United States should continue to use monetary and fiscal stimulus, based on the experience of the 1930s and World War II. But there is an important point to consider in this debate: we are now so weakened financially by excesses that stimulus may not work as the column proposes.

When the Great Depression struck, the national debt was only a small share of gross domestic product. Even at the end of the 1930s’ stimulus, the figure was still well less than half of G.D.P. Further, during the 1920s and 1930s, the nation had favorable balances of payments.

But jump ahead to the present, and the debt-to-G.D.P. ratio is moving ever higher, and we have long had highly unfavorable balances of payments.

The column cited the very high ratio — 109 percent — after World War II, but that probably does not provide a good argument that more stimulus would be acceptable in the eyes of our creditors and holders of dollars. At the end of World War II, everyone knew that much spending had been temporary. In fact, government spending fell sharply after the war, the debt-to-G.D.P. ratio declined significantly and the balance of trade was very favorable — none of which are foreseen at this point.

William H. Kuehnle

Alexandria, Va., Aug. 15

•

To the Editor:

The column argued that a structural mismatch between workers’ skills and available jobs is a small factor in today’s economy and that monetary and fiscal policy should continue to be the key factor in our economic recovery. 

The writer cited the rapid work-force adjustments during World War II, when millions of working men were drafted into the military and other Americans replaced them in factory and other jobs. Today, however, the sophisticated production lines of factories, as well as the technical support needed for many of today’s products, cannot be simplified so that unskilled laborers can make such rapid adjustments.

Just recently, Caterpillar’s chief executive told CNBC that it could not hire enough service technicians in Detroit because of a lack of trained applicants.

In addition, pre-World War II society offered little or no safety cushion for jobless workers. Today, there is less incentive for the unskilled unemployed to seek a higher-level skill when one may indefinitely access some form of government benefit along with temporary or permanent employment in abundant low-wage service jobs to make ends meet. Loose monetary policy and more fiscal stimulus will perpetuate the malaise.

Ed Campana

Pelham Manor, N.Y., Aug. 14

Letters for Sunday Business may be sent to sunbiz@nytimes.com.

Article source: http://feeds.nytimes.com/click.phdo?i=56bb73816c79bdf7aa04b3883b71e804

Speak Your Mind