How to grow the economy

The voters’ biggest issue in November is likely to be the economy. Neither party has developed a solution to the current slow growth/stagnation. Officially GDP growth is somewhere around 2% per year. For a large portion of the population, desperately looking for well-paid jobs – or any job – it might as well be zero.

Commentators point with envy to the Chinese economy, which this year will achieve over a 7% growth rate. They forget that America has done far better.

Between 1940 and 1945 the United States doubled its Gross Domestic Product. From 1942 through 1944 we achieved growth rates in excess of 20% per year.

The common put down on such exceptional performance is that “it was war” – as if a war situation somehow produced economic miracles. In fact WWII economic development was neither spontaneous nor haphazard. It was planned; it involved close cooperation between industry and government; it included extraordinary innovation and technical excellence as well as outstanding achievements by labor and management. With victory in sight war production was deliberately choked off and civilian production reinstated in an almost painless and nearly instantaneous conversion.

As our current approaches to stimulate our economy show disappointing results it is appropriate to review the WWII economic model and its potential application to our present situation.

It worked as follows:

  • The U.S. government, over the course of the war, borrowed up to 140% of GDP from U.S. citizens and institutions.
  • Part of the proceeds was used to recruit, care for and pay a military force of up to 12 million. Pay was “minimum wage” but accumulated over time.
  • Most of the balance went to pay for new infrastructure, armaments and supplies. Fixed price contracts with American corporations covered both plant and deliveries (and built-in 8 % profit).
  • Manpower shortages required recruiting and training a new industrial workforce, 40% being women with no previous experience. New skills were rapidly acquired and performance was outstanding.
  • Civilian production was curtailed but not canceled, helping the post-war transition.
  • The bulk of wages to both civilians and soldiers were saved, providing for a demand boom after the war. Increased tax revenue rapidly reduced the national debt.

All this occurred against a background of constant redesign and innovation due to front-line demands. Advances in product design, technology, management and logistics were immense.

The WWII industrial build-up was not a “patriotic miracle” triggered by Japanese attack. It involved friction, mistakes as well as blood, sweat and tears. Above all it was a process, willed, planned and managed. As such it can be duplicated and scaled in both size and duration.

Our situation now is similar to that of 1939-1940. Our economy is still in a near-depression; industry is decimated by off-shoring, with skills, know-how and technologies lost; unemployment/underemployment is over 20% and government spending vastly exceeds revenue. We need a “WW II-type” economic take-off – and in order to achieve that, we need to know what made it work.

First there was a goal: victory, which meant national survival.

Second were the strategies, requiring a given amount of arms and supplies to be designed, produced and delivered.

Third was the cooperation between government, industry and people to achieve the national goal according to the chosen strategies.

Finally was the necessary material condition: this was an American effort, by American citizens, in the interest of the United States, paid for in American dollars spent in the U.S.A. Nothing was “outsourced”. We did it all.

If we can agree on our next national goal, we can do it again.
Frank Shannon served in the U.S. Army, was an engineering/operations manager for AT&T for 27 years, was the owner of a small manufacturing business for 23 years, served as Colorado Chair of the Coalition for a Prosperous America and moved to Mesquite in 2013.

Born in Poland, Jacek Popiel was educated in Africa, Canada, and the United States. He speaks five languages. His career spans military and international business development in the Soviet Union, Eastern and Western Europe, North America, and Japan. He is currently a freelance writer and political consultant. His book “Viable Energy Now,” grew out of his military and international business experience and his professional involvement with energy issues.

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