Hugh Rockoff on what the US learned from WW1 Post author By Kevin O’Rourke Post date October 8, 2014 The latest on the VoxEu series on the economics of World War 1 is available here. Categories In Economic history 1 Comment on Hugh Rockoff on what the US learned from WW1 ← IMF 2014 Triennial Surveillance Review → TASC Budget 2015 Briefing One reply on “Hugh Rockoff on what the US learned from WW1” “Policymakers might have drawn the conclusion from World War I that deficit spending combined with an expansionary monetary policy had propelled the economy toward full employment – a lesson that would have been enormously valuable in the Depression. ” [Comment supported with illustrations in the article] “Although lessons about the effectiveness of monetary and fiscal policy could have been drawn from the war, economic theory was not ready. A few prescient economists recognised the role that had been played by monetary and fiscal policy, but the convincing work of Keynes and Friedman was still in the future.” This article is evidence that the New Deal was not the only case where combined fiscal and monetary stimulus was successful in creating full employment. Why is such historical evidence being ignored and dismissed in the Eurozone (not Europe, the UK being the clear exception). Is it deliberate and collective amnesia on the part of policy makers, particularly Germany. Has the 1930 been such a traumatic experience for Germany, that she is still unable and unwilling to look at that period and rationalise its lessons objectively. On the face of it Germany appears only to decry the inflation, that as I understand it occurred in the late 1920s and immediately after WW2 (to be almost an event of war). Is the root cause of the current (6 years and continuing) Eurozone policies of inertia is the failure within Germany to study economic history, particularly that of the 1930s and the earlier WW1? [Like a person who sees the awfulness of another’s death from cancer, but fails to make the connection between that death and the deceased lifelong smoking addiction.] Also interesting is the ‘Merchants of Death’ section, commenting on how wealthy industrialists and financiers promoted war to benefit their pockets, even though the smoking gun of corruption was difficult to find. Well, financiers have not changed their behaviour have they! Comments are closed.