Paul Krugman noticed that World War Two "left America with a big debt — bigger, relative to our resources, than we’re likely to face when the economic rescue is over. We dealt with it."

Why? Krugman does not say. He is simply happy to assert that "big defense spending during the war didn’t somehow make it easier to pay down debt after the war was over."


Krugman’s inner certainty made it somehow easier for me to show that, au contraire, defense spending during the war allowed the USA to purchase the world while it was on sale. No wonder the investment or, in other words, the debt of World War Two, was worth it.

The devil is in what was the debt for, and who it was supposed to be paid back to. That the US government paid US defense contractors with borrowed money it got from US taxpayers was a sort of symbolic calculus during WWII. Relative to these internal intricacies, the result of WWII, that the USA came into political and economic and financial possession of the entire planet, is such an enormous fact that everything else pales in insignificance.

The intricacies of the accounting of who should get most of the pie inside the USA is irrelevant. There was enough pie to give all American indigestion.

Whereas, when Britain had to borrow to the USA to buy US warships (one hundred destroyers early in the war, for example), and other military supplies and services, it was a transfer of sovereignty; the USA took control of part of the economic destiny of Britain. That later sort of debt, from one country to another, can be ruinous, and not just economically.

For example, what brought Argentina down during the twentieth century was not so much debt itself as the fact that it was owed to foreigners. When the foreigners got cold feet the peso collapsed, boosting interest rates even higher. To some extend this is happening to the USA now, because a lot of US debt is owed to foreigners, although this is still mitigated because the US dollar is still the world’s reserve currency ( but a wasting asset, to use military semantics).

Right now the USA is still hell bent on a policy of using much force to get energy from the Middle East, rather than using much more effort to modify its energy needs.

This policy creates another form of dependency on foreign powers, which is just as dangerous as debt owed to foreigners. The habit of gambling twice more to compensate for failed policies (for example invading Iraq, an ally, because one lost Iran, an ex-ally) makes this policy increasingly onerous and unstable.

Now Iraq’s Shiite, an independent part of Iran, come to think of it historically speaking, is ready to cut a deal with Iran, as soon as there will be fewer US troops around, so how much more the USA will have to get in debt for to try to prevent this ineluctable evolution?

Good debt and good taxes would mean, now, to set the country on a path to solve the energy crisis. The later the USA commits to this, the greater the pain. And this pain will probably not be restricted to the USA.

One can compare the contemporary Louis XV style approach of the USA (”Apres moi le deluge” -After me the flood) to the contemporary French approach, which is exactly the opposite: gasoline is three times more expensive in France, and France will be introducing a carbon tax in 2010. This heavy taxation makes the French economy more efficient, hence it got out of recession faster.

France has learned the history taught by an arrogant fool such as Louis XV, and has decided to do exactly what that idiotic monarch decided not to do: have foresight, and act on it.

French students are forced to study history at school for ten years: history is not an elective, and it is rammed into the minds of children as soon as they can read, and again, and again, as they become more intelligent. Thus, the approach to policy of Louis XV is well known to French students. Since this time a literal flood is coming, it’s even easier.

While Voltaire advised Louis XV not to die for a few acres of snow in Canada, Colonel Washington speculated for real estate in the Ohio valley, gun in hand, determined to extend his dominion. Since then Washington, the city, has been best at wasting the opposition and extending dominion. But it was against weak opposition, and with tremendously strong allies.

German forces late in 1918 were not what they were in August 1914, they were beaten. In 1944-45, the maximum of 64 American divisions engaged in Europe constituted a minority, even on the Western front. In the East, Stalin had 600 divisions (and 26.6 million dead). The French army was one million. When attacked by elite Nazi forces during the Battle of the Bulge, it was ordered to evacuate Alsace by Eisenhower. But the French army refused tor surrender one inch of ground . A frustrated Ike later cut off fuel and ammo to the French. Still, they got to Austria first. The British army was nearly three million.

The study of history shows that nothing replaces the correct policy, early on.

The tragedy of the USA is that its successful history is that of expansion and using force onto others, unabashedly, to maximize profit. This sounds arcane, but transpose this wisdom to the health care battle, and you have got Dr. Ezekiel Emanuel.

And the worst is that wisdom of profit violence worked, and could not have failed to work. Considering the initial conditions of the USA.

Now, all great empires were built by force, right. But, in the case of the USA, a single method to solve all problems was thus established, during the last four centuries, and it has become most of the history most Americans will ever know. Hubris became how the West was won. It worked. But now it’s failing, and most Americans do not have the eyes in their heads to see it is.

Europeans have learned though, that to draw such a lesson from history, that hubris is your friend, is a mistake, and a most common one. More humility, prudence, knowledge, appreciation and more foresight are to be preferred.

Not all taxes, and not all debt are bad. More crucial is what the taxes and investments are for. If they are for progress, they are good. If they are for bankers’ bonuses, they are bad.


Krugman, although going in a well deserved vacation, came back to the charge: he said that commenters objected that "didn’t the fact that the rest of the world was in ruins help?

Krugman does not think so; “Let me explain why [the] objection [is] off point… the war left our competitors in ruins? Well, yes it did — but it also left our markets in ruins. This goes back to stuff I wrote way back, about the fallacy of thinking about a country as if it were a company; basically, there’s no reason to believe that economic growth in the rest of the world necessarily makes us poorer."

Nor, would I perfidiously add, is there any reason to believe that economic growth in the rest of the world necessarily makes us richer.


Let me make an African observation: when the lion is weak, even dogs can eat it. The weakening, and then destruction of the lion is profitable, although it goes to the dogs.

Before going back to some carpet bombing of mine with facts of WWII, let me make a very refined observation that is little known and that any serious economic theory will have to take into account.

The Fourteenth century saw several (related) calamities in a few years, including famines, ecological collapse, severe climate cooling, the start of the 478 years "100 years" civil war between Paris and London, Normandy and Anjou, plus the "plague". Whatever the "plague" really was, it killed about half of Europe. People were left twice richer. Hence an economic boom. So much for the more, the merrier.


Contrarily to what Krugman implies, the ruinous aspects of the competitors’ markets was an enormous advantage for the USA, after WWII. European lions laid in ruins, while American dogs had full stomachs. No explanation really necessary.

The USA was left with huge profits, in part just as Goldman Sachs, having reduced its competition, thanks to the US government, is making larger profits than ever. Let me go into World War Two specifics.

Did the US markets disappear at the end of WWII? No. Just the opposite. One has to distinguish having a destitute patron, and having no patron. Actually, yesterday’s lord, if destitute, can be made into a dependent. WWII expanded US market enormously. Let me explain.

For example, when the French decided to build a nuclear power industry, they bought the technology from Westinghouse, a US company. Since they built many nuclear plants, it was a major deal, which transferred back a lot of wealth to the USA.

Let’s dig a bit deeper in that example. The French physicist (and Nobel prize winner) Irene Curie discovered the principle of the nuclear chain reaction (generally misattributed in "Germanic" countries to other people who contributed later). Patents on nuclear energy were deposited as early as 1937. When the Curies alerted the War Minister to the military application, making bombs, the patents were withdrawn, and a military program started. After adventures that put James Bond to shame, the program went on as the Manhattan project.

The economic point is this: the French were way ahead in nuclear energy. Still because of WWII, they were forced to buy massively US technology 30 years later. The same holds for jets. The first jets were Europeans, just as the first helicopters were French (so was the first plane).

The Germans were way ahead with jet aircraft: the swept wing Me 262 was 5 years ahead of US technology (even though the Americans could study captured Me 262s). Still, Germany became dependent upon American jets, for decades. It is only now that, thanks to EADS (including Airbus) and Arianespace that Germany has become independent again in aerospace. EADS is now the world’s largest aerospace-defense company (in sales).

Sweet for the first country to sink a battleship using a cruise missile, or to use rocket interceptors (Heinkel 163). By the way the fancy electronic in that drone which sank that big ship came as no surprise; (basically) German scientists invented the first transistors, as early as 1925 (the American "discovery" of the transistors was more than 20 years later and was proven, scholarly, and judicially, to be a copy of the German germanium transistors and their patents). Another German sweet vengeance was that 100 Nazi rocket engineers were working on Von Braun’s Apollo moon landings.

And so on. None of the huge transfers of American goods and technology would have happened, in the aftermath of WWII, but for WWII.

BTW, the captive markets that were the Portuguese, Spanish, Dutch, French and British empires, plus the Commonwealth, French Algeria, and enormous Franco-British protectorates over the entire Middle East, could basically leave the USA without markets. Pakistan would not have become a Muslim fundamentalist American puppet/client, if not for the collapse of the Raj. Actually, there would have been no Pakistan. A mighty Great Britain would have kept Gandhi’s Hindu nationalism under control, and thus the Muslim reaction.

After WWII, the USA acquired the entire planet as a market, except for the USSR. The patrons were desperately poor, but they were extended credit by Uncle Sam. Then they became dependent upon Uncle Sam, exactly, and in all ways, as serfs became dependent upon their Lord in the Middle Ages. This is where the "Anti-Americanism" Obama does not understand at all, comes from, deep down.

All of this was made possible by the crafty refusal of the Roosevelt administration to help the French republic as she set herself the mission of destroying Hitler.

Instead countless US plutocrats transferred technology and directly invested in Hitler’s Reich. in 1939, France found herself at war formally with Hitler and Stalin, both helped, managed and financed by many of Uncle Sam’s plutocrats. Often when I write this, the next thing which happens is that I get banned from"left" websites, who seem to all too often be all too friendly to plutocrats. Although the history I mention is all easy to prove (however, I know of no book putting it all together).

But, of course, many Internet commenters, in the USA, find culturally refined to object to “conspiracy theories”. Little do they know that most of history’s tragedies were the result of conspiracies.

On my sites, I studied in depth if that crime was committed with foresight or not, and its extent. Nuremberg established that some of the Nazis had conspired to make a war of aggression. They were hanged. My question is whether the conspiracy was much greater. And the answer is yes.

In any case, the "American Century" was made possible by WWII. The effect was to make the world the captive market of the USA, fed by US credit. As WWII fades away, so does the "American Century". Resistance is futile.

Patrice Ayme.

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  1. Paul Handover Says:

    Just an anecdotal comment. I was born in London during 1944, too young to remember the event first hand. But I do remember rationing that went on until just before my 10th birthday. I haven’t seen any economist regard that decade in Britain after VE day as a recession but it surely was. It was incredibly tough for most citizens.
    I wish I understood more about why so little was done to rebuild Britain (by the USA) after a significant sacrifice by so many but your Post may suggest the answer – it stopped a country that is very good at innovation from competing on the world arena for many years.


    • Patrice Ayme Says:

      I totally agree, Paul. Europe was not just in recession. Even the expression “deep depression” is not enough to describe what happened. Entire urban areas of Britain were devastated. Most of Europe was devastated, and economically stopped. France at some point had just three functional railroad engines… Survival was the objective. Germany knew semi starvation a few years after the Nazis went down.

      I gave the example of Europeans leading in aircraft manufacturing, or nuclear bombs, or transistors, and insisted on France and Germany, which were more drastically advanced in these domains. But Britain beat the Reich at the technology game, by mass producing some of the best planes in the world. Although the Germans were slightly better at jet engines, the British Meteor was flying by 1945, and the USA had nothing comparable. American strategic studies showed that if Germany had been able to mass produce the Me 262, she would have regained air supremacy over Europe. The Americans could shoot the occasional Me 262 when it was landing, with their Mustangs, but they were hopelessly outclassed. Hence the British answer, the Meteor. The bottom line is that, but for Hitler’s insanity, and the noodle minded German generals, Europe would have dominated in jet technology, electronics, nuclear, etc.

      Of course, British radar was the best, and Britain led in computer and code cracking efforts. Britain also served as relay in the nuclear bomb effort, by sheltering, and boosting the French nuclear weapon effort, before the later headed towards the safer “Manhattan”.

      All countries are selfish. There is a difference, though, between the USA and Europe. Britain, France, Spain, Italy, Germany, the Netherlands, and surrounding areas were part of the same polity, or influenced by it, and, basically belong to the same philosophy (fascism in Germany was an accident, clearly, and in Russia, too -because of the Mongols in the later case). Thus we are truly dealing here with just two countries: Europe, and the USA. Moreover, the USA is the outgrowth of a European colony.

      Hence Europe has to start acting as the senior partner she clearly is. Europe also has to keep a closer eye on American manipulations, inexperienced exhuberance, youthful selfishness, and hubristic plutocracy.



  2. nightman1 Says:

    OOPS! It’s THIS post my comment belongs to, not the one questioning the existence of an American left. Herewith my comment:

    I found the above very interesting. You have much in common with my favorite author, Gore Vidal, specifically: 1. you seem to have a wide knowledge of history and the mores of different societies; and 2. you are aware of the existence of an international plutocracy and not afraid to speak of it (while in usual discourse in the USA we are all just folks, whether we have too many homes to keep track of–or no homes at all).

    As far as I am able to judge (which unfortunately is not very far!), you also seem to understand international finance. I am 61 years old and for 40 of those years I have wondered exactly how the USA came out of WWII as Master of the World. You seem to have explained this above. I will re-read it and see if I fully understand what you said.

    I would love to hear you comment on why the USA had an economy in the 1950s and ’60s that permitted one working person to support a whole family–across a wide spectrum of income levels–, while now we have an economy that requires both spouses to work, and they still fall behind. Was the US prosperity in the ’50s and ’60s just a temporary echo of the the US’s coming out of the War financially paramount?


    • Patrice Ayme Says:

      Nightman1: thanks for the compliments. Your last question is excellent. Switching from the one spouse to two spouse model happened throughout the Western world. Feminism has some to do with it. The decrease of the West’s comparative advantage has also something to do with it. Advantage relative to the rest of the world, and advantage of the urbanites over the peasants and blue collar workers (when there was still an important peasant and blue collar population).

      Only much more and faster technological progress will allow to regain some advantage, in combination with strict ecological accounting, including a WORLDWIDE CARBON TAX.



  3. THIS GUY MAKES ME FEEL IGNORANT « Nightman1's Weblog Says:

    […] https://patriceayme.wordpress.com/2009/08/30/where-anti-americanism-comes-from/#comment-914 […]


  4. Paul Handover Says:

    Nightman, it’s not only the US that has changed in the way of supporting a family. In the UK it also requires both partners to work and even kids out of school still living at home( they can’t afford to leave home) often need to contribute to the family overheads.

    It’s items like this that show how lost we all are: “Robert Benmosche, AIG’s new chief executive, will receive annual pay of $7m in cash and shares and be in line for a bonus of $3.5m a year, the government-controlled insurer announced on Monday. Source: Financial Times, August 17th.”


    • Patrice Ayme Says:

      Per the nature of the exponential function, wealth tends to grow exponentially. Some countries, and chief of all the USA, but not only the USA, have extracted national advantage from letting their plutocracies run wild. They brought back a lot of prey. But now they are out of national control, and presents no national advantage anymore. Time to crack down.



  5. Rob H Says:

    Around 1963 we began to see inflation. Why? The banksters wanted more money than the prior stable times allowed. First visible signs of NWO

    As always follow the money

    Also they were intent on breaking up the stable household (enter feminism). Through inflation both parents HAD to work which suited the banksters model perfectly. The effect on children was/is devestating.


    • Patrice Ayme Says:

      Right on, Rob!
      The degeneracy of children education I will touch on in my next essay to come out tomorrow. It is not an accident, but a more or less concious drive at weakening the youth, by making them dumb, in the hope of avoiding another rebellion, May 68 style…. (“May 68” was worldwide, from Prague to Berkeley…) Hence why US education seems to be collapsing, an area where Obama nice efforts will come to nought, considering the local cuts…


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