Economic Prospects New Labor Forum • 135 pression. More specifically, the Depression ended thanks to a huge expansion in deficit spending by the government to finance the war effort. This meant that the government was in-jecting more money into the economy to re-cruit soldiers and to build weapons than it was receiving in tax revenues. The Vietnam War offers a similar, if some-what less dramatic, example. Vietnam was a horribly destructive imperialist venture. But the deficit spending to finance the war pushed the unemployment rate below 4 percent by the end of the 1960s. Employers faced labor shortages as a result. To attract the workers they needed to maintain their business operations, they were forced to raise wages, improve workplace con-ditions, and reduce job-market discrimination against minorities. Reflecting on these and related experi-ences, some of the most astute observers of the U.S. economy over time have argued that large-scale military spending is a necessary prop to
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This note was uploaded on 11/07/2011 for the course ECON 104 taught by Professor Dolenc during the Fall '08 term at UMass (Amherst).