In response to a post here last week showing that poverty fell more rapidly in the fifteen years prior to the initiation of the War on Poverty than it has since then, a commenter asserts that this was because we were "enjoying" the impact of government funded World War II and the Marshall Plan as well as "injection" of money into the economy through construction of the interstate highway system.
The idea the World War II "ended" the Great Depression through some type of Keynesian mechanism is quite dubious but let's review the bidding on our commenter's claim.
Federal spending as a percentage of GDP was averaged 17.8% during the period from 1950 through 1965. Since then, as poverty has remained relatively stable, it has averaged 20.9%.
Let's look at another way. From 1950 through 1965, nominal federal spending increased 77%. Between 1965 and 1980, it went up 399%. From 1980 through 1995, 156%. From 1995 through 2010, 161%.
The post war period was indeed unique. US businesses were largely immune from global competition since the rest of the industrial world had been largely laid to waste. That was not entirely a good thing but it did have positive ramifications for unionized oligopolies like the American automakers. But the notion that it was the halycon era of big government funded prosperity seems wrong.
The commenter says that the chart shows that poverty is hard to eradicate. That is my point precisely. More to come.