Current U.S. Political Economy Controversies

1. Why is Poverty Controversial?
2. Is Income Stagnation Serious?
     
3. Is Politics About the Money?
4. Worst 20th Century Decade Was?
5
. Criticism of Modern Capitalism


2C. Is the Current Dissatisfaction Explainable?

What Happened

American business faced little competition for twenty-five years after WWII. Companies and workers enjoyed extraordinary economic wellbeing because Great Brittan, Germany, and Japan had lost much of their industrial base and could not compete.

Then the OPEQ oil oligopoly became successful and pushed up oil prices. Foreign manufacturing competition especially from Germany and Japan, increased. America's industrial giants, unions and governments were slow to adjust which lead to less profitable companies known as the Rust Belt.
Eventually London would develop a very competitive financial industry.

How would America compete with Japan and Germany? How would Wall Street compete with London?  Then many Asian countries grew their manufacturing industries.

American Executives maintained their profits and high paying jobs by cutting wage and product quality though competition from overseas made this more and more difficult. Unions leaders also wanted to maintain there high paying jobs so they encouraged member givebacks and having replacement workers come in at lower wages. Then companies moved work overseas. Trade agreements help some US companies but many were unable to compete with foreign products. Wages stagnated but profits remained high.

Workers
facing a lower standard of living began using credit cards to compensate for wage loses. Then banks changed the name of home improvement loans to home equity loans so  stagnate wages were again compensated for by spending accunulated equity.  Spend now rather than build a retirement nest egg. Retirement would be delayed.

Financiers increased demand for their services with exotic products such as Derivatives and Credit Default Swaps. Politicians passed laws needed for all kinds of creative financing. A few saw disaster coming but few listened. Those that did made a lot of money.

Politicians
bought votes with expanded Social Security, Medicare, and an expanded Safety Net for the poor...  
The Republicans catered to conservatives desires for less regulation and more military.  Democrats catered tom liberals with expanded home ownership for the poor with expanding income credits and more fools gold known as college education for everyone.

See Economic Normality 1945-2015

 

 

The Result

Many Americans are better off. Many Older Americans have been pulled out of poverty by Entitlements SS, Medicare, Medicaid and an expanded safety net. There has been a dramatic post WW II increase in wealth.  Children are better off because many childhood deseses were cured  as was polio.  Seat belts, bike helmets, and school transportation improvements all help keep children safer.  Many baby boomers received an inheritance that was much larger than that received by their parents.

Dissatisfaction with capitalism politicians, educators, and business resulted because previous increases in the standard of living were not sustainable. Debt increased for all parts of society but the federal government got the most static because some of the money spent was for the other guy.

The last Great Dissatisfaction was caused by financial liquidity problems at the end of the 1920's. They were caused the Great Depression which ranked first among our recessions required federal WWII debt to cure the economy. WWII solved the problem of Fascism but all the debt accomplished little as we were left with Communism and the Cold War. The debt was never paid back because GDP growth eased the refinancing cost. Recent Federal debt was not for war but to make life more enjoyable. That is better than war debt but...

Fear that economic growth will not make current and future debt easy to refinance has people apprehensive. Will productivity improvement resulting from digitally educated Millennials create the U.S. monopoly power required to compete because The World Changed and Good Jobs Disappeared. They fear Stagnate Median Income Will Hurt Our Children.

Predicting the Future
Politicians will not act until the expense of carrying an ever increasing debt has a political cost. Many feelthe dollar will remain in demand and keep interest rates in the US low because the economies backing the Euro and Renminbi will not be able to compete any time soon. Voters are receiving too a large benefit from annual deficits and want only expenditures going to the other guy discontinued or lowered.

Millennials are charged with future solutions and as the first digital generation, they just might do it by using technology to increase production and demand for US goods. Educating the Class of 2034 will be the key.

With GDP increased the relative size of all U.S. debts and more importantly their interest cost could be as usually, minimal. If not, expect inflation because of federal government money printing will lower standards of living for many as the real value of pensions and safety nets are reduced.
And the Answer Is?
Please e-mail suggestions antonw@ix.netcom.com

Recent U.S. Decades Ranked by Problems
The
19th Century Ended with Monarchs in Control of Europe, 
Government Social Responsibility Growing and Increased US Immigration.       

Decade Grade

Terrible 
Events

Bad 
Events

Not Good Events

Rest of the Story

1930-39
1A
Great Depression
Dust Bow
l
 
 
  Keynes wins battle with classical economists
or did he?
1940-49
1B
War II4  

Cold War5

Marshal Plan rebuilds Europe helping U.S economy. Truman Doctrine hopes to contain
fears about communism.
1910-19
3A

WW I4
Flu Pandemic

Measles3

 

Labor Unrest
Red Scare

Progressive Era continues as US slowly accepts social responsibilities including hookworm  parasite elimination which increased southern worker and education productivity.
1960-69
3B

Vietnam War
4 Assassinations
Social Unrest


Cold War
4  

 

 
War and Segregation Turmoil 
dominated the decade.
1950-59
5

Korean War4
Asian Flu

Polio 
Epidemic
3 

Cold War5
Race Turmoil

2 Small Recessions 
Red Scare

Economic Expansion grew the middle class.

2000-09
6

 

Two Wars4
 Recession

Terrorism

Voters accepted Two Tax Cuts and
Medicare D expanded increased federal debt.
1900-09
7A
 

Social Unrest
Sever Recession

Yellow Fever Epidemic3 

Progressivism began a movement away from Oligopoly Power toward Public Social Responsibility.
US Yellow Fever
3 eliminated.
1970-79
7B
Stagflation   Watergate
2 Oil Crises
Iran Hostages
Elderly were Hurt by Inflation 
and an Inadequate Safety Net.

1980-89
9
 

 Recession
AIDS
3  

  Ronald Reagan Cut Taxes. Deregulation Era Begins,  Middle Class Wages Stagnate, Home Equity Loans Replace Home Improvement Loans, Government Debt and Future Liabilities Exploded.
1990-99
10

AIDS3  

    Flat world free trade continues middle class plight. 
1920-29
11
   

Small Post 
WW I Recession

Economy expanded as Wall Street and
Business Helped Rebuild Europe.
2010-14
?
  Great Recession ended Quickly as Government Printed What Could Be Money, Health Care Expanded, Many Already With Government Subsidized Health Insurance2 abhorred changes.

Given Fewer High Problem Decades, Why Are People So Apprehensive?

Current US Political Economy Controversies Explores This Question.

1The devastating effects of wars on the human condition make them the most terrible event. The devastating effects of unemployment on the human condition make it the second most terrible event. Prepared by Walter Antoniotti  2Company Paid Tax Free Health Insurance, Medicare Over Budget, Veterans Health Care, Medicaid, Hospital Must Help Uninsured with Cost Paid by Society

Send Suggestions to antonw@ix.netcom.com   more footnotes on page 2
    Visit 20th Century Decade Evaluation

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