Post WW2 International Economic Competitive Adjustment and the New Normal

Post WW2 International Economic Competitive Adjustment and the New Normal
Summary of Short Term Politics Versus Long-Term Returns Prof. Mark Blyth PhD - Interpreted by Walter Antoniotti
Return to Political Economy Book Summaries Updated 4/13/18 Please link to, use to educate and

Post WW2 pent-up demand increased AD increasing US wages and Profits.
The resulting high inflation pushed interest rates up followed by a 30-year decline..
Profit margins stayed high as Western economies used continuously falling interest rates for highly leveraged refinancing and higher profit.
This reprieve gave Western business time to adjust to a mounting profit squeeze caused by increased flat world AS. Wages vs. profit and Wages lost.
With only the U.S. increasing demand, a global savings surplus caused AS > AD. This will continue.
Resulting political turmoil will also continue but its effects will be less volatile allowing
Fiscal Policy to return in the form of Infrastructure spending and or helicopter money drops like tax reductions.
Guaranteed Government debts may allow 2% real 1950's economic growth.

See U.S. Post WW 2 Adjustments Part 1 Part 2

Cold War to 1980 AD > AS	Neo Liberal Era 1980- 2008 AS > AD	Three Problems of the AS > AD Era in a Democracy
Full Employment Goal led to Inflation, Debtors Paradise	Business Responded Leading to Deflation and a Creditors Paradise	1) Sustained Deflation has Winners and Losers	2) Globalization Failed	3) Pickett's R > G and Back to Equilibrium

Structural Causes	Structural Causes	Losers	Winners	Winners and Losers	Historical Long Run? Return on Capital Growth R > Growth rate of the Economy G. 90% of Income Gains Went to Top 1% and since 2012 most (70% of that 90%) went to Top 1/10 of 1%. Credit to consumers, business and governments expanded to equate AD with AS.
Strong Unions National Markets Central Government Strong Central Bank Weak Finance Weak	Weak Unions Globalized Markets Central Government Weak Central Bank Strong Finance Strong	Creditors lost as Real Value Up But Some Don't Pay	Debtors: Can't Wont Pay as Deflation Kills Wage Growth and Increases Real Debt Value	World's Very Poor and Very, Very Rich Win Vast Middle of Rich Western Nations are Stagnate
Economic Results Sustained Inflation Wages Share All Time High Corporate Profits All Time Low Inequality Low	Economic Results Secular Deflation Wages Share All Time Low Corporate Profits All Time High Inequality High	Center Left Parties lost as lower wages moved voters to right leaning parties	Populist Nationalist Parties: attract voters with renationalize and form anti-austerity policies