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