Post WW 2 International Competitive Adjustments
Economic Growth Has
Winners and Loses

Return to Political Economy Book Summaries  2/1/18  Please share!

Analysis by Political Economist Mark Blyth

Quick Notes by Walter Antoniotti

See U.S. Russia, China: Rivals, Adversaries, Enemies?

Post WW 2 Economic Adjustments
Source: Economist Mark Blythh

Prelude

The Why

World Wide Great Depression Made Low Unemployment "the" Public Policy Goal.


 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.

 

2. The Result
 

Profit Margins Stayed High
 as Western business used continuously falling interest rates
 for highly leveraged refinancing causing higher profit.

Western Business Adjusted
 
to a mounting profit squeeze caused by increased flat world AS.
 "Wages fought profit and
Profit Won."

Only U.S. Increasing Demand was available
 
to soak up global savings surplus
 to negate AS > AD. Will continue?
 

3. The Prediction

Resulting Political Turmoil
 will also continue but its effects may be less volatile,
 maybe not.

Fiscal Policy AD Could Increase
 in the form of infrastructure spending
and or helicopter money drops like tax reductions.

Government Debt Guarantees
may allow 2% real 1950's style economic growth.


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

Can Democracy Survive Global Capitalism? 100 min video

   Political Economy Summary

1. The Good

Cold War to 1980
AD > AS

Full Employment Goal =
 Inflation, Debtors Paradise

2. The Bad

Neo Liberal Reset 1980-2008
AS > AD

Business Responded to Inflation
Led to Deflation. a Creditors Paradise

3. The Ugly

Reactions to Neoliberalism 2008-

Sustained Deflation has Winners-Losers
Globalization Failed
Pickett's R > G
Back to Equilibrium with Increased Income Inequality

Structural Causes

Structural Causes to 1980

Strong Unions
Restricted, Rigid Labor Markets
Central Government Strong
Central Bank Weak
Finance Weak

 

Economic Effects
Sustained Inflation
Wages Share All Time High
Corporate Profits All Time Low
Real Value ff Debt Decreases
Inequality Low
 
Structural Causes
1980-2008

Weak Unions
Open Flexible Globalized Labor Markets
Government Less Economic Responsibility
Central Bank More Economic Responsibility
Finance Strong
 

Economic Effects
Secular Deflation
Wages Share All Time Low
Corporate Profits All Time High
Inequality High

 

Structural Causes  2008-

Lack of Bank Regulation

High Leverage

Short-Term Reserves Were in Euros When Dollar Were Required

Academic Economist Under Estimated Economic Effects of Financial Market

Government t Helped Top and Bottom Creating Middle Income Envy
 

Economic Effects
Winners Losers
Debtors Can't or Won't Pay
Deflation Kills Wage Growth
Real Debt Value Increases
Creditors lost as
Real Value of Debt Up But Some Don't Pay
Populist Nationalist Parties
attracted voters with renationalization
and anti-austerity policies.

 

Center Left Parties
in control lost as lower wages and fighting more over less cartel politics blamed capitalism and globalism

Center right parties
 in control blamed immigrants and globalism

Winners and Losers

World's Very Poor and Very, Very Rich Win

Vast Middle of Rich Western Nations
 are Stagnate. The Poor Got Much More! 

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 of this (70% of that 90%) went to Top 1/10 of 1%.

Expansion of Credit to consumers, business and governments  expanded to equate AD with AS.

 

 A Worldwide Threat Assessment From GZERO media

As we noted in the Wednesday edition, the US intelligence community
 has released its latest Worldwide Threat Assessment.

Much of the media focus this week has fallen on
President Trumpís criticism of the US intel chiefs,
but letís begin with the report itself. Here are its key findings:

The Trump administrationís trade policies have damaged US interests
by pushing allies to build new relationships with other governments.

ďAt present, China and Russia pose the greatest espionage and cyber attack threats

ISIS isnít finished.

Climate hazards such as extreme weather are intensifying,
threatening infrastructure, health, and water and food security.Ē

North Korea
ďis unlikely to completely give up its nuclear weapons and production capability.Ē
North Korea has continued nuclear development in some areas
and taken actions that are reversible in others.

Iran continues to support terrorist groups in the Middle East and Europe,
but itís still complying with the terms of the nuclear

See

Mark Blyth explains
Competitive Adjustment in European Market Area
Competitive Adjustment Applied to Trumpism starting at 4 min 15 sec mark

Short Term Politics Versus Long-Term Returns  Video from Prof. Mark Blyth PhD -

Crashed Video and book-review of Crashed:
How a Decade of Financial Crises Changed the World
by Adam Tooze
 Part 1-3 author/editor
Walter Antoniotti

Post WW 2 U.S. Growth Alternate Version