Economic Strategies of the United States of America since the 2nd World War

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EconomicStrategies of the United States of America since the 2ndWorld War

CourseInstructor

CorseTittle

EconomicStrategies of the United States of America since the 2ndWorld War

Economicactivitiesof a countryarealwayspinnedunder somepolicies,theoriesandleadingeconomicpolicies.Thepoliciestendedto changedepending on theperiodin thehistorydue to a differencein thecircumstancesat thatparticularlyperiod.Manyfactorsmakeitimpossibleto usethesametheoreticalpoliciesin drivingtheeconomicdemandsandgoalsof a countrythrough time.Forinstance,thepoliciesof the19th centurycould barelybe usedto drivethegrowthof theeconomyin the21st century.First,thelevel of technological know-howandexpertise has changedand,hence,productionandprocessing of goodsandservicescannot becompared.On theotherhand,populationkeepson growingand,therefore,otherchallengesfacethegovernmentdue to theincreasein thelevel of unemploymentacross thegeneralpopulation.Politicalcircumstancesandtheforeignpolicyof theUnited States alsodetermineits economicpolicies.Also,as a leaderin thepoliticalandeconomicscene,theUnited States is facedwith yetanotherproblemsince theyhaveto spendextraamountin ensuringthatthepoliciestheysetare favorableto avoida majorworldeconomicshow.Policymakersarefacedwith a milestonein ensuringthattheeconomicandpoliticalstrategiesfavora majorityto ensureprosperityi.GeneralOverviewInthe1930’s, theUnited States of America wasfacedwith thegreatdepressionof the1930’s. Thebirthof the1930’s greateconomicdepressionwascausedby thecollapseof thestockmarketat Wall Street. Theeffectswerefeltworldwide,andtheeconomiceffectswerefeltin almostthewholeworldby both therichandpoorcountries.Thegrossdomesticproductof theentireworldfellby a fifteen percent margin.Thiswasverydetrimentaland,in fact,marksthegreatesteconomicdepressionof the20th century.During theperiod,therateof unemploymentin theUnited States roseto a highof twenty-five percent. In somecountries,however,thefigurewentto thirty-three percent. Productionwasreduced,andmanyfactorieswentout orsuspendedoperations.Productionwashugely affectedin theagriculturalandotherprimaryproductionbecausethemarketfortheir productionwasnot therein thefirstplace.Productionin theagriculturalsectorwashighlyaffectedanddroppedto 40%. Coupledwith thedroughtin themainlandamerce, productionremainedat its lowestthrough the1930’s. Governmenttriedto curethesituationby reducingexpenditureto controlinflation.AfterthegreatdepressionhadcometheSecond World War anditwasevidentthatAmerica wasto beinvolved.DuringtheperiodthattheUnited States participatedin theSecond World War after Germany haddeclaredwaragainst them, itwasobviousthatthecountrywasgoingto dedicatea verysignificantproportionof thefederalgovernmentannualbudgetto thewar.Warsare verycostly,andthecostcannot bepreciselyestimated.Itis nevertheless,a veryexpensiveendeavorto take,andthatwould meanthatmosteconomicdevelopmentprojectsare keptto haltsoas to dealwith themosturgentproblemat hand.Afterall,itwastheroleof thefederalgovernmentto ensurethatits peopleare secure,andanyextendscould be reachedto honorthepledgeandtherightsof thepeople.Thiswasa periodof 15 yearswheretheUnited States would not be ableto carryout anysignificanteconomicimpact.Researchwasmajorly advancedtowards developmentof weaponsof mass destructionto helpthegovernmentfightits enemies.Someof thenotableexamplesare thefamous“theManhattan project”whichledto theproductionanddevelopmentof theatomicbombthat laterwasusedto endthewaron Japan. Thisis an indicationof howconstrainttheUnited States of America wasto achieveanysignificanteconomicstability.In theyear1945, theworldwarcameto an end,andtheUnited Nations wasformed.Hence,America could embarkon reconstructionandnationaldevelopmentii.TheEconomy of thePost-War Era

Itis impossibleto writeabout thepost-world wartwo without thementionof thecoldwar.After theterminationof worldwar(II), warbetween America andtheSoviet Union wenton forthenextforty-five yearsorso.Thewarwasexhibitedin differentscenariosin theworldthat ledto differentpolicyinfluenceof theearth.In theKorean peninsula,thewargaveriseto in thebirthof thetwo nations,thesocialist northPeople’s Republic of Korea andthesoutherndemocraticstateof Korea. TheSoviet-supported theNorth whiletheunitedstatesthecapitalist South Korea. In Vietnam, Indonesia andthePhilippines, America effortsto influencetheadoptionof thecapitalist economicpolicyprovedfutileafter sufferingmassivelosses.In Vietnam notably,morethan 55,000 soldiersdiedin a periodof almostfive yearsandnot regardingthemassivemilitarybudgetin theintervention.Theotherwarswereextendedin Afghanistan, Angola on theAfrican continentandthefamousCuba in theCaribbean states.All thishappenedwith eachworldpoweraimingat havingits economicpolicyto dominate.America andtheSoviet Union eachcontributeandfundedtherebelgroupsin thesecountriesin orderto provetheir mightin theInternational scene.China,which wasthemostpopulousnationon theearthtogetherwith theSoviet Union that controlledalmosthalfof theEastern Europe, meantthatmostpeoplein theworldhadadoptedthesocialist economicandpoliticalstrategist.

The1950’s sawone of themostsignificanteconomicprosperityin theUnited States since thegreatdepressionof the1930’s. America providedemploymentto thelimitthat is famously calledfullemploymentby theeconomist.About95% of theworkingforcein theeconomywasinvolvedin a workopportunity.Thevalueof livingforthenativesof America wentup, andsodidtheeconomicstatistics. After theworldwartwo, thewarhadcauseda verymassiveeffecton theproductionplantsin Europe hence,thecontinentprovidedahugemarketforthegoodsproducedin America. Thisreadymarketwasto continueservingAmerica formorethan a decade. Suburbsstartedto comeup in themajorcitiesof America, andthemajorityof peoplebeganto becometo themiddleclass.TheAfrican-American, however,remainedinsignificant,andtheywerealienatedfrom thedevelopmentagenda.Racismwasat its peakduring thisperiod,andsois segregationandthesouthernstateswheremajorityof Americans of theAfrican originliveddrafted lawswhichgavepriorityandpreferencesto thewhite counterparts.Theseissueswere,nevertheless,overlookedandwerebarelymentioned,andthisleftthem with a desperatesituation.Thiswasan indicatorof a problemthat wasyetto besolved,andthelackof inclusionwasa signof a loomingcivilwarin America which will be tackledlater.

Duringtheseperiods,prominentinvestors rarelyconductedbusinesswith theChinese orthenationsof theeast that hadadoptedtheCommunist economicstrategiesandpoliticalorientationlessyouwerebrandedto be one. Therewasa generalfearof communist spiesallover thecountryworkingin theUnited States andthat madethepresidentto be verycautiousabout thekindof peoplewhowereI theworkingforceespeciallyin thecriticalagenciesincludingthecentralinvestigationbureau.Anycriticsof thecommunistemerged,andtheforeignpolicyof thetalkin thepoliticalarenawasin regardto thecoldwarandtheeconomicstrategiesof communismandcapitalism.May Americans in the1950’s could acquirebasiclifeneedsandwerehigherin theMaslow’s hierarchyof needsandwerestrivingto obtaingoodsupperin thehierarchysupposedlyluxury goods.Automobilecompaniesrealizedsignificantturnover whilethegrowthof infrastructureintensified.America, thelandof dreamandopportunities,waslivingto its actualdefinitions.ManyAmericans could afforda homeas housebuildingtechnology wasimprovisedthatensuredthecostof buyinga housecamedown to a manageableprice.Theperiodalsosawa widespreaduseandpurchaseof technological advancementincludingthetelevisionthat wasearlierthoughtto be a thingfortherich.Thenewmediumensuredandhastenedcommunicationof mattersof nationalinterestandpoliticiantookadvantageof thisplatformto advertise their campaignagendaiii.

The1960’s in America wasnot quitesatisfactoryin termsof economy,buta politicalgainwould cometo beachieved,andtheAfrican-Americans startedto launcha warto liberatethem from theoppression.Thedecade sawtheriseandwarof liberationandcivilrightactivist includingMartin Luther King Jnr andMalcolm X. theAfrican-American hadbeingalienatedandwasneverincludedin theAmerican dreamrealizationandtheycould nolongerbe patientanddecideditwastime.Theshowof mightbetween theUnited States andtheSoviet tooka paradigmandthistimeitwasthetechnology of navigatingthespaceabove theearth.TheSoviet, Yuri Gagarin hadbecomethefirstmanin thehistoryto orbittheearth.Thisshowdidnot gounrecognized as Senate roseandsettheNational Aeronautics Space Administration (NASA). The1960’s wasdominatedby thereign of President J.F Kennedy andhevowedto getone manto landon themoonandthiscameto passin 1969, whenNeil Armstrong aboard Apollo11 becamethefirstmanto landon themoon.SatelliteswerelaunchedintheSpaceto aidin communicationandsurveillanceof theworld.Kennedy alsoraisedtheminimumwageandincreasein retirementbenefitsforworkers.Mostof his plansas presidentincludingprotectingthearidareasfrom development,provisionof a federalfundandMedicare insuranceplanwasnevera successdue to lackof thesenate’ssupport.Discriminationof womenandracismat placesof workwould be tackledby thecivilrightsactof 1964.

Duringtheperiodbetween thelate60’s and70’s, America wasat itagain,thistimeitwastheVietnam War. TheAmericans werein supportof thesouthernrebelswhotheydidnot wantto be compelledto be communist. During thistimealso,Johnson, thenNixon werethepresidentsof theUnited States. Thewaras earlierstatedprovedanddealta blowbecauseAmerica failedto achievewhatitwanted.Enormousexpenditurehadbeenextendedtowards thatwarandsowasthelossof approximately55,000 soldiers.Manypeopleof America didnot supportthewar,andthiscan explainwhymajorityof presidentsonlyserveda singletermdue to lackof commitmentto endingthemilitaryinterventionin Vietnam. On his part,President Johnson hadcampaignedon a platformof povertyeliminationbuthefailedto dosofollowingthewar.Themoneyallocatedto achievetheagendawaschanneledto war,andthiscausedhis secondtermin thepresidentialoffice.Hewasnot evento vieas heopted out of therace.Nixon tooka dramaticmovethat wasa signof therelaxedmeasuresthestateswastakingagainst thecommunist nation.Hemadea nationaltourof thepeoples’republicof china,andthisledto theAmerican recognitionof China andits admissionto theunitednationwith vetopower.Healsomadea tripto Moscow wheretheyagreedon manymattersas a nuclearweaponcontrolandin economicterms,andtheSoviet would allowimportationof thewheatfrom America. Thiswasa significantachievementas faras thecoldwarwasconcerned.

The1980’sthemostfoughtwarwason thewomen’srightto participatein economicactivityas opposedto thetraditionalroleof housekeeping.By thistimealso,Majority of undergraduate achievementwasattributedto theladies,andthisis themilestonetheytookin contributingto nationbuilding.However,thisbroughtanotherproblembecausetherateof divorceandbrokenmarriagesescalated.Theproblemwasa directcauseof givingtherightsto womennot to bediscriminatedat theplacesof work.Thewomancontributedto theeconomyin significanttermsbecauseforeverydollarprovidedby men,andthewomencontributeabout 60cents. The1980’s alsosawa furtherimprovementin thestandardsof livingincludingtelevisionviewingvia cableservices.Theothersignificantmilestonewastheintroductionof personalcomputersthat eased thepersonalservicesandlifeencounters.Managementof personalissuewasmadeconvenienceby theintroductionof thispersonalcomputer.Silicon Valley in California emergedandcontinuesto be a verysignificantaspectof theUnitedStateseconomyandtechnological resources.Investmentat Wall Street boomedledby theyouthpopulationandthedrugabuseamong thecelebritieswasalsoevidentstemmingfrom thenumerousstatistics of rehabilitationadmission.HIV wasalsostartingto be a menace,andits effectswereobviouslyfeltin theeconomy.The190’ssummarizedtheendof thecoldwarandmanyindependentnationsin theSoviet blocgainedindependencefrom Poland to Lithuania up to Ukraine. Russia alsogainedindependenceiv.

FiscalandMonetary Policies Influence

Fiscalpoliciesare a combinationof policiesthat regulatethespending of thegovernmentwith an aimto achievinga desiredeconomiccondition.Monetarypoliciesare policiesin regardto theissueifandsupplyof moneyin theeconomy.Theinterplayof thesetwo policiesis necessarybecauseithelpsin controllinginflation,interestratesandboosteconomicactivities.In theUnited States verymanyof suchpoliciescame,anditis not evenpossibleto mentionallof them. In the1950,s American governmentincreasedits investmentin theeconomy.Thesestimulatedeconomicgrowthandleakages from theeconomywerereduced.Unlike during thewar,mostof therevenueswerechanneledtowards incomeearningactivities.Theinflationrateremainslow,andemploymentwasat fullpotential a rateof 95%. Growthwasenormous,andthecostlivingwentdown as thestandardof livingwentupv.

From1970, theworldeconomiccrisisfacedandhitunitestates.ThisfollowedAmerican supportof theIsrael warandtheArab countriesreactedby puttingan embargoon thesupplyof oilin America. Thecostof doingbusinesswentup, andtheeconomicgrowthwasstunted.Inflationlevel washigh.Theperiodthrough thelate1990 didnot haveanysignificanteconomicshowdownand,hence,nomajoreconomicpolicyevermadeis worthmentioning.Pricecontrolswereusedto curbtheinterestratesandinflationwhilethegovernmentcutdown on its expenditure.Theperiodcoincidedwith theAmerican invasionof theVietnam and,hence,quitea significantamountof thebudgetlefttheeconomy.Thiswasduring Nixon era.In the1950’s Eisenhower administrationplacedoilquotasandalsoon othertradeoutflows.Thiswasin responseto theAmerica decliningbalanceof paymentdeficit.Thepolicieswereto ensurethatAmerica exportedmorethan itimportedsoas to betterits termsof trade.Mostof thefiscalpoliciesweremadeto counter thecontingenteconomicconditions(Brownlee,W. Elliot. 2004).

Recommendationson theCurrent Steps to Get Out Of theCurrent Recession

Afterthe2009 economiccrisis,thegovernmentwasfacedwith a verydifficulttimestryingto restoretheeconomyto its formerstatus.PresidentBarrack Obama, during thepresidentialcampaigns,promisedto getAmerica to whereitwasbutallin vain.However,insignificantprogressis beingmade,anditwill soongetto whereitwas.One of themajorproblemsfacingAmerican economyat themomentis themassivenationaldebtwhichat somepointwasalmostmorethan thegrossdomesticproduct.Thiswasa verydelicatesituation,butthingshavechangedforthebettersince then.To helpcurbout thissituation,America should in my opinionstopthehugeacquisitionof debts,moreso,foreigndebt.Theotherattentionis in regardto thebudgetto a differentsector.America spendsa verysignificantamountof its nationalrevenuein tacklingandextendingits foreignpolicies.Someof thisexpenditureis unnecessary.In general,thebudgetary allocation should be made,andspending on issuesthat donot adda significantcontributionshould beavoided.Acheckon governmentspending ought to be putinuseto curbthesame.TheObama taxdifferential systemshould beimplemented,andinvestmentin technology expedited.Directforeigninvestmentby citizensothercountriesshould be encouragedthrough subsidiesandtheleakages from theAmerican governmentshould be highlydiscouraged.Thetaxcollectionsystemshould ensureallpersonspaytaxandevasionare at its minimum

i Brownlee, W. Elliot. 2004. Federal taxation in America a short history. Washington, D.C.: Woodrow Wilson Center Press. http://site.ebrary.com/id/10131689.

ii Jorgenson, Dale Weldeau. 1995. Postwar US economic growth. Cambridge, Mass. [u.a.]: MIT Press.

iii Timberlake, Richard H. 1993. Monetary policy in the United States: an intellectual and institutional history. Chicago [u.a.]: Univ. of Chicago Press.

iv Collins, Robert M. 2002. More the Politics of Economic Growth in Postwar America. New York: Oxford University Press. http://public.eblib.com/choice/publicfullrecord.aspx?p=279506.

v Boskin, Michael J., and Henry J. Aaron. 1980. The economics of taxation. Washington, Dc: Brookings Institution

Bibliography

Brownlee, W. Elliot. 2004. Federal taxation in America a short history. Washington, D.C.: Woodrow Wilson Center Press. http://site.ebrary.com/id/10131689

Jorgenson, Dale Weldeau. 1995. Postwar US economic growth. Cambridge, Mass. [u.a.]: MIT Press

Timberlake, Richard H. 1993. Monetary policy in the United States: an intellectual and institutional history. Chicago [u.a.]: Univ. of Chicago Press.

Collins, Robert M. 2002. More the Politics of Economic Growth in Postwar America. New York: Oxford University Press. http://public.eblib.com/choice/publicfullrecord.aspx?p=279506

Boskin, Michael J., and Henry J. Aaron. 1980. The economics of taxation. Washington, Dc: Brookings Institution.

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