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POST WW II TO 1991 HOW DID WE GET HERE-PART 2
This hub is the second of a series based on an essay that I wrote in the fall of 1991 both making a prediction of the outcome of the 1992 Presidential election, and the economic situation in the United States at that time, and how we got there
WHOA WHAT HAPPENED
During the post World War II era the economic tools of fiscal and monetary policy were relatively successful in the effort to minimize economic cycles of the US economy. However with the current national debt of $4 trillion for which we incur interest charges of $320 billion annually, and with present Federal budget deficits projected at $250 billion (additional borrowing), the governments ability to employ fiscal policy to stimulate the economy is very limited if non-existent for all practical purposes unless the Federal Reserve agrees to monitize the debt (print more money) which will eventually cause the devaluation of the dollar.
Let us reminisce about the post WW II period. Another thing happened throughout our journey through the Cold War wilderness. Our emergence from WW II left us in a position of global pre-eminence both militarily and economically. Our economic infrastructure had not only escaped the ravages of war unscathed, but had, in fact expanded. The European and Asian participants in that conflict were devastated. Had the United States then acted in a manner consistent with our conservative history we would have withdrawn our armed forces to the safety of Fortress America. We would have returned to our traditional role of America first isolationism.
Others argued that it was, indeed, such a return to isolationism at the conclusion of WW I (the withdrawal of our troops, our failure to join The League of Nations, which our own president Woodrow Wilson had crafted, and the unilateral dismantling of our military machine) that had led inevitably and directly to World War II. This argument in which I can find some validity carried the day, but I do have some strong reservations, and qualifications to my support of the assertion.
We should have joined and fully participated in the League of Nations. We should not have unilaterally dismantled our military. However I would take no pride had our troops remained in Europe as the instrument where by the German people were punished and oppressed as dictated by The Treaty of Versailles.
Thus the US chose to abandon isolationism. The new threat of Soviet expansionism, with its stated goal of World domination, caused us to enter into new military and political alliances. We found it to be in our self-interest to rebuild the economic infrastructures of our new allies, and we gave massive amounts of money, material, and brainpower to do so. The Cold War was on!!!!
By the late 1950’s to the early 1960’s, our new allies with their American rebuilt economies were beginning to prosper. This was good. The glaring differences between the Free Worlds free market democracies, and the devastation remaining under the totalitarian repression of Soviet Communism was proof positive of both the moral, and practical superiority of our position.
BUT, between then and now, something else happened. Our new allies with their AMERICAN REBUILT ECONOMIES, which were prospering under the protection of the AMERICAN MILITARY UMBRELLA, decided it would be in their self-interest to become our economic adversaries. This was not done out of malice, after all, we had taught them the blessings of free enterprise, and they had seen the light. They entered the free market “promised land”, and they tasted the milk and honey. They saw that it was good, and they wanted more.
The entry of our political allies into economic competition with us was not seen as a threat by our political, business, or labor leaders. There were still some America-first conservative isolationists around who gave warnings of gloom and doom, but many of their arguments were (or were perceived to be) based on hatred left over from WW II.
As some of our “less important” industries became impacted, there were isolated pockets of concern expressed by business and labor leaders, but these concerns were mainly, in the nature of, “ How can we compete with these people making $0.25 per hour when we are paying $3.00 to $4.00 per hour for labor?”. Even the minimum wage (mandated by the Federal Government at the behest of organized labor) is $1.50 per hour. Enlightened experts who saw the concerns as the result of some special interest group having its ox gored did not take the concerns seriously.
I remember the 1960’s. I remember a very funny Christmas song of that era. That funny song was a parody of the traditional song “The Twelve Days of Christmas”. The ending refrain of each verse of the traditional song is “And a partridge in a pear tree.” In the parody the phrase “And a Japanese transistor radio” is substituted for the traditional phrase. It was hilarious then, BUT I’M NOT LAUGHING ANY MORE!!!!!!!
I remember the 1960’s. I got my first “real job” in the summer of 1966. Having worked in the small grocery store my father and his partner owned wasn’t a “real job” it was just part of growing up in the Whitworth family. The four weeks in 1964 traveling with Thomas Joyland carnival was more like survival training than a job (It defininately wasn’t like Elvis In “Roustabout”). The almost two years I had been making money playing in our rock band I never considered as a job. My first “real job” was at Louis Marx & Co. in Glen Dale, WV. The toy plant had been there for as long as I can remember and longer. Toys were made there prior to WW II, munitions during the war, and back to toys after the war. The toy industry was one of those unimportant industries that first fell to foreign competition. In the1950’s over 1000 well paying jobs existed at the toy plant, by the time I worked there for $1.65 per hour there were about 300 jobs remaining at the same pay they were making in 1955. Louis Marx was moving to “The Land of The Rising Sun”. The building where the toy plant was is still standing and there are a few small businesses employing about 50 people in the Glen Dale Industrial Park. I find it ironic how industrial park is a euphemism for industrial graveyard.
I remember……….competition in the steel industry meant competition between US Steel, J&L Steel, Wheeling Steel, Bethlehem Steel, National Steel, Pittsburgh Steel……..
I remember competition in the automobile industry meant competition between Ford, General Motors, Chrysler, American Motors ( I can also remember Kaiser Fraiser). A Honda was a motorcycle. There were some Volkswagen Beetles and vans roaming around, but they certainly posed no threat to Detroit.
I remember……….We determined to fight a “War on Poverty” in order to form a “Great Society”, while at the same time fighting a hot war against communist aggression in South-East Asia. I became aware of the terms deficit spending and inflation during this era.
I remember……….That when a river in Cleveland, Ohio caught fire we decided that maybe those people running around screaming about dire consequences due our neglect of the environment weren’t all crazy. Thus laws were passed and the EPA came into being.
I remember……….We decided it was probably a good thing to come home from work safe and sound every day. Thus laws were passed and OSHA came into being.
I remember……….That we decided (with a little coaxing) that each and every one of our citizens truly deserved the equal opportunity promised by our Constitution. Thus laws were passed and EEOC and other Civil Rights Regulations came into being.
I could go on forever with the history lesson but I’m getting ready now to get down to brass tacks. I remember……….
- American money and know how rebuilt the industrial infrastructure of our European and Asian allies after WW II, and the beginning of the Cold War.
- As our allies prospered under our military umbrella they also decided to enter economic competition with us.
- The initial nature of that competition was such that we failed to take it seriously. We failed to plow the needed capital investment into our own economy to keep it up-to-date with our foreign competitors, because we failed to recognize they were serious competitors. THEY BLIND SIDED US!!!!!!!!!
- By the time we recognized the threat we were already committed, both by law and common sense, to spending an enormous amount of money, to protect ourselves in the workplace, protect the environment, and to securing equal opportunity for all of our citizens.
The result is what we have today. Our vital manufacturing base has shrunk in the face of foreign competition. The simple fact is we did not have all the money needed to provide for the common defense of THE ENTIRE FREE WORLD, and to secure the blessings of liberty for ourselves and our posterity FOR THE ENTIRE FREE WORLD!!!!!!!!!!! We simply could not afford to do all of the above, but we did it anyway. We borrowed huge amounts of money much from those same allies WHO WERE EATING OUR LUNCH!!!!