US HISTORY : The post war economic Boom – Introduction During W.W.11 the US economy entered a boom period, which lasted up to the end of the 1960s. Some feared there would be another Great Depression (1929) but this did not happen.
When? The US economy grew rapidly from the late 1940s and through the 1950s and 60s.
How? Unemployment remained low and inflation averaged 2.5% a year from 1951-70.
Result? The US enjoyed the greatest prosperity the world has ever seen and became the world’s dominant economic power. The economy doubled in size and the US became the world’s greatest economic power. There were plenty of jobs and wages rose.
Changing Society - by the 1960s many Americans were home owners, high consumers and were well educated. By 1960 they were 30% better off than in 1950.
For the first time in history a majority of people could spend on luxuries as well as necessities. Most could afford a decent home, some luxury and consumer goods and could afford to go on holidays.
Fact? By the late 1940s the US had only 7% of the world’s population yet produced half the world’s manufacturing output and possessed over 40% of the world’s income.
The influence of the Second World War
on the US economy # The war industries eliminated the high unemployment of the 1930s. It also
people began to save money – which was used after the war to boost consumer spending – led to a consumer boom on TVs, fridges, cars, housing materials etc)
# Government revenue also increased – from $7 billion (tax) in 1940 to $51 billion in 1945. This was because more people were working and earning money. This meant more people were paying taxes.
# Companies also gained out of the war as their profits increased. New mergers(joining of companies) began and by the end of the war(1945) three-quarters of manufacturing industries were controlled by 100 companies or corporations. Because their profits were so high they could spend huge amounts on Research and Development. They developed new technology, which kept American companies ahead of their competitors. It meant the rest of the world wanted to buy the products that were made by American companies.
# America also benefited as US mainland was undamaged during the war (unlike mainland Europe or USSR).
# They also benefited by exports to these areas. In Western Europe, Marshall Aid funds were used to buy in American goods.
# US government spending (investment) increased rapidly at this time, from $10 billion in 1940 to $580 billion in 1980. – 600 times
# Where? Between 1945-70, 60% of all federal spending went on Defence. But also in highways(roads), education and welfare. # The defence spending was due to Cold War rivalries. Example...two major wars, Korean War and the Vietnam War, as well as a number of smaller conflicts. Many people were employed by companies making war materials for the US army.
# There was also huge spending on weapons research and development, eg. military aircraft, missiles and ships.
Corporations benefited from the sales of its weapons to other countries, eg. the Sun-Belt (from Florida to California) which had several new high-tech and defence industries.
# Many government economists followed the Keynesian economicideas – which stated that government spending helped to create economic growth and employment.
# GI Bill of Rights --- this gave aid to veterans to buy houses, start businesses and educate themselves and this too helped the economy to grow (more educated and skills) – the cheap mortgages they could get helped start a housing and construction boom.
# Highways Act 1956 --- had an important influence on economic growth. Over 15 years the government invested $43 billion in major roads crossing the continent. This gave a great boost to construction and indirectly to the car industry.
# Social Welfare Programme --- A great deal of spending was done in this area, especially during President Johnson’s Great Society programme in the 1960s, thus reducing poverty in the country.
#Population growth : The US population grew by 95 billion between 1940 and 1980. This was due to a baby boom after the war and to better health and longer life. The growing families bought houses and spent on their families. And when the younger generations grew up they created demand for consumer goods as well.
Growth of a Consumer society : ( Buying and selling of consumer goods – advertising – shopping centres – belief that you can find happiness by buying things )
The increased wealth (affluence) led to a boom in the buying and selling of consumer goods. After the war people had their savings to spend and the growth in wages meant that people had extra money to spend. Most could buy a wide range of goods and for the first time most could afford luxuries as well as necessities. People bought TVs , fridges, vacuum cleaners, designer clothes, went on holidays and bought cars. Shopping malls were built to sell all the goods to the new spending classes. By 1960 90% of homes owned a TV. 2 million new cars were sold in 1946, 8 million in 1956, 70 million in 1960 and 130 million in 1970.
The move to the suburbs : With the rise in car ownership and increased spending power American families wanted to live in detached houses. Estates were built on the outside of cities (the suburbs) and people could live there because they did not have to live near their place if work as they could now drive to work.
Giant US multinational corporations soon became part of a GLOBALISATION process – the world’s economies become linked and connected and companies began to set up factories in other parts of the world outside the US as well as selling lots of their goods abroad.
However through this growth, the US economy began to affect other parts of the world.....HOW???
a). Became part of the growing internationalisation in both trade and politics that led to……..
b). the spread of new ideas e.g. cultural values, in particular consumer goods such as Coca-Cola, IBM and Levi jeans.
c). Americanisation of the world - in pop music, jazz, rock ‘n’ roll and films.
#Supporters of Globalisation argued.....