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Lecture 5

History 240 Notes Week 5.doc

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HIST 253
Tim Smith

History 240 Week 5 Notes The People’s Peace State Economic Planning, Welfare State Expansion, the Great Compression of Incomes, the Glory Age of Capitalism, 1945-75 - The war showed many people that economic planning maybe the best way forward. - The days of laissez faire were behind, and the welfare state was a good thing; no nation came out of the war thinking the contrary. - It shows middle-classes especially how at risk they really are for losing everything. - Capitalism was working for most countries post-war; wages were rising for everybody. - Raising those at the bottom fastest. - Taxes are cutting those at the top. - Shrinking of agriculture and industrial sectors (de-industrialization) and the expansion of the middle classes (CHECK IMAGE). - Many of the victims of social change (primarily industrial workers) end up in lower wage jobs in the lower-white collar jobs (clerical). - IMPORTANT: This period can’t be used as an economic model for the future, because the factors of post-war Europe are not common and impossible to replicate; many of these things can’t happen again. - A time of great social mobility - There were a growing number of good jobs created by the market. - There was an expansion of higher education (university, etc.) - Ie. About half of Queens’ buildings were built during 60s and 70s. - It was a time of growth and productivity, never before seen in history. - The “original sins” of overspending still haunt the present. - Revenue Canada pays about 10% of every dollar it takes in towards the debt interest. - Canada Savings Bonds, Treasury Bills, etc. - When unable to pay the debt, it borrows from the private market. - Typically viewed as safe investments, but countries that are in danger of defaulting offer higher rates of return to make investment more attractive. - Note: Sweden revolutionized pensions: matched to national resources. - Deficits will be counted by increase in taxes (at rate of economic growth). - The expansion of state was coupled with an increase in societal trust of the government. - Belief that it could (or should at least try) to fix social and economic problems. - That number has dwindled to about 1/3 North Americans trusting the gov’t. Keynes and Post-War Spending: Is there a link? - Keynes is often given credit for the post-war expansion of the state. - Would be given indirect credit due as he passed away in 1949. - Debts could be used to achieve full employment. - To counteract the lows of the business cycle - States often ignore part two of his advice - Raise taxes and acquire economic surpluses - “States were innocent until proven guilty, markets were guilty until proven innocent” The Physical Impact and Destruction of War: Forced Expansion of Infrastructure - 750/950 bridges must be rebuilt on the Rhine River. - By 1950 the state owns ___ of the economy (GB 25%, France 50%, Italy 50%, avg. 5- 10%). The Politics of Consensus and the Expansion of the Social Services - “If you build it, they will come” (voting). - It was a time of great economic breakthrough. - Unemployment around 2-3% in 1950-60’s, - Avg. Western European worker’s wage increases 250% from 1940-70. - British Prime Minister Harold MacMillan, 1959, “You’ve never had it so good” - It was very easy to be a politician in this time; “how much should we spend this year?” - Debates were based on how much and where to spend. - Corporations of a certain amount of workers needed to provide representation for them on the board, it helped to keep wages in line with productivity growth. - Workers were integrated into the boardroom in about 8 European Notions. Reckless Optimism? Or Bills for Future Generations? - There was a slide on wage growth. - Economic growth was 3-5% and social spending increased 10-12%. - It was assumed that the good times would go on - From 1945-70 most deficits were in the name of infrastructure and investment in social capital. - Critics of social and economic planning state that, “they are like the farmers that believe the sun goes up because the rooster crows”. The Politics of Full Employment - “The days of mass unemployment in industrialized societies are history: problem solved”. - 1967 Economics Textbook Le Plan. Commissariat General du Plan: France - Influenced by Sovietism. - Planning of spending and government subsidization. - Which industries get the cash? Progress Paradox - In 2013 most people are better off than in 1975 (the so called glory days).
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