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
- 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-
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
- 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
- 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?
- In 2013 most people are better off than in 1975 (the so called glory days).