Golden Age of Capitalism 1950-1970

Its pretty obvious that WWII sparked the golden age of Capitalism.

Interestingly enough we were an isolationist country till WW II.

It looks like if a conventional WW III occured it would probably start another 20-30 years of a second Golden Age of Capitalism.

Like the Occasional brushfires that occur in nature, burning out all the old growth and making room for new growth maybe we need our version of the brushfire?

http://en.wikipedia.org/wiki/Post–World_War_II_economic_expansion

 

The aftermath of WWII created a unique situation in world history. 1945-1965 established the US as the leading manufacturing country in the world, not because of our manufacturing prowess, but rather because of our military might. At the end of WWII, the US had 5% of the world's population and almost 70% of the world's intact manufacturing and transportation infrastructure because most of Europe and Asia had been bombed to ashes during the war. During the war, the United States was protected by two massive oceans and friendly neighbors to the north and south.

For about 20 years after WWII, the US had the highest manufacturing price/wage structure in the world, from which the American middle class benefited greatly. By the mid-1960s, the rest of the world had rebuilt and the US had to actually compete against countries like Japan and Germany. Our market dominance began to erode in the 1970s, and the erosion increased in velocity during the 1980-90s as India and China entered the world markets. When hundreds of millions of people enter the global manufacturing workforce and are willing to work for fifty cents an hour, wages are going to fall, manufacturing is going migrate, and there's nothing anybody can do to stop it. It's inevitable that the economies of China and India will overtake the US because China's population is 4X the US and India is 3X. Simple math. The economic forces of gravity in action.

If there were a WWIII, I doubt that we, or any other country, would be spared the way the US was in the previous world war. Geography is no longer an effective defense. WWIII would probably be a nuclear hell requiring a 100-year recovery period.

 

Some dude named Einstein said that WW4 would be fought with sticks and stones. That's maybe all that "society" might have to rebuild with after WW3 because all of the trucks and bulldozers will have been destroyed. :eek:

 

Maybe that is why we have all our wars with non-nuclear countries nowadays..

 

And to continue that thought further, maybe that's why Iran wants the bomb. Can you blame them?

 

What I find amazing about the post war period is not our dominant position, we absorb near zero destruction of our capacity to produce as others got slammed, but our amazing ability to piss away an advantage that large that quickly.

It takes most empires centuries to decline yet we seem to be on the path to do it in less than a single century. I hope that is not what history records as American exceptionalism.

 

Could not agree more with what you wrote. It amazes me that no one is talking about "why" we were able to create a large middle class because of our competitive advantages after WWII.

Yet we constantly hear how if we just "elect XYZ politician, they will bring back manufacturing" and "strengthen the middle class".

I NEVER hear a single, in-depth follow up question of how they propose to do that.

At this stage, the only competitive advantages that I can see for the US are:

1- Still a fairly nice abundance of natural resources (particularly the ag sector)

2- The $USD as the reserve currency

The latter we are doing our best to piss away as we borrow to replace the jobs that flow overseas each year.

 

and to further continue that thought
Maybe that's why reducing/eliminating all the world's nukes is good idea.

Except for the US's of course.

The US and Israel.

and maybe England....and...

 

With regard to clacy's competitive advantage #2 it is a fairly safe prediction that reserve status for the U.S. dollar will be lost in stages, the first stage being in oil. Already some trade is in Euros. We will see that trend continue.

We should also see the rate of U.S. hard assets being bought by foreign interests increase. If the congress intervenes to stop this, then still another problem will be created.

The deterioration process will take a long time, but there is no going back without a radical change in the First Amendment, or at minimum its interpretation by the Court. And what are the chances of that?