The Age Of Affluence: The American Economy

Question 1

how far did economy and society develop to create an age of abundance (1945-60)?

Answer 1

Consumerism: fuelled by hire purchase and consumer debt = high levels of spending on goods (automobiles & houses) (1960 GDP 3 times higher than in 1940)
(Outstanding debt rose over $50 billion by 1960)

WW2: got more Americans working, for maximum work production. Stimulate big industries (oil, steel, engineering) (& high-tech. E.g aircraft builders (Boeing is Seattle-Tacoma) benefited from advanced scientific and development from war

New methods of industrial organisation: small solid state transistors Rose development of computers. (1951) establishment of Santa Clara valley near Stanford uni

Cold War: Korean War increased spending on armaments to stimulate economy

Boom in the chemical industry: (plastics developed)

High levels of government spending (help high tech industries, employment such as military

Export industry: (1944) bretton woods conference reshaped world trade that favoured US. Marshal plan benefit US producers and exporters

Question 2

How far did the economy and society change in the Kennedys tenure to create an affluent society?

Answer 2

Kennedys federal spending:
-stimulate construction industry (housing)
-raise minimum wage
-aid to ‘distressed’ areas [area development act, public work act=$900 million for job creation,
-‘Kennedy round’ (cut tariffs, work with japs and EEC)
-stimulate high tech industry growth= economic recovery: (1962) communications Satellite Act= cooperation to develop satellite tech. Spending on NASA= US win ‘space race’
-more investment In military research
IMPACT: economic growth above 5% by end of 1963
BALANCE:
-caused suspicions of ‘military industrial complex’ forming.
-Kennedy policies waters down by congress: (1963) tax cuts $10 bill for next 3 years proposed was passed 9 months after
-Growth fuelled by natural strengths of economy

Question 3

How far did the economy and society change in the LBJ tenure to create an affluent society?

Answer 3

Johnson interventionist measures:
-huge federal spending on economy and society for his ‘war on poverty’ and ‘great society’
-anti-poverty bill
-set up Office of Economic Opportunity , give services to help small farmers, job training and further education-(1965) expanded
-Appalachian regional development act, subsidies for development to deprived regions
-tax cuts, welfare progress, urban renewal
(By end, Was still high consumerism, manufacturing industry boom like General Motors )

BALANCE:
-national debt rose by 13% (double kennedys but less than half under nixon)
-too much regulation
-cost of Vietnam spending

Question 4

How far did the economy and society change in the Nixon’s tenure to create the 1970s ‘Great Depression’?

Answer 4

Nixons intervention:
-freeze on wages and prices
-raised import tariffs
-took US of gold standard
-devalued dollar= undermined dollar position as world lordly reserve currency
SUCCES
-reassured Wall Street and reduced aid deficit (short term benefits)
FAIL
-dollar devalue= Breton wood system end= high inflation in west economy. Provoked OPEC sharp rise in oil prices= oil crisis
-Stagflation: (1974) 12% inflation rate, US industrial production slump by 15% and unemployment rose to 9%
-phsycoligcal impact: citizens in long queues at petrol station for gasoline from fuel shortage

(Economy by 1970)
-natural economic cycle = end prosperity
-fed military spend: US strained on massive military spending in Cold War and Vietnam
-trade: growing balance of pay deficit (got imports (lots oil!) much more than exports)