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by Amezarak 4451 days ago
Can you explain to me how the federal government being a creditor to European nations after World War II ensured happy times for employee/employer relations? If creditor/debtor status of the federal government makes such a difference, why didn't the massive US federal debt (around 110% of GDP) negate that creditor status? This argument has never made sense to me since a) most European countries had almost fully recovered by the mid-50s, yet this boom lasted much longer, b) our exports (and imports) were way down during the post-war period and basically irrelevant c) the loans were mostly inflated away. I don't understand what mechanism would have had the observed effect.

If anything I'd have thought the wage and price controls from WWII were a bigger factor, since in the absence of higher pay, companies had to offer more benefits and cultivate better relationships with their employees to keep them around - and there seems to have been a lot of inertia from those policies.
2 comments
anigbrowl 4451 days ago
US federal debt was largely domestically held. Also 'most European countries had almost fully recovered by the mid-50s' seems quite wrong to me as a European. Certainly, they had functional economies again and cleaned up the mess of the war, but that's hardly a full recovery. European countries were paying off war debt far longer than that too. The US had a huge economic advantage for several decades.

Things like price controls and the GI bill and the Cold War all helped in their way, but I'm not sure that that's a formula you can deploy going forward.

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pcrh 4451 days ago
After WWII, the US was pretty much the only functioning manufacturing nation for a decade. In addition, new markets opened up to US manufacturing due to the dropping of trade barriers with, and competition from, the markets of the British and French Empires as well as Japan. This advantage also lead to faster technological development in the US compared to other markets for a while.

These advantages slowly eroded as other economies were rebuilt. They nevertheless lasted well into the 1970's.

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Amezarak 4451 days ago
While that might have helped the domestic manufacturing market, international trade was not a substantial part of the US economy for a long time - in 1950-1960, imports and exports were 4-5% of GDP (with exports usually just barely north of imports.) They're triple that today. The pre-World War II import/export statistics aren't much different from the post-World War II import/export statistics, but the economy was much different. I don't see how any argument about international trade can apply, based on the data.

After all, it's not just competitors that are gone, it's customers too.

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