Friday, May 18, 2018

Economic Information (from 1945-2018)

From 1945 to 2018 would include some of the most important economic developments in human history. After World War II, there was the start the post-World War II economic boon. It lasted from 1945 to the early 1970’s. There was the $200 billion in war bond maturing. The G.I. Bill funded a well-educated work force. Immediately after WWII, the middle class grew, GDP increased along with productivity. Across many economic classes, the growth was distributed fairly. There was the strength of labor unions during this period as labor union membership peaked historically in America by the 1950’s. Many people in towns and the cities experienced better paying jobs by 1960. Still, society wasn’t a Utopia back then either because of the obvious reasons. Back then, black people and people of color were denied basic human rights from voting rights to educational opportunities. Women back then in many cases couldn’t even enjoy full rights and Jim Crow plus lynching back then were in epidemic levels (Lynchings continue to this very day in the 21st century as exposed by many incidents in America alone). The Congress created the Council of Economic Advisors to promote high employment, high profits, and low inflation. Keynesianism was even embraced to some extent by the Eisenhower administration (1953-1961). Many people embraced public works programs, easing credit, and reducing taxes. Keynesian economic policies have been embraced by John F. Kennedy and Richard Nixon back in 1969. The nation still experienced recessions of 1945, 1949, 1953, and 1960 with a decline in GDP. The Baby Boom saw a rapid increase in American births from 1942 to 1957. It was caused by delayed marriages and childbearing during the depression, more economic prosperity, the growth of suburbia. This economic growth was influenced by technological developments. Fertilizer and farm machinery was modernized. The Green Revolution of the 1940’s and beyond increased yields of corn, soybean, and wheat. New Deal policies continued from then to this very day. The New Deal assisted framed in their policies like farm loans, commodity subsidies, and price supports. The farm population declined and food stamp programs were used to help urban communities. World War II saw air transport heavily utilized. After WWII, America had the leading producer of combat aircraft and commercial aircraft. The airplane manufacturing and maintenance personnel expanded with radar. 

The aircraft industry had the highest productivity growth of any major industry, growing by 8.9% per year from 1929-1966. Automobiles, highways, and inexpensive housing expanded suburbia. There were problems during that era of time too. Many poor families lived in overcrowded apartments. Economic inequality was a serious issue. Richer families saw their family savings grow to be used for down payments on many items. Whereas an average of 316,000 new housing non-farm units had been constructed from the 1930's through 1945, there were 1,450,000 units built annually from 1946 through 1955. The G.I. Bill helped many veterans with low down payments and low interest rates. In 1956, the interstate highway system started to develop. Computer technology with transistors and other items helped to do accounting, billing, and payroll actions. Federal taxes on incomes, profits and payrolls had risen to high levels during World War II and had been cut back only slowly; the highest rates for individuals reached the 90% level. Congress cut tax rates in 1964. President Lyndon B. Johnson (1963–69) dreamed of creating a "Great Society", and began many new social programs to that end, such as Medicaid and Medicare. The Great Society and other programs cut poverty in half from 1960 to 1970. The Great Society's Head Start, disability benefits, job training programs, have helped millions of Americans of every color for years and decades.

As for the Great Society programs, they were beginning to work until  budgets were cut and the economy began to shift from manufacturing. The data is clear: in the years between 1965 and 1973, poverty rates plummeted, and especially in urban areas, by about 38 percent. Even the Model Cities programs helped people, but they were ended in a less than a decade after its initial implementation. By the mid-1970's, many of the programs of the Great Society had been cut or eliminated, leaving only cash assistance (which began to decline relative to inflation and was never sufficient to pull folks from poverty), food stamps and limited housing support.

Eisenhower expanded nuclear technology. John F. Kennedy supported expansion into space travel and other investment. The South also had a transition from manufacturing to high technology. There was the Atomic Energy Commission's Savannah River Site in South Carolina; the Redstone Arsenal at Huntsville in Alabama; nuclear research facilities at Oak Ridge, Tennessee; and space facilities at Cape Canaveral, Florida, at the Lyndon B. Johnson Space Center in Houston, and at the John C. Stennis Space Center in Mississippi. The Defense Department financed some of the private industry’s research and development in the decades like ARPANET, which would become the Internet. By the late 1960’s, manufacturing employment and nominal value added shares of the economy have decline since WWII.

Japan and West Germany grew its economy after World War II. They were rebuilt by the Marshall Plan and actions from U.S. investments to both of those nations. With the Vietnam War, there was massive inflation. The reason was that there was massive spending overseas for the war while by the late 1960's, the Great Society programs were beginning to be cut. The manufacturing jobs started to decline in America especially by the 1960's because of jobs moving outside of cities and automation. Also, there was the rise of the service sector economy in replacing the private sector economy by the late 20th century. Technological innovations of the final third of the 20th century were significant, but were not as powerful as those of the first two-thirds of the century. Manufacturing productivity growth continued at a somewhat slower rate than in earlier decades, but overall productivity was dragged down by the relative increase in size of the government and service sectors. The Bretton Woods system in 1971 ended. That was when America made the dollar a fiat currency from ending the convertibility of the U.S. dollar to gold. By the early 1970’s, imported manufacturing goods came about like automobiles and electronics. The 1973 oil crisis was about nations like Saudi Arabia banning oil from importing into America. They did this in retaliation of American support of Israel (especially during the time of the Yom Kippur war). There was the stock market crash of 1973-1974. New economic theorists attacked the New Deal. They are monetarist economists from the Chicago School of Economics promoted the free market along with low taxes, less regulations and free trade. One leader of this movement was Milton Friedman. These people promoted deregulation from New Deal style regulation. Milton Freedman's deregulation policies has harmed the economy for years and decades into the future. America became dependent on OPEC. Stagflation (which is an economy situation with a combination of high inflation with a stagnant economy) harmed America. President Gerald Ford introduced the slogan, "Whip Inflation Now" (WIN). In 1974, productivity shrunk by 1.5%, though this soon recovered. In 1976, Carter won the Presidency. Carter would later take much of the blame for the even more turbulent economic times to come, though some say circumstances were outside his control. Inflation continued to climb skyward. Productivity growth was small, when not negative. Interest rates remained high, with the prime reaching 20% in January 1981.

Unemployment dropped mostly steadily from 1975 to 1979, although it then began to rise sharply. This period also saw the increased rise of the environmental and consumer movements, and the government established new regulations and regulatory agencies such as the Occupational Safety and Health Administration, the Consumer Product Safety Commission, the Nuclear Regulatory Commission, and others. As early as 1976, the deregulation movement took ground in America. Carter promoted deregulation in the Airline Deregulation Act, was cleared by Congress. Transportation deregulation accelerated in 1980, with the deregulation of railroads and trucking. Deregulation of interstate buses followed in 1982. In addition to transportation deregulation, savings and loan associations and banks were partially deregulated with the Depository Institutions Deregulation and Monetary Control Act in 1980 and the Garn–St. Germain Depository Institutions Act in 1982. Incoming President Jimmy Carter instituted a large fiscal stimulus package in 1977 in order to boost the economy. However, inflation began a steep rise beginning in late 1978, and rose by double digits following the 1979 energy crisis. In order to combat inflation, Carter appointed Paul Volcker to the Federal Reserve, who raised interest rates and caused a sharp recession in the first six months of 1980.  In March 1980, Carter introduced his own policies for reducing inflation, and the Federal Reserve brought down interest rates to cooperate with the initiatives. During the 1980 recession, manufacturing shed 1.1 million jobs, while service industries remained intact. Employment in automotive manufacturing in particular suffered, experiencing a 33% reduction by the end of the recession.  Collectively these factors contributed to the election of Ronald Reagan in 1980.

The Federal Reserve caused another recession when it raised interest rates in 1981. By December of 1982, unemployment was about 10.8%. Reagan promoted Reaganomics. This was about promoting tax cuts to the wealthy, cutting the marginal federal income tax rates by 25%.  Inflation dropped dramatically from 13.5% annually in 1980 to just 3% annually in 1983 due to a short recession and the Federal Reserve Chairman Paul Volcker's tighter control of the money supply and interest rates. Real GDP began to grow after contracting in 1980 and 1982. The unemployment rate continued to rise to a peak of 10.8% by late 1982, but dropped well under 6% unemployment at the end of Reagan's presidency in January 1989. The economy grew by the end of Reagan’s 2nd term, but homelessness grew and much of the economic growth existed on the super wealthy. There was the War on Drugs and the crack epidemic harming urban and poor communities nationwide during the Reagan years. Large trade deficits existed. From 1982 to 1987 the Dow Jones Industrial Average gained over 1900 points from 776 in 1982 to 2722 in 1987 – about a 350% increase. An economic boom took place from 1983 until a recession began in 1990. Between 1983 and 1989, the number of people below the poverty line decreased by 3.8 million. Computers, cell phones, music players, and video games saw more popularity. Much of the economic growth on the 2nd term of Reagan was a product of low interest rates and more government spending not because of trickled down economics. The early Bush Presidency's economic policies were sometimes seen as a continuation of Reagan's policies, but in the early 1990s, Bush went back on a promise and increased taxes in a compromise with Congressional Democrats. He ended his presidency on a moderate note, signing regulatory bills such as the Americans with Disabilities Act, and negotiating the North American Free Trade Agreement. In 1992, Bush and third-party candidate Ross Perot lost to Democrat Bill Clinton. Deindustrialization since the late 1960’s grew income inequality. In 1968, the U.S. Gini coefficient was 0.386. The Gini coefficient measures economic inequality. In 2005, the American Gini coefficient had reached 0.469. Globalization was upon by the world in a large level by the 1990’s.

During the 1990s, government debt increased by 75%, GDP rose by 69%, and the stock market as measured by the S&P 500 grew more than threefold. From 1994 to 2000 real output increased, inflation was manageable and unemployment dropped to below 5%, resulting in a soaring stock market known as the dot-com boom. The second half of the 1990's was characterized by well-publicized initial public offerings of high-tech and "dot-com" companies. Bill Clinton in the 1990's signed a law that increased taxes on top earners (i.e. those who made $250K + income annually). He increased the tax rate from the top earners from 31% to 39.6% on top earners. Later, there was 23 million jobs created under Clinton's time. There was a budget surplus from a budget deficit. Economic growth was found from 1992-2000. Many conservatives predicted that Clinton's tax increases would harm America massively in economic terms, but they were wrong. This proved that trickled down economics doesn't work.

By 2000, however, it was evident a bubble in stock valuations had occurred, such that beginning in March 2000, the market would give back some 50% to 75% of the growth of the 1990's. The economy worsened in 2001 with output increasing only 0.3% and unemployment and business failures rising substantially, and triggering a recession that is often blamed on the September 11 attacks. Corporate scandals existed too. The housing market caused a false sense of security from 2001 to 2007. George W. Bush signed a tax law that cut the top capital gains and dividends. He reduced the taxes rate from top earners 39.6% to 35%. The economy barely grew. The housing bubble was caused in large part by reckless policies from many banking interests. The Great Recession was global. The bursting of the worldwide bubble in housing harmed millions of American lives. Many banks and hedge funds borrowed hundreds of billions of dollars to buy securities which were toxic. Many U.S. and Europe banks went bankrupt like Lehman Brothers. Also, payday lenders exploited many poorer African Americans in charging them more interests than white Americans. Both George W. Bush and Barack Obama passed bank bailout legislation. The Great Recession ended the Bush administration completely.  The government for the first time took major ownership positions in the largest banks.

The stock market plunged 40%, wiping out tens of trillions of dollars in wealth; housing prices fell 20% nationwide wiping out trillions more. By late 2008 distress was spreading beyond the financial and housing sectors, especially as the "Big Three" of the automobile industry (General Motors, Ford and Chrysler) were on the verge of bankruptcy, and the retail sector showed major weaknesses. Critics of the $700 billion Troubled Assets Relief Program (TARP) expressed anger that much of the TARP money that has been distributed to banks is seemingly unaccounted for, with banks being secretive on the issue. President Barack Obama signed the American Recovery and Reinvestment Act of 2009 in February 2009; the bill provides $787 billion in stimulus through a combination of spending and tax cuts. The plan is largely based on the Keynesian theory that government spending should offset the fall in private spending during an economic downturn. Obama’s policies had a mixed results. The policies prevented a return of the Great Recession. Also, much of the job growth came into the wealthy and upper middle class. In the U.S., jobs paying between $14 and $21 per hour made up about 60% those lost during the recession, but such mid-wage jobs have comprised only about 27% of jobs gained during the recovery through mid-2012. Barack Obama expanded taxes for the top earners to 39.6% along with more tax on capital gains and dividends. In contrast, lower-paying jobs constituted about 58% of the jobs regained. Under the Obama years, the unemployment rate continued to decline. By the Trump years, the economy has remained stable with challenges. One was Trump’s recent tax bill that benefited massive corporations and limit taxes on the super wealthy. Tax cuts for the rich won't work to help end poverty or radically grow the economy because of many reasons. Since the 1980's, the tax rate of the wealthy has already been cut from 80% to less than 40%. During that time, wages for workers have been stagnant.

Wages continue to not rise massively among Americans and the U.S. economy is not where it needs to be. Right now, the unemployment rate is about 3.9%. It is also true that some of the wealthy grown by private banks and private industries deprived from cruel evil of slavery. There is still a lot of poverty in the world. The progressive social movements brought us unions, the 40 hour work week, civil rights legislation, women's right legislation, environmental standards, and other blessings that some take for granted. During that time of these forms of legislation from the early to 20th century to the late 1970's, the economy has grown in unprecedented levels. After the late 1970's, neoliberalism has grown economic inequality. The wealthiest 1 percent take home about 20% of the national income. That is why investing directly to the American people is necessity in growing the economy comprehensively. We need more educated, skilled workers which are productive to any economy. More workers having a living wage will buy items which built industries and those industries in term hire more people. Also, we need to help the poor and the working class as well. Funds in healthcare, education, and job training are key. Yet, the American people are very resilient and we shall overcome the extremism from the Trump regime.

*We live in a time where people want economic solutions and people are entitled to them. Trickle down economics doesn't work because of many reasons. One reason is that large corporations will not typically send billions of dollars to address economic inequality. Large multinational corporations with tax cuts will spend the money globally in favor of their interests irrespective of altruistic motivations. Also, the wealthy pay less of their income as a percentage than the poor or the middle class. Therefore, if you want more demand for goods and services, you have to send more income to the middle class and the poor, which makes up the majority of the American people. Many workers are consumers and consumers make up the majority of economy activity in the U.S. Most Americans aren't rich. Most Americans are either poor or middle class. Building the economy for the poor and the working class including the middle class is from the ground up. That is why any economic policy ultimately must address our healthcare, education, and infrastructure. A strong education with job training skills will in term help to grow the economy more comprehensively in America. This revolves around public investments since studies already document that public investments grow the economy. For example, the New Deal and Great Society programs cut poverty in half from 1960 to 1970. Also, these programs increased the amount of Americans in college.

We must strengthen our social safety net like Social Security, Medicare, and Medicaid. Before these three programs existed, millions of Americans suffered poverty, starvation, and some Americans unfortunately died because of a lax of resources. When Social Security was created in 1935, half of America's seniors were in poverty. By 1966, that poverty rate declined to 28.6%. Medicare existed when LBJ was President. JFK gave speeches in support of it like in NYC, but he passed away before it was made into law. Medicare guarantees health care for older Americans (which was opposed by Ronald Reagan back then too). In 1966, half of seniors had health care and today about 98.9 percent of seniors have health care. Medicaid was used to help the elderly and the poor in very compassionate ways. We as workers pay money into Social Security and Medicare everyday we work. This is our money and these social programs must be strengthened. These programs must be expanded and improved upon without cuts.

Universal pre-K is always beneficial. Investing in infrastructure is common sense. An economy can't function without an infrastructure. Without a ROAD you cannot TRANSPORT goods, WITHOUT POWER you cannot have a FACTORY. Therefore, resources to build structures, to create jobs, and to establish wealth are necessary in any civilization. Progressives and even some conservatives believes in investments in infrastructure like our roads, highways, public transportation, our hospitals, our schools, our bridges, etc. From 1945 to 1975, America made huge investments in infrastructure, education, and health care. Also, there was collective bargaining, union growth, and the growth of the civil rights movement which legitimately expanded rights for black people plus other minorities. That resulted in the lowest drop in economic inequality in American history, possibly world history. During that era of time, median income increased, but since the late 1970's, median income has stagnated because of neoliberal policies (like massive tax cuts for the wealthy, austerity, etc.). Heroes constantly are fighting for a higher minimum wage, a higher EITC (or an earned income tax credit), stronger unions, and lower taxes on the working class to be financed by higher taxes on the super wealthy). We, the people should run our own government not Wall Street-backed large corporations. That is why revolutionary economic policies must be fought for.

By Timothy

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