World War 2 Until the Modern Time in the U.S.

U.S. Economy Since World War II

economy is the largest in the world but has the most unequal distribution of wealth among all the developed countries of the world. The major reason for this inequality is that since the Second World War most U.S. governments have tended to favor the wealthy and the corporate sector while formulating their economic policies. Such "rich friendly" policies have become more pronounced since the early 1980s and continue to this day to the detriment of the society and the economy. This essay gives an overview of the post-World War II U.S. economy and outlines the ways in which various U.S. administrations have enacted policies favoring the corporate sector and the wealthy.

Background

The 18th century British economist Adam Smith advocated the benefits of a Laissez faire economy in his The Wealth of Nations (1776) by proclaiming that a "free economy" in which every individual pursues his own good, works for the benefit of everyone. These principles of a capitalist economy were adopted by almost all Western countries including the United States following the Industrial Revolution. The 19th century United States thus saw the rise of the "robber barons" -- an era in which industrial workers were ruthlessly exploited by a handful of capitalists who also exercised great influence over the government. The result of the "free" economy without regulation and the unchecked pursuit of profits was one of the main reasons behind the Great Economic Depression of the 1930s in which millions of Americans were rendered destitute. This, in turn, prompted the "New Deal" Reforms of Franklin Roosevelt which led to increased government regulation of the economy and far-reaching reforms such as minimum wages and social safety nets for the poor. As a result, the U.S. economy turned around and was put on the path of prosperity.

Post War Economy

President Harry Truman favored a continuing government role in the post-war economy and wanted to pursue the New Deal policies of FDR after the war. The Republicans and conservative Democrats were bitterly opposed to the strategy and wanted a return to minimal government controls and a laissez faire economy. As the Democrats lost control of the Congress in the 1946 midterm elections, Truman was unable to implement his liberal economic policies. The congress, thus, began to roll back the New Deal policies and managed to reduce the government's role in the economy. For example the "Taft-Hartley" labor law was passed in 1947 which reversed an important New Deal Act (the Wagner Act) and severely restricted union activity. ("Harry S. Truman," para on Truman and Post-War America)

Economic Policies of the Presidents who Followed Truman

The economic policies of the U.S. Presidents who immediately followed Harry Truman, i.e., Eisenhower, Kennedy and Johnson were as pro-poor as could be expected under the circumstances.

Eisenhower, although a Conservative Republican, resisted the pressures from the right wing Congressmen to reverse FDR's New Deal programs by continuing programs such as Social Security and public works programs including the Interstate Highway System. ("Eisenhower," Encarta Article)

President Kennedy was in charge for only a short period but generally followed a balanced economic policy -- investing in education to benefit the poor and favoring businesses with an investment tax credit. Johnson implemented a number of public welfare projects in the areas of poverty-reduction, education and health and Civil Rights and can arguably be considered the most poor-friendly U.S. President of the post World War-II era -- at least as far as the effect of the policies is concerned.

President Nixon has a mixed record on economics. Although he increased social welfare spending in certain areas, he refused to raise taxes to cater for the increased spending on the Vietnam War. When faced with rising inflation, he attempted to slow it down by cutting government spending on domestic social programs, such as education, urban renewal, and antipoverty programs, while resisting congressional attempts to reduce military spending.

The most "rich-friendly" economic policies were introduced by President Reagan in the 1980s. Popularly known as "Reaganomics," they were based on large tax-cuts for the rich and large corporations and major reductions in government spending on social programs such as college loans, food and medical programs, child day-care centers and centers for the elderly. The Reagan administration also relaxed environmental and safety standards to avoid "undue hardships" for American businesses. At the same time, the defense spending during the Reagan presidency increased sharply -- from $134 billion in 1980 to $290 billion in 1988. ("Reagan Ronald W (ilson)" Para on Economic Policies) Reagan's economic policies were continued by his successor, George Bush.

President Clinton, who succeeded Bush in 1992, was confronted with the challenge of controlling the large budget deficits that he inherited. During his Presidency, he faced a largely Republican-dominated Congress and could not have reversed most of the social program reversals made by the Reagan administration even if he had wanted to.

How are the Economic Policies influenced by the Large Corporations?

According to the Marxist theory, one of the features of capitalism is the trend of increasing monopoly and the driving out of the smaller firms by the larger bigger firms. In the context of the U.S., the merger trend in the U.S. during the last several decades have also reduced the number of firms in almost every field ranging from the heavy industries such as steel, oil, chemicals, and electrical goods to new technology companies such as computer hardware and software, as well as the retail outlets and even the print and electronic media.