The Great American System… What Happened?

In a discussion of American political and economic history I was asked this question:

“We had a system that worked for decades, did we get lazy? Did we let our morals slide?”

My answer is as follows: 

No, we did not let are morals slide or get lazy.  We started demanding more from the system than the people who control it were willing to give.  During the post-war era, we had a generous welfare state and government supported full employment.   This caused the population to get restless and around the 1960’s they started demanding civil rights for black Americans, environmental protection, and vocally opposed the military intervention in Vietnam and the draft.  Additionally ordinary people were in a position to demand higher wages better and working conditions and as this ate into profits it sowed the seeds of the next downturn.  

In the mid-seventies, Samuel Huntington released has report The Crisis of Democracy which argued that the western world had too much democracy and that the “impulse of democracy is to make government less powerful and more active, to increase its functions, and to decrease its authority”.  As such advocated we: “restore the prestige and authority of central government institutions.”  As such this was done by switching from a social Keynesian model to a more military Keynesian model, and using the bust that occurred after the Arab oil embargoes to weaken the power of the working and middle class.  This of course was after the state had either outlawed or crowded out most alternatives to the welfare state it created, and implemented a legal regime that weakened organize labor.  As such under the new economy corporate profits began rising without the corresponding rises in standard of living that occurred in the immediate decade after WWII. 

The postwar sellers market in labor was turned into a buyers market has remained one ever since.  In the period since, capital has become more mobile, and the cost of post-secondary education has greatly increased, as has the cost of healthcare.  Additionally economic bust have become more extreme and their recoveries have become more mild.  A person can no longer start a family, and send their kids to college with a factory job, and even with a college education, finding suitable employment is often an uphill battle, that is made worse by the huge levels of debt associated with getting a college education.  This is at least how I understand it. I welcome any remarks from anyone who can challenge this understanding or provide further insights into this part of our history. 

This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s