Post war economic development in the U.S

Post war economic development in the U.S

After the Second World War, the United States of America underwent tremendous economic growth. The war had brought to a standstill the operations of the country as significant activities that contribute to the growth of the economy had been shut down. One of the significant claims that the leaders made was that the war had been responsible for perpetuating the poor—the economic status in the country. Therefore, after the war, economic development became a primary plan for the leaders not only because of the need to raise people’s standards of living but because the leaders had made promises. The people would see a failure to fulfill such obligations as the failure of the government to fulfill its promises.

American economy during the Second World War

During the Second World War, the American economy suffered immensely. The war effects were able to destabilize governments. The then-president tried to mitigate and reduce the impacts of the war on the country’s economy, but his efforts bore little success. Different economic indicators suggested that the country was still wallowing in the war effects (Fogel, 2005). For instance, during 1929-1932, the country’s gross domestic product declined significantly. The level of unemployment in the country was also an indicator of the war’s impact. The majority of American citizens were unemployed and could not afford their basic needs.

Sources of economic development

The expansion of the automobile industry in the U.S after the Second World War played an essential role in the financial growth of the country. The number of vehicles that the company annually produced quadrupled. As a result, the company was able to make a lot of profit due to the sale of the cars hence earning a significant amount of revenue for the government.

Recognition of the role of women in leadership in the U.S after the war played also contributed to the improvement of monetary growth in the country. Women were elected in high positions of power, which made it possible for them to operate for the greater good of the people. For instance, the selection of women to head different government parastatals contributed to increased production hence improved economy in the country.

The United States of America also experiences a housing boom due to the availability of affordable mortgages for returning service members. Homeownership also played an essential role in the economic growth of the U.S. Homeownership played a substantial role in the prevention of the growth of slums in the U.S. slums can play a critical role in the event of illnesses associated with poor living conditions (Maier, 1977). For instance, heart-related diseases can arise due to living in rooms with poor ventilation. Besides, cholera can occur due to the availability of safe drinking water. The government was, therefore, able to redirect the finances that would be used in treating sick individuals into other development projects such as the construction of schools.

The areas in which the homes are located provides an opportunity for people with different talents to interact and share ideas that impact positively on the economy of the country. For instance, sharing ideas in the neighborhoods led to the development of social amenities in the area, which reduced the poverty rate among the people. The low poverty rate meant that there was a flat dependency rate on the part of the government (Fogel, 2005). Hence, the government was able to focus on the development of other projects, such as improving the education sector. Besides, the neighborhood brought people together, therefore, creating a good relationship among the people. The excellent relationship made it possible for the people to report any suspicious behavior in the area hence maintaining peace, which plays a substantial role in the growth of the country as people can operate without fear of being attacked.

After the Second World War in 1945, significant organizations in the U.S.A expanded significantly. Although the previous years had experienced waves of company mergers, 1945 experienced such mergers significantly. Companies with different branches in a different part of the world merged, establishing additional offices in and out of the country. International companies that dealt with communication came together and improved their services. Besides, companies that dealt with issues related to food also merged. For instance, smaller franchise operations like McDonald’s fast-food cafés provided still another pattern (Maier, 1977). Large companies also opened up branches in other counties where terms of service were favorable. The growth of such companies was essential for the survival of businesses in the country. The organizations were, therefore, able to acquire assets, attract new talents in the industry, and additional fund investments. The growth of these businesses also made it possible for people to increase their stability and profits substantially.

The media, and especially television, had a powerful influence on the community and financial arrangements. Although the TV had been established in the 1930s, it was not extensively recognized until the end of the Second World War. After the war, only a few privileged individuals owned television sets.

However, after the war, a large number of individuals were able to purchase the televisions, and the number kept on increasing as time went by. The TV did not only act as a source of entertainment to the people but also served as a critical driver to the American economy (Fogel, 2005). The broadcasting televisions worked as a source of a myriad of employment opportunities and also acted as a platform through which different companies could advertise their products. In a nutshell, the profitable native transmission industry was disapprovingly significant to the United States economy at large and local economies in specific. For instance, the revenue which was received by employees in occupations unswervingly connected to native television broadcasting, either in the business itself or in the many providers that support the business openly, helped generate additional financial activity.

After the Second World War, the United States of America experienced a period of political stability, which triggered the economic growth of the country. There exists an essential relationship between economic growth and political stability. The risks related to an insecure political environment can significantly decrease the rate of investment and financial growth. On the other hand, the poor monetary routine may trigger an administration’s collapse and political turbulence. Due to political stability in the U.S after the war, individuals were able to open up businesses without fear of incurring losses (Maier, 1977). Besides, foreign investors in the country were also able to open up new markets in the country hence increasing the availability of job opportunities in the country. Job opportunities, on the other hand, improved the standards of living of the people, thus reducing the poverty rate in the country. Low poverty levels also ensured that the price of crimes in the country became low as people would not engage in crimes in search of their essential needs.

Benefits of economic growth in the U.S after the war

Higher average income among individuals triggers economic development, which enables individuals to consume more goods and services and enjoy improved state of living. For individuals living in any part of the world, the average person’s satisfaction is based on a combination of individual wealth, possessions, and optimism. Individuals who can afford their basic needs are likely to lead happier lives (Maier, 1977). For instance, after the Second World War, financial development in the U.S played an indispensable role in decreasing certain levels of insufficiency and enabling a rise in life expectancy.

Lesser joblessness. Commercial development in the U.S also saw the country experience a flat unemployment rate. The established companies absorbed a lot of individuals and hence reduced the number of unemployed individuals in the country (Fogel, 2005). As a result, the dependency rate was decreased as people could now depend on themselves.

Economic growth in the U.S after the war also lessened the administration’s borrowing significantly. Financial development generates higher tax incomes, and there is little or no need to devote money on welfares such as joblessness welfares. Therefore commercial development helps to lessen an administration’s borrowing. Economic growth also plays a role in dropping debt to GDP ratios. The U.S was able to evade the negative consequences of government borrowing (Maier, 1977). When a country’s debt approaches a severe stage, stakeholders typically start asking for an increased interest rate. They demand increased benefits for a more substantial risk. This shows how likely it is that the nation will not afford to pay the debt. Besides, as interest rates rise, it becomes more difficult for a society to refinance its current mortgage. As time goes by, revenue has to go toward debt reimbursement, and less toward an administration’s services

Intensified economic development in the U.S also ensured that there were improved public services in the country. With amplified duty incomes, the administration was able to invest more in social services, such as the construction of world-class recreational facilities such as stadia and public parks. Besides, the government managed to improve the educational system in the county. An improvement in the educational system triggered advanced living standards, such as augmented life probability, advanced rates of literacy, and a better comprehension of community and fundamental issues (Maier, 1977). For instance, knowledge of the political problems in the U.S has made it possible for the people to elect good leaders in the country who have managed to spearhead the development of the country tremendously. Besides, political maturity in the country has allowed people to choose leaders based on their manifestos instead of racial affiliation.

Financial growth also amplified research and advancement. Enormous economic growth led to increased effectiveness for companies, allowing more expenditure on research and extension. Furthermore, continued monetary growth expanded self-assurance and encouraged companies to take risks and invent. Research plays an essential role in the expansion of a business. Through research, a company can realize what their customers want and come up with the best goods and services to satisfy the clients (Fogel, 2005). The United States of America managed to support research through which risks related to a different issue in the country have been overcome, which has impacted positively on the growth of the economy.

Economic theories and their influence in the growth of the post-war economy in the U.S

The theory of demand believes that the request for particular goods and services is grounded on factors such as the price of the products and services. Quality goods and services that are offered at a fair price tend to sell more compared to goods and services, which are sold at a very high price as only a few individuals can afford such products and services (Maier, 1977). The theory also denotes that the higher the number of incomes that buyers get, the more the buying capability. Besides, the prices of related goods and services also determine the people’s demand for particular products and services. Theses theory, therefore, played an essential role in the growth of the American economy after the Second World War. After the war, individuals who had taken part in the war as soldiers came home loaded with a lot of cash. Their financial capabilities made it possible for them to purchase houses and settle in urban areas. Besides, the field of real estate in the U.S had improved tremendously due to the merger of different companies. As a result, the companies were able to construct and sell houses at a considerably lower price, which made it possible for individuals to purchase homes (Fogel, 2005). Besides, the rate of unemployment in the country significantly reduced due to the growth of different companies such as the automobile industry, thereby increasing the consumption rate of the people and especially in issues related to housing. Besides, due to government support, financial institutions were able to offer mortgage services at low interest, thereby increasing the people’s financial capabilities, which made it possible for people to buy houses. An improvement in the housing sectors in the country played an essential role in the growth of the American economy at large.

The perfect competition market structure theory

According to this theory, a competitive market environment provides a ground for comprehending how different businesses operate in a capitalist economy. Ac competitive business environment is determined by factors such as similarity of the goods and services in the market, the availability of many clients, and faultless flexibility of resources or factors of production. When different companies produce similar goods of the same quality and sell such goods and services at the same price, individuals tend to purchase products from all those industries without caring about the nature of the companies (Maier, 1977). For instance, the expansion of the motor vehicle industry in the U.S after World War 2 saw the different companies make considerable profits due to an extension of both the local and the international markets. Individuals would purchase vehicles from different companies, as they produced high-quality, cost-effective products.

The existence of many buyers also played a significant role in increasing the demand for the different services in the U.S., the higher the demand, the higher the supply. Improved financial capabilities increased people’s purchasing power. For instance, due to the reduced unemployment rate in the country due to industrialization, people could now afford primary and secondary needs (Fogel, 2005). Besides, the sprouting suburbs necessitated the provision of essential services in different neighborhoods in the country, thereby increasing the customer base. Industries were forced to produce more goods and services due to the increasing population and demand or various products such as houses and vehicles to run errands. The availability of favorable factors of production also plays a significant role in the growth of any economy.

Government policies can either encourage or discourage the expansion of different companies in a country. The United States, for example, charged a considerable amount of taxes to individuals who wanted to invest in the country after World War 2. The favorable taxes made it possible for both local and international investors to establish businesses in the country, thus improving the economy of the country (Maier, 1977). Besides, the government was able to provide electric power at a significantly lower price making the market attractive to different investors. The government’s dedication to provide and maintain a state of security in the country was also appealing as it inspired a sense of security to individuals. Individuals were, therefore, not afraid of being attacked and incurring losses from their businesses.

Classical economics

The theory believes in free markets, and that state of the economy would always attain total employment through forces of demand and supply. For instance, if there exists a higher number of individuals seeking employment opportunities compared to the number of available jobs, the number of salaries that the employed individuals receive would be reduced until all people secured employment opportunities (Fogel, 2005). Individuals who supported this theory did not see any role of the government in the business. Such individuals never advocated for the use of fiscal policy by the government.

Reasons behind the economic boom after the war

After the war, the American economy improved immensely. Many individuals, and especially economics, thought that the economy would sink into more depression. However, things took a different turn as the government was able to cut on its spending. For instance, the amount of money that was used to finance the war through buying of ammunition was used to carry out other essential activities. Besides, the government reduced and stopped recruiting more armed soldiers due to the end of the war. As a result, the figures which were used to hire additional men were used to support other economic activities such as the construction of essential infrastructures (Maier, 1977). The industries which produced weapons during the war were also able to adjust—such sectors engaged in the production of goods such as toasters whose demand had significantly increased. After the war, too, the government stopped controlling private companies. The companies were, therefore, given the liberty of engaging in other economic activities. As a result, they participated in the production of a myriad of goods and services hence making large amounts of profits.

Conclusion

In conclusion, it is essential to recognize that every event in a country has both positive and negative effects on the economy and the general people’s way of life. However, no individual can intentionally trigger any kind of violence to subject the economy to a period of hardship in an attempt to create economic health. Whenever a country experiences a period of financial difficulties due to conflicts, it is the role of the government to come up with measures to improve the economy after the war period. For instance, after the world war, the American government came up with proposals to reduce the impacts of the war. The government cut taxes, which encouraged many people to invest in the country. Besides, the government made it possible for industries that previously engaged in the production of weapons to venture into the creation of essential goods and services.

References

Fogel, R. W. (2005). Reconsidering expectations of economic growth after World War II from the perspective of 2004. IMF Staff Papers, 52(1), 6-14.

Maier, C. S. (1977). The politics of productivity: foundations of American international economic policy after World War II. International Organization, 31(4), 607-633.

CLICK HERE TO ORDER A PLAGIARISM-FREE PAPER

Post war economic development in the U.S