Historical Patterns in US Economy & Economic Policy April 1, 1999

US Economy over Time Agrarian Society Industrial Society Post Industrial Society

Agrarian Society Subsistence Agriculture Plantation Economies Land Rich, Cash Poor Relatively high level of equality; relatively low income

Industrial Society Mass Production National Market Corporations Urbanization Concentration of Economic Power Income Inequalities Class conflict

Post Industrial Society Movement of information Education in place of natural resources Brains not brawn Rapid Change

Economic Growth is not Constant Recessions -- total output declines for 2 or more quarters Relationship of Unemployment to Inflation (As unemployment declines, inflation increases) As usage of productive capacity increases, productivity decreases and inflation increases

Inflation Impact Inflation destroys growth Inflation weakens middle class Inflation has its own momentum, that can lose control Inflation heightens social conflict

Five Eras of US Economic Policy

Building the Infrastructure Nationalizing the debt and Hamilton National Economic Policy Tariffs to stimulate local production National bank Land sales to finance public goods

Economic Regulatory State Railroad Monopolies and ICC Sherman Anti-Trust Act Standard Oil Progressive Era -- Child Welfare Laws

Welfare State: Regulation of the Business Cycle Great Depression and threat to Capitalism and Democracy New Deal and Protection of Business -- FDIC, Social Security, FCC

The Depression Challenged American Capitalism

Military Industrial Partnership Rapid Growth and involvement of government in business sector Interstate Highway NDEA Big Businesses

Social Regulatory State Great Society Programs Reduce Risk to ‘all Citizens\ Equal Opportunity Medicare/Medicaid

Political Economic Culture of the United States Americans Support Capitalism and do not like Big government Americans support equality of opportunity, not equality of outcomes Americans tend to be pragmatic economic conservatives, not laissez faire adherents Americans support earned rights not entitled programs (Yes to Soc. Sec. No to Welfare)