American Economic History

1
American Economic History

• Rebuilding the International Economy October 12,
  2007
• Economics 113 U.C. Berkeley Fall 2007
• Brad DeLong

2
Lecture Outline

• The Gold Standard
• The Interwar Catastrophe
• Post-WWII
• Bretton Woods
• Marshall Plan
• Political Democracy
• Mixed Economy
• Social Democracy

3
The Gold Standard
4
The Interwar Catastrophe
5
Post-WWII

• Bretton Woods
• Marshall Plan
• Political Democracy
• Mixed Economy
• Social Democracy

6
Present at the Creation

• The non-isolationist U.S.
• Marshall Plan as symbol
• After WWII, everything went right in the North
  Atlantic world
• Western Europes odds in 1945 do not look very
  good at all
• U.S. arrives with carrots
• And does a remarkably good job
• Two sets of comparisons
• Post-WWII to post-WWI Europe
• Post-WWII Europe to post-WWII Argentina

7
Western Europe in the Aftermath of WWII

• Slow and uneven recovery
• Hunger
• Absence of private capital
• Political risks
• How close to the edge?
• What is the edge?
• Bankruptcy of the American model?

8
U.S. Post-WWII Intervention

• UNRRA
• Truman Doctrine
• Marshall Plan
• MSA
• NATO
• Carrots
• But also conditionality
• Mixed economy
• Democratic politics
• Openness to world trade

9
Comparing Post-WWII to Post-WWI

• WWII more destructive than WWI
• Recovery faster after WWI
• Not a rubber band affect
• Not just a favorable post-WWII international
  environment

10
Was it the Marshall Plan Directly?

• Private investment boost?
• 2
• Bottlenecks?
• 3 to 7 at most
• Market economies route around bottlenecks
• But are direct effects the most important?
• Would the market have been allowed to do its job?

11
Europe in the Argentine Mirror

• Juan Peron
• Descamisados
• National pride
• Argentina stands up
• Longer-run consequences of Peronism
• Sounds a lot like interwar Europe, doesnt it?

12
Effects of U.S. Aid

• Financial stability
• Counterpart funds
• Use of the stick
• Requirement of market economy
• Requirement of international openness