US Economic Policy

1
US Economic Policy

• 1945-75

2
Keynesian Economics

• John Maynard Keynes
• British economist
• General Theory on Employment, Interest and Money,
  1936
• Monetary and fiscal policy should be used to
  counter drops in demand
• Economic stimulus in recessions

3
Post-War Accord

• Breton Woods System
• July 1944
• Each nation must maintain a fixed exchange rate
  to US currency
• US Dollar is reserve currency
• US must maintain certain level of gold reserves
• International Monetary Fund (IMF) created

4
The Post War Economy

• Fordism,1950s-1970s
• Mass production/mass consumption
• Little product differentiation
• Big companies
• Big unions
• Steady growth
• Sometimes called the Golden Age of capitalism

5
Trumans Fair Deal

• An expansion of the New Deal
• Goals
• Minimum wage
• Public housing
• Health Insurance
• Farm subsidies
• Health insurance and farm supports fail

6
Taft-Hartley Act

• 1947 Passed by Republican congress over Trumans
  veto
• Made closed shop illegal, but union shop
  allowed
• Undermined union growth
• South creates Right to Work laws

7
Eisenhower

• Republican, conservative
• Allowed recessions to combat inflation
• BUT also Keynesian
• Expanded Social Security
• Refused to cut taxes until deficits disappeared
• Space Race
• Highway System

8
Kennedys Policies

• Alliance of Republicans and Southern Democrats
  limits Kennedys plans
• Housing Act of 1961
• 5 billion over four years
• Expansionary monetary policy
• Eventually leads to inflation

9
The Great Society

• President Johnson
• War on Poverty
• Congress passes
• Medicare/Medicaid
• Housing and Urban Development (HUD)
• Education funding
• Repeal of National Origins system in immigration

10
Cesar Chavez

• Mexican American union activist
• Took up cause of migratory labor in California
  agriculture
• Founded United Farm Workers Union
• Led successful grape boycott

11
Nixons Policies

• Keynesian big spending
• War
• Entitlement programs
• Economic Stabilization Act of 1970
• Gave President power to set wage/price controls
• Result is shortages

12
Abrogation of Breton Woods

• To fund increasing budget and trade deficits, US
  refuses to keep up gold reserves
• Shock to the system
• Fixed international exchange rates replaced by
  floating rate system
• Fordist model is breaking down

13
Oil Crisis

• Yom Kippur War, 1973
• Egypt and Syria attack Israel
• US supports Israel
• OPEC declares embargo against US
• Price of oil skyrockets
• Leads to high inflation
• Gas shortages

14
(No Transcript)