Transcript US Economy
Basic economic philosophy
A belief in the market forces
Private initiative
Laissez-faire
Self-reliance
The ”self-made” man
Adam Smith
The Wealth of Nations
economic philosophy based on self-interest
the invisible hand
self-interest results in common good
led to rapid economic growth
1870-1929 Increasing problems
End of the frontier
Growth of towns
Falling wages
Speculation in land
Supply exceeded demand
Crash in 1929
1930s Great Depression
The New Deal
Roosevelt (Dem.) President
Increased state intervention
Used Keynes’ ideas
Created jobs and subsidised farmers
Introduced minimum wage
Start of social security
Recovery: World War Two
Jump-start to US economy
US supplied the Allies
weapons
clothing
food
Unemployment disappears
Workforce widens
women & blacks employed in industry
Post-war expansion
Internationalist period
IMF, Marshall Aid, UN,
Saving world from Communism
Developing overseas markets
Increase in living standards
Growth of middle class
American workers well-paid
Economic boom - 1945-1965
The difficult seventies
Economy slowed down
Reasons
Competition from Germany & Japan
Oil prices increased from 1973 (OPEC)
Stagflation
Falling growth & rising inflation
New departure: Ronald Reagan
“Supply-side” economics
Tax cuts, not subsidies
Backed by Milton Friedman
Did not cut government spending
Triple deficit
Budget deficit
government spent more than it received
National debt
accumulation of budget deficits
Trade deficit
imports exceeded exports
US Economy today
Economy looking strong
High productivity
Low inflation
High employment
Budget surplus
Economic strengths
Strong currency
International influence
Strong agricultural sector
Cutting edge technologies
Huge domestic market
Excellent communications network
American mentality
Threats
International instability
Trade deficit
Wealth gap
Social issues
Risk of inflation