Why did the U.S. economy do so well in the years following World War II given how badly it had done in the years preceding America’s entry into the war? The answer, in a nutshell, is that dramatically reducing government spending and deregulating an economy can take that economy from sickness to health. In short, one of the main things a government can do to help a weak economy recover is to step aside.
I for one am not entirely convinced by the premise.
This is certainly one reason in a string of reasons why the United States recovered so well after the war, but what seems to be more important was a combination of these policies and a reduced industrial base in the rest of Europe. Our industrial base was fresh and thriving and ready to fill the gaping void in Europe and Japan (this is one reason why I think we’ll never see a return to this sort of manufacturing primacy in the US). While I support the policies this paper discusses, it’s difficult for me to say that this is a primary factor following the war. Despite this flaw, in my view it is nevertheless an interesting piece.