Why was the 1950s economy good for people?

Old Mare Yells At Cloud. (News, Events, Philosophy)
Post Reply
Perrydotto
User avatar
Agents of Chaos
Posts: 1268
Joined: Sun Oct 29, 2017 6:20 am
Gender: Female
Location: The Final Frontier

Why was the 1950s economy good for people?

Post by Perrydotto (?) » Sun Dec 03, 2017 12:38 pm

Yeah, see thread subject.

Metal and I are discussing economy and job market stuff and our limited knowledge of both is making us wonder: How is the economy of places like the US today different from how it is now? As far as we understand, both share strong economies, but it seems like average people benefited more in the 50s than they did now. Obviously the world was a very different place in the 50s, but we are wondering why it feels like a lot of the economic strength Western countries are boasting today isn't reaching the average joe. Trickle-down economics seem to be a myth in general, but what is happening now VS what happened back then? Did it even happen that way? How could the economic strength of countries like the US or Germany actually benefit the average people?

We are definitely very dumb about this matter, can anyone school us a bit?
Image /// Image /// Image

Factory Factory
User avatar
HELLO I AM HONSE
Semper Pie
Posts: 137
Joined: Sat Oct 28, 2017 10:56 pm
Gender: Male
Location: Horsedale, NY

Re: Why was the 1950s economy good for people?

Post by Factory Factory (?) » Sun Dec 03, 2017 1:17 pm

The long and short of it is "the aftermath of World War II." Huge investments in manufacturing for wartime and a relatively untouched mainland gave the US incredible manufacturing capability. The Marshall Plan guaranteed that the rebuilding efforts in devastated European economies 1) could proceed financially and 2) would have to spend this aid on American businesses to meet demand, creating a huge demand for American goods. Countries benefitted by the Marshall plan were thus able to rebuild pretty quickly and reinvest in their economies.

The 1950s is also when the crazy sciences developed in World War II began to see commercialization and STEM became a national priority due to the Arms Race and the Space Race.

In essence, the U.S. was tricked by "national security" into creating an enormous redistributive social investment system at home and abroad coming right out of a major economic downturn (i.e. war), which is a pretty good time to create an enormous redistributive social investment system.
Image
There is no guarantee that the wizard selling you that bag full of magic sand is wearing pants underneath his robes.

Octavia
User avatar
Octavia's Orchestra
Patreon supporter
Posts: 1313
Joined: Mon Oct 30, 2017 11:59 pm
Gender: Male
Location: Chicago, IL
Contact:

Re: Why was the 1950s economy good for people?

Post by Octavia (?) » Sun Dec 03, 2017 5:48 pm

Here's also a huge reason why the economy was booming in the '50s

Image

The wealthiest people actually paid a high marginal tax rate back then, so the government had a lot of money to put into social programs and infrastructure, which created jobs, which led to a thriving middle class. Historically, the best economies happened when the middle class was the strongest. This is because they have the money to spend on luxuries, but spend a larger percentage of their income on them than wealthy people. If someone makes $50,000 a year, they probably have bought one car. Someone who makes $10,000,000 a year probably doesn't own 200 cars, which is the amount they would need to spend on cars to create an equivalent amount of sales tax revenue. So even though they make the same amount of money, it helps the economy much more if the wealth is split among 200 middle class people rather than one wealthy person.
ImageImageImageImageImage

Pocket
User avatar
Hell is other people
That's what some people say
Well, welcome to hell
I'll be your devil for today
Posts: 316
Joined: Tue Nov 07, 2017 4:52 pm
Contact:

Re: Why was the 1950s economy good for people?

Post by Pocket (?) » Sun Dec 03, 2017 9:02 pm

Yeah, basically. Reagan saying he was going to take America back to the 1950s was the biggest lie ever sold to the American people, because he enacted the exact opposite policies that were in place back then. And notice that the 91% tax rate remained untouched under Republican President Eisenhower. Granted, he probably allocated a lot of it towards churning out thousands of nukes rather than social programs, not to mention building the interstates and having a pissing contest with the Soviet space program. Still, though. It's pretty funny that our highest tax rates were during the same decade that people were getting disappeared for being suspected Commies.

SlateSlabrock
User avatar
Celestia's Champions
Patreon platinum
Posts: 439
Joined: Tue Oct 31, 2017 12:02 am

Re: Why was the 1950s economy good for people?

Post by SlateSlabrock (?) » Sun Dec 03, 2017 9:41 pm

Sometime in the '70s, the U.S. gave up on making rising tides lift all boats.

Image

Image

And no matter how much the American economy grows, the average family isn't getting much out of it:

Image

If you grew up or started working in the '50s and '60s, you were an equal partner in the country's success. Even in the '70s and '80s, there was enough opportunity to go around. But now American workers are being left behind, and the people who benefit are too rich to care.

Perrydotto
User avatar
Agents of Chaos
Posts: 1268
Joined: Sun Oct 29, 2017 6:20 am
Gender: Female
Location: The Final Frontier

Re: Why was the 1950s economy good for people?

Post by Perrydotto (?) » Mon Dec 04, 2017 6:10 am

Was this down to a change in political policies for the most part, or have other factors made it so the rich increasingly left everyone else behind?
Image /// Image /// Image

Mir
User avatar
Apple Artisans
Posts: 47
Joined: Mon Oct 30, 2017 11:03 pm
Gender: Female

Re: Why was the 1950s economy good for people?

Post by Mir (?) » Mon Dec 04, 2017 9:56 am

Well, Unions used to be very strong in the US but they've been weakening to the point that they're almost a non-factor at this point.
Another factor is that it's become exponentially easier for large corporations to produce their goods over seas and ship them in. Even what little they end up spending rarely ends up back in the pockets of US citizens.
And there's also just not nearly the demand for a lot of goods and raw materials, as other countries around the world develop.

Mr. Big
User avatar
Open yourself to the Garfield option.
Rarity's Roughnecks
Posts: 904
Joined: Mon Oct 30, 2017 11:00 pm
Gender: Male
Location: Tennessee
Contact:

Re: Why was the 1950s economy good for people?

Post by Mr. Big (?) » Mon Dec 04, 2017 11:41 am

Yeah. I'm sure it was already weakining before he took office, but Reagan (himself a former union leader) is generally credited as the one who helped strip the power of labor unions when he fired the striking air traffic controllers.

It basically sent the message to company executives that firing striking workers was OK because hey, the president did it.

It was an even bigger kick in the groin for that air traffic controller union because they endorsed Reagan during his campaign, and they were counting on him to support them.

SlateSlabrock
User avatar
Celestia's Champions
Patreon platinum
Posts: 439
Joined: Tue Oct 31, 2017 12:02 am

Re: Why was the 1950s economy good for people?

Post by SlateSlabrock (?) » Mon Dec 04, 2017 3:30 pm

I think the '70s are the place to look for the original change in policy that drove capital and labor apart. Reagan was already on the political stage by then, but he wasn't president yet. Here's a snippet from the first article I ran across on the subject:
Dollars and Sense wrote:There were three major prongs in the capitalist mobilization. First, they financed policy organizations (or “think tanks”) which helped develop the conservative economic policy agenda. Capitalists channeled financial support to existing conservative think tanks, like the Hoover Institution and the American Enterprise Institute, which until then had limited resources and influence. They also supported new policy organizations, founded in the early 1970s, like the Institute for Contemporary Studies and the Heritage Foundation. This support helped vault both older and newer conservative think tanks to national prominence.

Second, they stepped up the scale and effectiveness of their lobbying efforts. Capitalists swelled the membership of existing business organizations, such as the U.S. Chamber of Commerce, and large corporations created a major new organization, the Business Roundtable. Founded in 1972 (merging two earlier organizations), the Business Roundtable brought together the largest U.S. industrial companies. By 1974, its 150 members included 60 of the largest 100 industrial companies in the United States and 90 of the largest 200. During the late 1960s and early 1970s, large corporations had been on the defensive, facing a rising tide of environmental, occupational safety and health, and consumer-protection regulation. By the late 1970s, two major pieces of reform legislation, a labor-law reform proposal backed by the AFL-CIO and a bill to establish a consumer-protection agency, went down in defeat, largely due to the business mobilization against them. As political scientist David Vogel put it, “business turned the tide” politically, even before the watershed 1980 election brought a slew of new conservatives to Congress and Ronald Reagan into the White House.

Third, they directed support to conservative candidates for public office. Capitalist corporations do not always direct campaign contributions only to candidates they perceive as ideologically “pro-business.” Individual corporations also use campaign contributions to gain influence with elected officials and may contribute to candidates they do not regard as generally pro-business, but who they think are likely to win election and repay the favor of a campaign contribution. Companies in highly regulated industries and those highly dependent on government contracts are especially likely to engage in this kind of “pragmatic” campaign giving. By the 1978 election cycle, corporate political action committees began to shift away from pragmatic and toward ideological contributions. Rather than contribute to powerful incumbents large corporations increasingly directed their contributions to conservative challengers. This support helped shift the ideological composition of Congress in a “pro-business” direction, especially in the 1980 elections, and helped conservatives defend their gains in 1982.

The capitalist mobilization of the 1970s played a big role in bringing about a sea change in economic policy, sometimes known as the “right turn,” beginning late in the decade and continuing with the “Reagan Revolution” in the 1980s:

The “full employment profit squeeze” ended in the late 1970s, when Federal Reserve chair Paul Volcker, appointed by President Carter, engineered a dramatic increase in interest rates. This detonated a deep recession and pushed the average annual (official) unemployment rate near 10% in both 1982 and 1983. Massive unemployment was not an unintended consequence of this policy, but the chosen means to finally break the power of workers to push for wage demands. By the 1980s, the power of the labor movement had been waning for years, and individual capitalist corporations had adopted an increasingly aggressive stance toward labor. This employer offensive intensified after Reagan broke the air-traffic controllers’ strike in 1982, widely interpreted as a signal to capitalists of “open season” on unions. Union decline accelerated, and strikes (which had become virtually unwinnable in the new anti-union climate) dropped off dramatically.

Quanta
User avatar
Which Witch?
Rarity's Roughnecks
Patreon supporter
Posts: 182
Joined: Mon Oct 30, 2017 10:56 pm
Gender: Male

Re: Why was the 1950s economy good for people?

Post by Quanta (?) » Tue Dec 05, 2017 12:39 am

Perrydotto wrote:
Mon Dec 04, 2017 6:10 am
Was this down to a change in political policies for the most part, or have other factors made it so the rich increasingly left everyone else behind?
If you Google Mark Blyth, he mentions this era a lot in his talks. Basically, rising wages were creating a situation where businesses were hardly seeing any profits, and rampant inflation basically made holding debt for someone a good way to lose money since the inflation going on would make it trivial to pay off after a few years. Like, imagine taking out a loan and buying a house in a nice neighbourhood for $1000 or something, then selling it for $10,000 a few years later and giving the bank their $1000 back, and that's assuming the house hasn't appreciated in value in the intervening years.

Shit like this basically made the rich go "This blows, so let's change everything," and they basically set to work starting in the 1970s on establishing the current global economy and removing the chains that had been put upon finance since the Great Depression, which gave them the means to smash the labour movement to pieces. Now politicians are little more than middle-management types, and central banks basically have the goal of ensuring that inflation is kept to a minimum.

Anyways, I probably explained that poorly, so here's a video from September 2016 where he discusses what he calls "Global Trumpism", which is basically the name he gave to this whole neoliberal backlash we're currently experiencing all over the world.

ImageImage
Image3DS Friend Code: 2852-6885-2752

drunkill
User avatar
me @ ur posting
Patreon supporter
Posts: 66
Joined: Sat Oct 28, 2017 10:49 pm
Gender: Male
Location: Melbourne, Aus

Re: Why was the 1950s economy good for people?

Post by drunkill (?) » Fri Dec 08, 2017 11:52 pm

Because the rise of the car following WW2 helped the land boom expansion in many countries, suburbs began to sprawl meaning families could cheaply buy their own house and white picket fences. Particularly in America where there was minimal damage to the country or population (in comparison to the rest of the developed world) from the war.
Image

theGECK
User avatar
People don't "become an adult", they just get too old to be called a kid
Scootaloo's Pro Scooters
Posts: 95
Joined: Tue Oct 31, 2017 9:12 am
Gender: Female
Location: World's best hospital

Re: Why was the 1950s economy good for people?

Post by theGECK (?) » Wed Dec 13, 2017 9:26 am

Another factor is currency after WW2. Since the US had such a surplus of manufacturing power, they ended up with a lot of the gold which enabled them to print more dollars since they were still on the gold standard. Because the US had so much gold, numerous countries pegged their currencies to the US Dollar, which gave USD tremendous buying power on the world stage. Extra Histories did a good job of describing it here.

Jill
User avatar
it's the super maria sisters super show!!!
Special Flowers
Posts: 379
Joined: Mon Oct 30, 2017 10:59 pm
Gender: Female
Contact:

Re: Why was the 1950s economy good for people?

Post by Jill (?) » Wed Dec 13, 2017 11:18 am

this thread reminded me of this 'toon:

Image

CorvusCaw
User avatar
Maud Squad
Posts: 155
Joined: Tue Oct 31, 2017 10:39 pm
Gender: Female

Re: Why was the 1950s economy good for people?

Post by CorvusCaw (?) » Sun Dec 17, 2017 5:52 pm

There was no real trickle down in the 1950s... Or at least, the trickle was extremely limited in outlook. The poverty rate didn't change much during the 1950s, hovering around 20 to 22 percent the entire decade (and 54 percent for African Americans). The notable decrease didn't occur until the mid 1960s, in the aftermath of the New Frontier and Great Society
ImageImageImageImageImage

diribigal
User avatar
Special Flowers
Posts: 151
Joined: Tue Oct 31, 2017 6:35 am
Gender: Male

Re: Why was the 1950s economy good for people?

Post by diribigal (?) » Fri Nov 29, 2019 1:53 pm

Scientific American recently put out an article Is Inequality Inevitable(aka The Inescapable Casino).

Basically, a very simple model seems to fit a bunch of countries' economies quite well. In the model, people randomly win and lose in one-on-one financial transactions an amount equal to some fraction of the poorer person's wealth. Also both sides borrow a bit before doing that. Also, there is some benefit to being richer so the chances of winning aren't 50-50. But there's also some redistribution so the rich people subsidize the poorer people to some extent.

If the redistribution of wealth compares to the benefits of being rich in a certain way, thing are reasonably fair. Otherwise, wealth naturally gets concentrated in the hands of the few. Maybe the Netherlands is just barely on the good side of the line, but most countries are not: there isn't enough redistribution to counteract the benefits of being rich over long timescales.

I recommend reading the whole thing as the description of the math is not too complicated and there are interesting details.
ImageImageImage Very math.

Demeh
User avatar
Limo Learners
Posts: 30
Joined: Wed Oct 16, 2019 3:10 pm

Re: Why was the 1950s economy good for people?

Post by Demeh (?) » Fri Nov 29, 2019 6:09 pm

diribigal wrote:
Fri Nov 29, 2019 1:53 pm
Scientific American recently put out an article Is Inequality Inevitable(aka The Inescapable Casino).

Basically, a very simple model seems to fit a bunch of countries' economies quite well. In the model, people randomly win and lose in one-on-one financial transactions an amount equal to some fraction of the poorer person's wealth. Also both sides borrow a bit before doing that. Also, there is some benefit to being richer so the chances of winning aren't 50-50. But there's also some redistribution so the rich people subsidize the poorer people to some extent.

If the redistribution of wealth compares to the benefits of being rich in a certain way, thing are reasonably fair. Otherwise, wealth naturally gets concentrated in the hands of the few. Maybe the Netherlands is just barely on the good side of the line, but most countries are not: there isn't enough redistribution to counteract the benefits of being rich over long timescales.

I recommend reading the whole thing as the description of the math is not too complicated and there are interesting details.
Very interesting read, thanks for linking.

Post Reply