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- A brief analysis of the world’s largest economy
- by John Birchall
- Bishops Stortford College
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- For 100 years after Columbus traders journeyed to New World
- Pilgrims arrived in Massachusetts and more business minded people made
their home in Virginia
- Charter companies began to exploit the resources of East US
- Settlers developed own interests and structures
- Industry began with farming, some plantations and exports of rice,
tobacco and dyes
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- Supportive industries then appeared e.g saw mills, ship building,iron
forges.
- Plantations, using slave labour started
- Living standards began to be better than in UK
- By 1770 self-government wanted
- War of Independence won and New Nation emerged in 1787
- Adopts new constitution. New nation from Maine to Georgia - a common
market
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- Federal government provided the legal framework and States developed
within this
- Intellectual property recognised
- tariffs imposed to protect infant industries
- First National Bank started in 1791
- With invention of cotton gin the trade boomed
- Moved economy south and westwards
- National roads and waterways created at start of nineteenth century
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- Steam boats start to run over larger distances
- railroads arrive
- foreign capital attracted and industrialisation begins
- By 1860 16% of population living in cities
- one third of national wealth created by manufacturing
- Immigrants start to arrive in large numbers
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- South remained more rural
- Northern victory in civil war determined future direction of economy
- end of slave labour
- planter power diminishes
- Industrialists begin to control economy
- discoveries, such as oil drive new nation on
- typewriter invented, telephone, phonograph, electric light bulb,
refrigeration on railroads
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- Industrial infrastructure develops e.g coal, iron mines, copper, silver
lead and cement factories emerge
- mass production starts
- scientific management
- Rich business men became national heroes
- fierce competition and some questionable tactics
- government begins to react to business
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- Gospel of work and thrift
- philanthropic gifts to universities etc
- risk and excitement deliver increases in living standards
- corporations emerge
- New management elite start to appear
- the Gilded Age moves into twentieth century
- largest economy in world
- little foreign involvement
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- In early years Federal government only in transport
- laissez-faire economy
- begins to change in latter part of nineteenth century
- farmers start to ask for help
- Fear of corruption in government starts new political movements
- Railroad Act in 1887 and government begins to create Federal Agencies
e.g Food and Drug Administration
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- The New Deal of 1930’s deepens government involvement
- Federal authority extended into banking, agriculture and public welfare
- minimum wage established
- Securities and Exchange Commission started
- Social Security system introduced
- More central control introduced throughout 1930’s and during war
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- Consumer boom followed peace
- Not depression some feared when war spending ended
- GNP up from $200000m in 1940 to $300000m in 1950 to $500000m in 1960
- Military spending continued as Iron Curtain emerged
- Marshall Plan
- Employment Act 1946 ‘ promote maximum employment, production and
purchasing power.’
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- Consolidation in business - communications, hotels, insurance, car
rentals
- by 1956 majority of workers in white-collar jobs
- unions win good terms of employment
- Agriculture faces tougher times
- By 1998 just 3.4 m in agriculture had been 7.9m at end of war
- suburban migration grows
- air conditioning becomes popular
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- ‘Sun belts’ e.g Houston grow in popularity
- shopping malls begin to flourish
- industry begins to move ‘out of town’
- New, powerful states emerge in place such as Florida, Georgia, Arizona
and Texas
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- 1960/70’s times of considerable change
- new nations, insurgent groups, challenges to US supremacy
- Kennedy era - New Frontier.
- Space, Peace Corps, help for elderly
- Post Kennedy Johnson wanted a Great Society
- Medicare, Food Stamps, increased military expenditure/Vietnam
- But government revenues do not rise
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- Rising inflation, OPEC problems, rises in unemployment, Federal deficits
up, foreign competition increases, stock market sags
- Fear that nation is losing control. Nixon goes
- Imports up, trade deficit grows.
- Stagflation becomes the new problem
- expectations push up prices, higher wages follow, labour contracts have
‘cost of living’ clauses
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- Government spending rises to protect vulnerable
- economy sees prices rise and unemployment
- Carter tries to break spiral
- De-regulation starts e.g airlines
- Federal Reserve Board clamps down on inflationary trends
- control of money supply
- interest rates rise, recession follows
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- Recession deepened into 1982
- Cycle broken by early 1983-prices fall, growth returns
- Reagan bases polices on supply-side doctrine
- Lower taxes, more savings, more investment, more output, overall
economic growth
- Federal government too big - Reagan
- Increase military spending
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- Federal budget swells to -$221000m in 1986.
- But not all winning - farmers lose, especially in drought areas, banking
crisis, some fear it will all end in pain
- External push in policy - communism falls
- Asia - beginning to hurt US supremacy
- ‘Corporate raiders’ strike in US, as stock prices are low
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- !990’s see Clinton elected
- declares end of big government and fails with Medicare reforms
- opens -up markets e.g local telephone services
- Reduces welfare benefits
- Fall of USSR and satellite states open up new business
- Dow Jones end decade on 11000, had been 1000 in 1979
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- Framing continues to decline
- service sector expands
- deficit peaks in 92 and falls
- New Economy? Low inflation, high employment, high growth?
- US grows in its interdependence with global economy
- NAFTA formed. Look to EU as base for sourcing markets
- Decade ends with new feeling of confidence
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- Economy grew from February 91 till end of decade - longest in peacetime
- unemployment just 4.1% of workforce - lowest for 30 years
- inflation low
- Growth high
- global presence expanding
- Asian markets suffer downturn
- US in good shape and confident
- Major locomotive economy in world
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