Publisher Note: I don’t normally agree with Hanson’s prognostications beyond his masterful treatment of the ancient world of Greece and his occasional scribbling about the health and impending doom of his small business. His militaristic instincts and neoconservative sensibilities have blunted the efficacy of his more contemporary ramblings but this particular missive is much more instructive. I certainly see a far greater historical correlation to post WWII Britain than other comparisons that have been proffered. Imagine if we had adopted the post WWII economic model adopted by Conrad Adenauer after 1949 leading to the Wirtschaftswunder that briefly led to an industrial revival that was strangled in its cradle by the welfare/warfare statist enthusiasts who then forced Germany to mimic the fascist economic models of the West. The socialist Atlee was the instigator of taking Churchill’s more fevered dreams of a controlled economy and putting the wartime shackles on peacetime private industry. Attlee claimed: “The Labour Party is a socialist party and proud of it. Its ultimate purpose at home is the establishment of the Socialist Commonwealth of Great Britain – free, democratic, efficient, progressive, public-spirited, its material resources organized in the service of the British people.” Government is always at war with industry unless the private sector becomes a wholly-owned subsidiary of the government whether through outright expropriation like the British nationalization ventures or the American variant using total regulatory and tax vertical and horizontal micromanagement to achieve the same objective of Keynesian economic fascism. One would imagine that absent out trillions poured into the wars in the Middle east and the near trillion dollar annual defense budget, our economic house would be in better order but then again, the socialist theft transfer programs for the welfare state would most likely obviate those savings. VDH is onto something here. BB
But now? Household credit-card and mortgage debt, for all the new frugality, remain high. Consumers are strapped, even those who have jobs and have not lost thousands in collapsed home equity and depleted 401(k) retirement plans, or made nothing in years from near-zero-interest savings accounts. In other words, we do not have a long-deprived public, flush with years of hoarded cash, just waiting with pent-up demand to buy brand new labor-saving devices and shiny new vehicles produced in converted tank and bomber factories. There is no need to add that in a pre-Great Society America, without food stamps, two to three years of unemployment insurance, and housing subsidies, there might have been more incentive to hustle for jobs.
Moreover, the world abroad in 1946 was hardly similar to the world in 2011. Review the prior status of our present global competitors: India was a backward colony and in civil turmoil. War-torn China was about to embark on the most self-destructive social experiment in human history. Two-thirds of a centrally planned Soviet Union was in shambles. Western Europe was near starving after years of bombing and Nazi strangulation. The future export powerhouses of Japan and Germany were in ruins. Brazil was pre-modern. The miracles of Hong Kong, Singapore, Taiwan, and South Korea were still imaginary. A victorious Britain was full of self-doubt and exhausted, busy dismantling its colonial empire and nationalizing its steel, transportation, health, and energy industries.
In the immediate postwar years, only a capitalist, self-confident America was poised to supply foreigners with much-needed manufactured goods, expertise, and capital to raise the world from ruin. And from the profits, we were able to pay down our own staggering and unsupportable wartime-incurred debt. Note as well that in 1946 a self-sufficient oil-producing America was not guzzling down a half-trillion dollars’ worth of imported oil each year.
In short, in 2011 there is nothing that suggests the present massive borrowing will lead us to anything like the prosperity of the postwar years — a time when social spending and entitlements accounted for 30 percent, not 70 percent of the annual federal budget; when households both had cash and were eager to buy long-denied items; when America did not import high-cost oil (having recently supplied 80 percent of its wartime allies’ oil needs from domestic production); and when an unscathed industrial-powerhouse United States was alone on top of the world.
But if we must go back to the post-World War II era for an example to enlighten us about what the current Obama policies presage, then the similarities to the present are not to be found in 1940s America. A better guide is Clement Attlee’s 1946 United Kingdom, which, like Obama’s 2011 America, sought to retrench from the world scene, lead from behind, and establish a much-vaunted high-tax, big-government, cradle-to-grave redistributive welfare state — one whose legacy we have just witnessed in London’s streets.
Read the rest: https://victorhanson.com/articles/hanson082811.html