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Postwar Booms

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My Buddy Posted: Sun, Nov 28 2010 5:28 AM

Does anyone have an explanation for the postwar booms after WW2 in Germany, France, Japan, the US, etc?


Out of those four, only Germany used laissez-faire means, and I can't find its damn GDP growth at the time.

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I don't think Germany was laissez-faire then.

Also, lower GDP is better.

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US didn't have a postwar boom.  They had a wartime boom.  Women in the workplace + European dependance.  Note that this is in Real GDP terms only.  I haven't heard anyone say life was good economically during WWII.


I don't know about France and Japan.  Didn't they experience massive inflation?

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From this article:

"Although unemployment virtually disappeared, the disappearance owed nothing to Keynesian fiscal policy. In truth, it owed everything to massive conscription. Between 1940 and 1944, the number of unemployed persons fell by 4.62 million, while the armed forces increased by 10.87 million."

"But what about the enormous increase of the economy's total output? This, it turns out, is nothing more than an artifact of the accounting system used by the government to keep the national product accounts. In the official system, spending for military goods and services gets counted as part of the dollar value of national output, as does spending for consumer goods and new capital goods."

"But when we examine the rest of the GNP — the part consisting of spending for civilian consumer goods and new capital goods — we find that after 1941 (adjusted for actual as opposed to official inflation), it declined for two years; and even though it rose after 1943, it was still below its 1941 value when the war ended. Thus, the war years witnessed a reduction of the total real output flowing to civilian consumers and investors — a far cry from "wartime prosperity.""

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Kakugo replied on Mon, Nov 29 2010 11:27 AM

Japan's economy really took off after the 1952 Peace Treaty which drastically cut reparation to be paid to Mainland Asia Nation and GHQ's (the Allied Occupation Forces) control over economic policies.

After 1945 not only the Japanese government was expected to pay reparation but also the big zaibatsu and the largest munition manufacturers which had used "slave labor" from countries like Korea and Vietnam. This had led to the big groups (which more often than not rotated around a very large bank, like present day keiretsu)being very cautious in using what was left of their economic power to invest in new manufacturing plants, machining tools etc.

GHQ's economic policies were extremely irrational: for example post-War Japan desperately need trucks and lorries since its railway system was in ruin. GHQ not only kept a tight fuel rationing system in place, but also strictly enforced a monthly production quota for trucks and lorries: just 1500 units. To give you an idea of how irrational GHQ's policies were just take a look at the motorcycle industry: Japan needed cheap to buy and cheap to run motorized bicycles and motorcycles but GHQ favored manufacturers of big, expensive vehicles like Rikuo (whose bikes were Harley Davidson clones built with tooling and blueprints purchased from H-D in the '30s). Only few could afford Rikuo motorcycles: police forces, news agencies and rural areas doctors.

The US didn't loosen its grip on Japan out of its good heart: the main reason was a genuine fear that an impoverished and enbittered Japan could easily fall into the Soviet sphere of influence. Also GHQ was pretty much forced to change its policies because of the Korean War: Japan experienced a "mini boom" during this period: in Asia only Japan had the industrial strength to support the UN war effort. US warplanes were serviced in Japan by highly experienced technicians. Uniforms and blankets were woven using excellent Suzuki looms. Gasoline and diesel for the war effort came from recently rebuilt Japanese refineries.

Once Japan was more or less left to its own devices it pretty much "fell to its old ways". While technically speaking the extremely powerful Ministry for International Trade and Industry (MITI) has always provided guidance to local industries, in reality MITI officials sat down with representitives from the main keiretsu to discuss economic policies. If MITI set goals, it was because keiretsu representives had previously told them it was feasible and "advisable". It must also be said that MITI mostly concerned itself with heavy industry, construction and petrochemical. The electronics and motorcycle industries which afterwards became such huge powerhouses were originally more or less left alone simply because MITI simply saw them as too small and not worth the time. Japan's motorcycle industry in its formative post WWII years (1945-1970) is an example of a relatively free market at work. In the '50s there were about 120 motorcycle manufacturers in Japan (most of them building jidojitensha or "motorized bicycles"). In 1971, after Bridgestone closed its motorcycle division, there were only four left, the same still around today. The motorcycle wars were ferocious and mostly conducted without government meddling since MITI started take notice only when Honda started exporting large numbers of motorcycles in the early '70s.

Together we go unsung... together we go down with our people
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