North America

The North American Welfare Society

The North American economic system has had a powerful dynamic that has made the United States the richest and most powerful country in the world. The United States has benefited not only from its enormous resources but also from its power over the international economy. Yet, the United States has failed to eliminate immediate distress and poverty. In 1978, 25 million North Americans were below the official poverty line. Inflation has brought more and more elderly people near or below the poverty line because pensions have not been regulated.

Revenues are very unevenly distributed. The richest 20% of the population has approx. 50% of the income, while the poorest 20% simply have approx. 4%. Black North Americans, especially women and children, represent an ever-increasing share of the poor. In 1970, the African population made up 22% of low-income families. By 1978 the figure had risen to 28%.

  • Countryaah: Introduces North America as a continent, includes a full list of countries in North America, and provides location map of North America.

The economic crisis has led to reduced influence for the unions. The number of trade unions in all industries outside agriculture has fallen from 35% in 1960 to 14% in 1998.

Increased crime is another result of the crisis. The United States has a larger number of people in prison than any other Western country – compared to the population. Today there are 1,700,000 inmates in US prisons. At the same time, there is a privatization of the prison system to provide space for more prisoners.

Economic development

By the turn of the century, the United States had become one of the world’s leading industrial nations. Great fortunes were founded through the conquest of new land and through the access to natural resources, new commodity sources and cheap labor. Customs walls, especially after the Civil War, had protected the national industry and created the opportunity for rapid expansion. A weak trade union movement and a relatively low wage level were contributing factors.

The value of industrial production doubled from 1860 to 1890. The number of factory workers increased from 1.3 million to 5.3. The population increased from 31 million in 1860 to 50 in 1880 and 76 million in 1900.

From around 1870, monopoly formation became the main trend in industry and banking. Large companies began to share markets or joined forces in trusts. Gradually, the steel and oil industries as well as the railroad were completely dominated by cartels and trusts. When this development aroused political resistance – especially among the peasants – the authorities sought to prevent monopoly formation by adopting the so-called antitrust law in 1890. Also at the state level, a number of laws were passed, which would limit the possibility of forming associations and trusts. Lawsuits have been brought about the validity of the law under the Constitution. This resulted in new laws being drafted, but these only worked partially. A Supreme Court ruling did so, for example. it was possible to form associations of industrial companies – but not of trading companies – and limited companies were formally excluded from the law.

By 1904, 40% of U.S. industry capital was controlled by 200 corporate associations with capital of more than $ 1 million. Varying cycles and the government influenced how strict the law was enforced, but in general, the monopoly formation and the development of dominant major corporations throughout the 20th century continued within the various industrial branches.

In the 20’s, a wave of mergers occurred in the automotive and electronics industries – the two fastest growing industries. During this period, opposition to monopoly formation waned and the leaders of the groups gained high social and political prestige.

The crisis of the 1930’s prompted a number of reforms in the US economy. Roosevelt, in the first phase of his ” New Deal ” policy, attacked the monopolies, but in a later phase there were good opportunities for large companies and associations. The role of giant corporations was strengthened.

By the end of World War II, the United States was the world’s most powerful industrial nation. The country accounted for 50% of the world’s industrial production – with just 6% of the population. After the war, the dollar was made into the world’s reserve currency. For the first 20 years after the war, the US could dominate the world economy because of its economic and military strength.

The crisis of the 1930’s and World War II seriously brought the state into economic life – including in the United States. The North American Constitution is based on the idea of ​​a community of free-initiative space and with a very weak state interference. Yet, North Americans’ daily lives, social and health care, their relationship with administration and administration are marked by this. Today, however, the state budget has reached almost $ 2 billion, and the state manages approx. 30% of national income. This means it is just as important to have control over government revenue as it is to have control of Wall Street’s financial market.

The state also exerts an increasing influence on prices and employment through the use of monetary and tax policy. Government subsidy schemes are of great importance for the market and production regulation in agriculture. Large industries that are defined as significant for state security receive state support – often through large government contracts. The state provides, for example. on a smaller scale support for oil extraction.

The rise in state consumption – not least through the armor industry – was one of the key elements of the economic expansion that brought the United States out of the ’30’s crisis. Together with the war and the new build-up in the North Atlantic Defense Alliance, this created an unusually close link between the state and the armor industry – both economically and politically. The defense share of the national product is higher in the United States than in any other NATO country.

The tendency for interweaving political, military and economic interests became evident in the 1950’s. From that time came the term “the military-industrial complex “. It comes from President and former General Eisenhower and refers to the establishment of a power block with a strong influence on state policy.

The influence has not diminished since. It was maintained through the armor race until the late 1980’s, not least by the fact that military personnel are largely recruited from the military while recruiting to the leading positions in the state administration from the same industry top.

The postwar period was initially a period of constant expansion for North American industry. The United States became the world’s leading industry. Concentration in business continued rapidly, creating a situation in which the 100 largest industrial companies accounted for half of US industrial production, while the 500 largest covered a total of 75%. The same development occurred in the agricultural and processing industries. This meant, among other things, that it was in particular the large groups that could benefit from the state’s subsidy schemes.

However, the period up to 1965 showed simultaneous features that threatened US domination. There was turmoil around the dollar’s position. The domestic market was weakened by the foreign exchange policy that was pursued, and the United States increased competition from the outside, especially from Japan. The Vietnam War and defeat there, along with the Watergate scandal, marked the beginning of a serious weakening of the US position – both economically and politically.

The United States first recovered from its political and economic decline after Ronald Reagan took office in 1981 as the country’s president. He implemented a military-Keynesian policy that, through extensive public investment in the military, fueled the country’s economy. The consequence in the mid-1980’s was a considerable economic growth that attracted the rest of the world. However, the strategy was short-lived as it was based on massive public borrowing. From being a credit nation, during the 1980’s, the United States became the world’s most indebted state. At the same time, a growing portion of the profits were used for speculation as they could not be productively invested. In 1987, this kind of casino capitalism burst when Wall Street experienced its biggest crash since 1929. The superpower did not overcome this crisis until 1992-93.

Yet, the importance of the United States on the world market has dropped dramatically since World War II – in line with the rebuilding of Europe and Japan as well as the subsequent growing industrialization of parts of Asia and Latin America.

1962 1970 1979
Motor vehicles 22.6 17.5 13.9
Flight 70.9 66.5 58.0
Organic chemicals 20.5 25.7 15.0
Telecommunications Appliances 28.5 15.2 14.5
plastic materials 27.8 17.3 13.0
Pharmaceutical products 27.6 17.5 16.9
Metalworking machines 32.5 16.8 21.7
Agricultural machinery 40.2 29.6 23.2
Textile machinery 15.5 9.9 6.6
Wagons 34.8 18.4 11.6
Table 1. Developments in US market shares for some key industries – as a percentage of the world market.
1962 1970 1979
Motor vehicles 95.9 82.8 79.0
Steel 95.8 85.7 86.0
Electronic components 99.5 94.4 79.9
Agricultural machinery 92.8 92.2 84.7
Inorganic chemicals 98.0 91.5 81.0
Electronic Consumables 94.4 68.4 49.4
Metalworking machines 96.8 93.2 75.4
Textile machinery 93.4 67.1 54.5
EDB machines 95.0 63.8 56.9
Table 2. Developments in the US market share for some key industries – as a percentage of the domestic market.
Source: Commerce Dept. and Data Resources Inc.

Industrial flight from the United States has led to job losses, and the service and information sector has not developed quickly enough to absorb unemployment. Productivity growth has been lower in the United States than in most other industrialized countries (see Table 3). The overall investment rate throughout the 60’s and 70’s has been far lower than in countries such as West Germany and Japan (see Table 4).

Countries 1960-1973 1973-1979
Japan 8.8 4.7
France 4.9 2.8
Italy 5.6 1.6
West Germany 4.4 3.2
USA 2.1 0.7
England 3.1 0.7
Table 3. Productivity growth in some industrialized countries, annual average, as a percentage.
Countries 1960 1963 1970 1975 1977
USA 18 18 17 16 17
West Germany 24 26 26 21 21
Japan 30 32 35 32 31
Table 4. Investments in the United States, West Germany and Japan, as a percentage of gross domestic product.