Beneath the surface of everyday America life, a shadowy entity directs the tides of society. One tends to hear of its work only in extraordinary times, yet its world of percentage points and obscure terms never sleeps, keeping many Americans awake at night along with it. One might even claim it is the very heart of America. The pulse it generates fuels not only the nation’s present dreams, but accounts for much of its past wisdom and future hopes as well. This entity is none other than the U.S. economy. In the decades following WWII, America experienced substantial social change, political scandals, and a seemingly endless stream of war. While there is rarely a single “cause” for any event in history, the economy had an extremely potent influence
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The main idea behind Keynesian theory was that “good micro intentions can lead to bad macro results” (Musgrave 171). In other words, while actions taken by individual people and firms may often appear financially sound, they can lead to devastating consequences on a greater scale. The assumption that rational individuals in a free market will produce the greatest economic benefit for all is the basis of classical economics. Keynes challenged this idea and proposed that through fiscal policy, the government can remedy the faults of the market, typically by stimulating consumption on both a private and public level (Musgrave 170). In a more abstract sense, Keynes proposed the idea that individuals could be wrong, and that the government needed to step in to regulate the consequences of the individual’s errors. At an even higher level, the Great Depression and Keynes humbled the American people. By the time WWII began, Keynesian ideas had thoroughly penetrated general American thought, and the war became a massive experiment in the effectiveness of Keynesian fiscal policy (Musgrave 176). Looking at the bigger picture, the economic changes and policies during WWII not only set America up for material abundance, which itself would lead to massive change in the social landscape, they also changed American’s views on the role of the government, individual, and legislation in the daily life of the American citizen. In a sense, fluctuations in the economy led citizens to a deep reflection on the structure of American society as a
The main idea behind Keynesian theory was that “good micro intentions can lead to bad macro results” (Musgrave 171). In other words, while actions taken by individual people and firms may often appear financially sound, they can lead to devastating consequences on a greater scale. The assumption that rational individuals in a free market will produce the greatest economic benefit for all is the basis of classical economics. Keynes challenged this idea and proposed that through fiscal policy, the government can remedy the faults of the market, typically by stimulating consumption on both a private and public level (Musgrave 170). In a more abstract sense, Keynes proposed the idea that individuals could be wrong, and that the government needed to step in to regulate the consequences of the individual’s errors. At an even higher level, the Great Depression and Keynes humbled the American people. By the time WWII began, Keynesian ideas had thoroughly penetrated general American thought, and the war became a massive experiment in the effectiveness of Keynesian fiscal policy (Musgrave 176). Looking at the bigger picture, the economic changes and policies during WWII not only set America up for material abundance, which itself would lead to massive change in the social landscape, they also changed American’s views on the role of the government, individual, and legislation in the daily life of the American citizen. In a sense, fluctuations in the economy led citizens to a deep reflection on the structure of American society as a