History v Now – US Near World Monopoly 1945 – 1970
We often hear things like, wages have not risen appreciably since 1976 and we want our old jobs back. We often look back at the past to look forward. I thought I would look at history and where we are today to determine what is possible. This is a look at what started it all. Then we will move forward in time, probably tomorrow.
By 1976, the United States had experienced 30 years of unique economic advantage. From World War I through the end of World War II in 1945, the rest of the relevant industrial world had managed to all but destroy its industrial capabilities. WWII effectively dismantled European and Asian industry. In 1945, the US was the only world economy left standing, not only unscathed, but expanded and strengthened by the new US war machine.
It took over 20 years for much of Europe and Japan to rebuild. It took some years before they managed to build enough product to cover their internal needs, while importing a great deal from the US. Meanwhile, China and Russia (along with all of Eastern Europe) removed themselves almost completely from international competition.
From 1945 to about 1970, the US was essentially the only, and certainly the major, industrial producer in the world. Businesses grew exponentially, enjoying nearly monopolistic profits. Labor demanded its share and got it, because US businesses could afford it and had no choice at the time. By the 1970’s, with no competition from international producers or foreign low-cost labor, US wages and US companies were at their height relative to the rest of the world.
It wasn’t until the late 1960s that European and Japanese competitors began to make significant inroads into US markets. Made in Japan was new, and not an emblem of quality. VW Beetles invaded the US, the first step in upsetting years of Big 3 dominance. I remember playing “punch-bug” with my siblings and friends in the back seat in the late 60’s. It was hard to get a Mercedes in this country in the 50s and 60s. I remember when the first Mercedes dealership opened in town. It was a huge deal. Then small, cheap Japanese cars arrived in droves. The Big 3 were in panic mode. This happened across the spectrum of manufactured products.
In the 40 years since 1976, the world has changed. Baby Boomers like me remember these glory days well, and most want to get back to them, but the underlying reasons for US world industrial dominance are long past. World War II recovery was just step 1. More to come.