Post WWII Economic History in a Nutshell

Much is made of the impact on federal government spending and debt of different administrations and political philosophies, but the major driver is much bigger. Our economic environment experienced a fundamental change in the mid 1970's, and our climbing debt is a result of failure to acknowledge and deal with that change.

Before the mid 70's, we had oil at a controlled $3/barrel and faced little competition from Europe, Japan, China, and other emerging economies.  We were an export powerhouse, slowly paying off the huge debts we had accumulated during WWII.  We were relatively young and had social benefits that consumed a negligible portion of our national resources.

Since the mid 70's we have faced world market oil prices and severe competition from Europe, Japan, and the emerging economies.  We have to pay a price, beyond the MSRP, for all those Lexus and Mercedes and Toyota vehicles we are driving.  And, we have aged and put in place social benefits that take an ever-increasing portion of our national resources.

So, at a time when we should have begun tightening the national belt and focusing on improving our competitiveness, we encouraged outsourcing and importing, and we expanded government services and spending and began building debt.  Now we may be forced to deal with the economic realities we face.

Here is a picture.  Click on the chart for a readable view.

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