- May 23, 2020
The Golden Age
Between1950 and 1970, Europe experienced a lot of economic growth andstability. This was unlike the previous period when the continent hadgone into many wars that drove it back economically. Regardless,countries that had been experiencing slow economic growth realizedperiods of expansive industrial revolution, which helped them to groweconomically. As well, new government policies helped the Europeancountries to grow their economies. The golden era saw the growth ofthe gross national product to hundreds of billions. Economic relianceon technological innovations also helped the European nations toexpand their economies. New professionals, such as engineers,economists and managers helped various organizations to growsignificantly. While these professions improved service delivery,they enabled the European countries to expand their capacities interms of the economic growth. Not to forget, farming was advanced,and it became an economic activity. The United Kingdom governmentalso liquefied its outstanding debts, which made the UK a leadingindustrial center. After the Second World War, European governmentscame together to form policies that worked in the favor of allEuropean countries. Agencies such as the Federal Housing Agency andthe Veterans Administration that were formed during this era ensuredthat people spent less on mortgaging new homes in the suburbs. Allthese policies resulted in the growth of the suburbs and a decline ofthe urban population, a move that was accompanied by various socialand economic gains
Theperiod, commonly referred to as the golden age, was characterized byhigh economic growth and stability especially for many of theEuropean nations (Gill& Raiser, 2012).Compared to the interwar period, the golden age is seen as an era offast growth mainly due to the reconstruction that happened after thewar and technological advancement. According to Bohanon(2012),countries which initially experienced low productivity levelsunderwent a significant transformation during the golden age in termsof growth. It is argued that the economic growth experienced duringthis era is mainly because of reductions in inefficiencies whichaccompanied the changes in labor and means of production. Moreover,the government implemented various policies that significantlycontributed to the economic boom experienced after the war.
Duringthe golden age era, the gross national product (GNP) went up fromroughly $200 billion in 1945 to over $500 in the 1960s (Bohanon,2012).During this period, the population increased and as normallyexpected, the GNP would go down. However, the economic growth wasfast enough not only to sustain a growing population but also toensure the GNP instead of declining, continued rising even faster. Moreover, the demand for automobiles increased compared to theinterwar period. Consequently, millions of automobiles (domesticallyproduced) were sold in the 1950s, generating more income and taxesfor the nations. It is important to point out that it is not only theautomobiles that were in demand during this period but new productsthat came along with technological advancements such asrefrigerators, radios among others.
Withincreased reliance on technological innovation experienced duringthis period, the workforce changed. During the inter-war period, theEuropean nations relied on manual labor not only in Agriculture butalmost all other industries (Bohanon,2012).With changes in the workforce, it meant that industries no longerrelied on manual labor but trained people from colleges such asresearchers, engineers, managers and services personnel.Consequently, blue collar jobs decreased during this era whilewhite-collar jobs increased. Therefore, during the golden age, manypeople acquired good-paying jobs hence had more money to spend andinvest resulting to more economic growth (Gill& Raiser, 2012).Moreover, as the blue collar jobs thinned during this era, the unionmovement of the 1930s, which relied on this class of professionals,lost momentum. White-collar professionals found the union movement tobe irrelevant and by 1960s, the union had only 31% of thenonagricultural workforce (Bahanon, 2012). The union movement havinglost its powers, the golden age was characterized with fewer laborstrikes meaning more time was invested in promoting production andefficiency.
Increasedproductivity during this period did not only change the workforce butalso agriculture. According to Bohanon(2012),less human resources were needed to satisfy the nation’s fooddemands needs hence the farm laborers significantly dropped. Theblack people, who were the majority of the farm manual workers, leftthe land at an alarming rate. Despite the fact that agriculturerequired less workforce, the farm sizes increased tremendously sincefarmers started producing in large scale owing to technologicaladvancement that had enabled mechanized agribusinesses. Thelarge-scale farming was encouraged by government policies such as theimplementation of the crop-subsidy program that financially andmaterially supported the farmers (Bahanon, 2012). Moreover, use ofpesticides and chemicals was embraced by many farmers resulting intomore farm output that enhanced food security and economic growth.
Accordingto Gill& Raiser (2012),various government policies implemented during the golden age madesignificant contributions to the economic prosperity in Europe. Someeconomists argue that the post-war boom was as a result of theadoption of Keynesian policies, one of them being increasedgovernment spending. Through increased government spending, many ofthe European nations created business and employment opportunitiesthat caused sufficient economic growth to recover their public debts.Moreover, the government policies also ensured low nominal rates andlow interests rates to lower the cost of servicing public debt(Bahanon, 2012). Many countries, for instance, the United Kingdomliquefied their outstanding debts through inflation and taxation.Therefore, the countries were in a better position to handle andminimize the level of their government debt without the need ofallocating a high portion of government spending to debt recovery.
Thepost-war boom was also enabled by government policies that ensuredtrade liberalization. The policies removed unnecessary trade barriersthat encouraged trade between nations, leading to more economicgrowth (Gill& Raiser, 2012).One of these government policies saw the emergence of the EuropeanPayments Union, (EPU) which was initiated through the Marshal plan.During the golden age, EPU had significant positive effects on tradelevels for many European countries. Later, the European EconomicCommunity and the European Free Trade Area were established, whichincreased trade tremendously. Moreover, the Marshall plan to rebuildEurope encouraged global cooperation and up to date, it is creditedfor international reconciliation. The policies reestablishedpolitical connections between the former axis powers and the WesternAllies. After the war, many powerful European nations were determinednot to make the same mistakes that had previously caused the GreatDepression of 1929 to 1939 (Bahanon, 2012).
Thegovernment also implemented specific public policies that promotedmass production of housing at low cost. For instance, back thosedays, some homes equipped with refrigerators and other householdgoods sold for as little as $6,900 (Bahanon, 2012). The federalgovernment implemented policies that encouraged suburban growthleading to a decline in urban population. Therefore, the governmentinvested in developing interstate highways and the suburbs ratherthan spend on urban transportation and other issues associated withoverpopulated towns. The Federal Housing Agency and the VeteransAdministration that were formed during this era ensured that peoplespent less on mortgaging new homes in the suburbs. On the other hand,people who chose to renovate or rent in the urban areas did not enjoysuch privileges. Moreover, suburb homeowners were allowed to deductmortgage interests to pay federal taxes while the urban dwellersenjoyed no such benefits. All these policies resulted in the growthof the suburbs and a decline of the urban population, a move that wasaccompanied by various social and economic gains (Bahanon, 2012).
Itcan be concluded that many of the European countries experiencedsignificant economic growth during the golden age compared to theinter-war period. The period between 1950 and 1970 was marked byrapid growth in economic growth, with many European nations recordinggrowth in GNPs and decrease in public debts. The era was marked withtechnological advancement that changed both the workforce andagriculture, resulting in more economic growth and stability. It wasexpected that the Keynesian policies that were employed during thisera would result in higher public debts but as it turned out, theeconomic growth was fast enough to even service the existinggovernment debts. Moreover, the federal and state governments adoptedvarious policies that promoted trade liberalization and internationalcooperation among the powerful nations. Policies were also adoptedthat encouraged people to own homes in suburbs resulting inurban-to-rural migration that brought about social and economicbenefits.
Bohanon,C. (2012). Economic recovery: Lessons from the post-World War IIperiod. MercatusCenter, George Mason University.
Gill,I. S., & Raiser, M. (2012). Goldengrowth: Restoring the lustre of the European economic model.World Bank Publications.