The Economic Consequences of the Great War

by John Quiggin on March 9, 2021

A draft of the first chapter of my book, The Economic Consequences of the Pandemic. Comments, criticism and congratulations all welcome.

{ 7 comments }

1

William Roark 03.10.21 at 4:14 am

Prof. Quiggin,

An excellent overall summary of the interwar period. I’m putting together with a colleague at the university I teach at an Art and Politics class as based on Eric Hobsbawm’s Age of . . . series based on his long-19th and short-20th century frameworks (1789 – 1914; 1914 – 1991). This is summary is most useful for the latter both in its brevity and comprehensiveness as suitable for undergraduates.

Two minor typos found:
p. 14: “The idea that the economy would return to full employment through market process of adjustment was ad discredited as it had ever been.” Changing “ad” to “as”.

p. 15: FDR’s “the Public Works Administration” changing to “Works Progress Administration” (originally) or “Work Projects Administration” (as changed in 1939).

Thank you for the posting.

2

nastywoman 03.10.21 at 7:15 am

AND how about in the US –

”To appreciate the concrete significance of the ARP for ordinary Americans — and, by extension, the significance of having 50 Democratic votes in the Senate versus 49 — here are a few of the ways life in the U.S. is about to change as a result of a unified Democratic government coming to power:

• The average household in the bottom quintile of America’s economic ladder will see its annual income rise by more than 20 percent.

• A family of four with one working parent and one unemployed one will have $12,460 more in government benefits to help them make ends meet.

• The poorest single mothers in America will receive at least $3,000 more per child in government support, along with $1,400 for themselves and additional funds for nutritional assistance and rental aid.

• Child poverty in the U.S. will drop by half. • More than 1 million unionized workers who were poised to lose their pensions will now receive 100 percent of their promised retirement benefits for at least the next 30 years.

• America’s Indigenous communities will receive $31.2 billion in aid, the largest investment the federal government has ever made in the country’s Native people.

• Black farmers will receive $5 billion in recompense for a century of discrimination and dispossession, a miniature reparation that will have huge consequences for individual African-American agriculturalists, many of whom will escape from debt and retain their land as a direct result of the legislation.

• The large majority of Americans who earn less than $75,000 as individuals or less than $150,000 as couples will receive a $1,400 stimulus check for themselves and another for each child or adult dependent in their care.

• America’s child-care centers will not go into bankruptcy en masse, thanks to a $39 billion investment in the nation’s care infrastructure. • Virtually all states and municipalities in America will exit the pandemic in better fiscal health than pre-COVID, which is to say a great many layoffs of public employees and cutbacks in public services will be averted. • No one in the United States will have to devote more than 8.5 percent of their income to paying for health insurance for at least the next two years, while ACA plans will become premium-free for a large number of low-income workers.

• America’s unemployed will not see their federal benefits lapse this weekend and will have an extra $300 to spend every week through the first week in September. This is a small sampling of the COVID-relief bill’s consequences (more comprehensive accounts of its provisions can be found here and here). But it is sufficient to establish that something has dramatically changed in the Democrats’ approach to wielding power. When pundits suggested progressives had little hope of getting major reform through a 50-vote Democratic majority, their speculation was well founded. After all, when Democrats had 60 votes in 2009, they struggled for more than a year to pass a watered-down version of progressives’ health-care-reform agenda, then left the bulk of their party’s constituencies with unfulfilled IOUs. And yet: Twelve years later, with just 50 Senate votes — including one from a state Republicans won by 40 points in November — Democrats managed to pass one of the largest fiscal programs in U.S. history within weeks of Biden’s inauguration. Obama spent the better part of his first year in office seeking bipartisan buy-in for the Affordable Care Act. Biden just slapped most of his own health-care agenda on top of a $1.9 trillion relief bill and then rammed it through Congress before his administration’s two-month anniversary.

This is how progressives have been begging their party to govern for more than a decade: Ignore the Beltway’s fetish for bipartisanship and deliver big, clear gains to the American people. The Democratic leadership has now affirmed that counsel in both word and deed. As Schumer told the Washington Post this week, “What happened in 2009 and ’10 is we tried to work with the Republicans, the package ended up being much too small, and the recession lasted for five years. People got sour; we lost the election.”

3

notGoodenough 03.10.21 at 9:56 pm

John Quiggin @ OP

I’m afraid I don’t have any thoughtful comments to make, but I did want to off my heartfelt congratulations (and my thanks for providing discussions and forums which have proven very interesting)!

I also wanted to say that I am very much looking forward to another fine publication, which I am sure I will find as thought provoking and fascinating as your “Economics in Two Lessons” (which I also thoroughly enjoyed). I have very much enjoyed the posts you’ve made here on these topics, and I think this will prove quite a good examination of pre-to-post COVID life.

Please do keep up the excellent work :-)

4

Starry Gordon 03.11.21 at 4:58 pm

I was wondering whether the use of ‘normalcy’ was meant to mock poor old illiterate Harding and his time, place, and class. I was surprised to see it in serious writing.

However, besides snarking, I mostly want to write sort of seriously myself in response to nastywoman 03.10.21 at 7:15 am @ 2. It does not seem to me that any payment or transfer denominated in dollars can be considered a ‘gain’ in the sense of something advantageous to the receiver in the long term, since the payments will quickly be sponged up by rents, both literal and metaphorical, and inflation. I think the seeming largesse simply betokens a new birth of imperialism, already indicated by a fresh bombing of Syria. Putting things back the way they were — ‘build back better’ — for the present ruling class seems betoken a full restoration of the American version of the Bismarckian welfare-warfare state, which succeeded so well at first in Germany but ultimately led to catastrophe. How would a nice new war or two suit the pandemic, which, after all, has not left us yet and may still have some kick left?

5

nastywoman 03.12.21 at 2:01 pm

@4
”How would a nice new war or two suit the pandemic, which, after all, has not left us yet and may still have some kick left”?

It wouldn’t ”suit” it AT ALL – or do you know anybody who has ANY appetite for ”war” in this pandemic times?
And what is wrong with… guys? -who even think in such times about ”war”?

6

nastywoman 03.12.21 at 3:37 pm

and about ”the Bismarckian welfare-warfare state, which succeeded so well at first in Germany”

What?
Even if it was meant… ”cynical”? – Germany NEVER succeeded ”so well” until it finally succeeded in becoming a pretty peaceful Welfare State of Europe –
and with the ”ARP” –
as already mentioned –
my homeland
the US –
succeeded even more ”bigly” than Germany –
this time…

7

Starry Gordon 03.14.21 at 3:52 am

The welfare part of Bismarck’s welfare-warfare state succeeded in keeping the proles quiet enough to allow the warfare part to embark on a substantial imperial project. So it succeeded from Bismarck’s point of view. I believe one of his notable successors also employed substantial welfarist means towards a similar purpose. And we can notice a similar configuration in other places and times, which I won’t name since they strike rather close to home.

I mean, pandemic or not, there has been almost constant war talk and practice for decades from the Established Order. Nothing seems to impede it. Somebody must like it.

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