The North American Welfare Society
The North American economic system has had a powerful dynamic that has made
the United States the richest and most powerful country in the world. The United
States has benefited not only from its enormous resources but also from its
power over the international economy. Yet, the United States has failed to
eliminate immediate distress and poverty. In 1978, 25 million North Americans
were below the official poverty line. Inflation has brought more and more
elderly people near or below the poverty line because pensions have not been
Revenues are very unevenly distributed. The richest 20% of the population has
approx. 50% of the income, while the poorest 20% simply have approx. 4%. Black
North Americans, especially women and children, represent an ever-increasing
share of the poor. In 1970, the African population made up 22% of low-income
families. By 1978 the figure had risen to 28%.
Countryaah: Introduces North America as a continent, includes a full
list of countries in North America, and provides location map of North America.
The economic crisis has led to reduced influence for the unions. The number
of trade unions in all industries outside agriculture has fallen from 35% in
1960 to 14% in 1998.
Increased crime is another result of the crisis. The United States has a
larger number of people in prison than any other Western country - compared to
the population. Today there are 1,700,000 inmates in US prisons. At the same
time, there is a privatization of the prison system to provide space for more
By the turn of the century, the United States had become one of the world's
leading industrial nations. Great fortunes were founded through the conquest of
new land and through the access to natural resources, new commodity sources and
cheap labor. Customs walls, especially after the Civil War, had protected the
national industry and created the opportunity for rapid expansion. A weak trade
union movement and a relatively low wage level were contributing factors.
The value of industrial production doubled from 1860 to 1890. The number of
factory workers increased from 1.3 million to 5.3. The population increased from
31 million in 1860 to 50 in 1880 and 76 million in 1900.
From around 1870, monopoly formation became the main trend in industry and
banking. Large companies began to share markets or joined forces in trusts.
Gradually, the steel and oil industries as well as the railroad were completely
dominated by cartels and trusts. When this development aroused political
resistance - especially among the peasants - the authorities sought to prevent
monopoly formation by adopting the so-called antitrust law in 1890.
Also at the state level, a number of laws were passed, which would limit the
possibility of forming associations and trusts. Lawsuits have been brought about
the validity of the law under the Constitution. This resulted in new laws being
drafted, but these only worked partially. A Supreme Court ruling did so, for
example. it was possible to form associations of industrial companies - but not
of trading companies - and limited companies were formally excluded from the
By 1904, 40% of U.S. industry capital was controlled by 200 corporate
associations with capital of more than $ 1 million. Varying cycles and the
government influenced how strict the law was enforced, but in general, the
monopoly formation and the development of dominant major corporations throughout
the 20th century continued within the various industrial branches.
In the 20's, a wave of mergers occurred in the automotive and electronics
industries - the two fastest growing industries. During this period, opposition
to monopoly formation waned and the leaders of the groups gained high social and
The crisis of the 1930's prompted a number of reforms in the US economy.
Roosevelt, in the first phase of his " New Deal " policy, attacked the
monopolies, but in a later phase there were good opportunities for large
companies and associations. The role of giant corporations was strengthened.
By the end of World War II, the United States was the world's most powerful
industrial nation. The country accounted for 50% of the world's industrial
production - with just 6% of the population. After the war, the dollar was made
into the world's reserve currency. For the first 20 years after the war, the US
could dominate the world economy because of its economic and military strength.
The crisis of the 1930's and World War II seriously brought the state into
economic life - including in the United States. The North American Constitution
is based on the idea of a community of free-initiative space and with a very
weak state interference. Yet, North Americans' daily lives, social and health
care, their relationship with administration and administration are marked by
this. Today, however, the state budget has reached almost $ 2 billion, and the
state manages approx. 30% of national income. This means it is just as important
to have control over government revenue as it is to have control of Wall
Street's financial market.
The state also exerts an increasing influence on prices and employment
through the use of monetary and tax policy. Government subsidy schemes are of
great importance for the market and production regulation in agriculture. Large
industries that are defined as significant for state security receive state
support - often through large government contracts. The state provides, for
example. on a smaller scale support for oil extraction.
The rise in state consumption - not least through the armor industry - was
one of the key elements of the economic expansion that brought the United States
out of the '30's crisis. Together with the war and the new build-up in the North
Atlantic Defense Alliance, this created an unusually close link between the
state and the armor industry - both economically and politically. The defense
share of the national product is higher in the United States than in any other
The tendency for interweaving political, military and economic interests
became evident in the 1950's. From that time came the term "the
military-industrial complex ". It comes from President and former General
Eisenhower and refers to the establishment of a power block with a strong
influence on state policy.
The influence has not diminished since. It was maintained through the armor
race until the late 1980's, not least by the fact that military personnel are
largely recruited from the military while recruiting to the leading positions in
the state administration from the same industry top.
The postwar period was initially a period of constant expansion for North
American industry. The United States became the world's leading industry.
Concentration in business continued rapidly, creating a situation in which the
100 largest industrial companies accounted for half of US industrial production,
while the 500 largest covered a total of 75%. The same development occurred in
the agricultural and processing industries. This meant, among other things, that
it was in particular the large groups that could benefit from the state's
However, the period up to 1965 showed simultaneous features that threatened
US domination. There was turmoil around the dollar's position. The domestic
market was weakened by the foreign exchange policy that was pursued, and the
United States increased competition from the outside, especially from Japan. The
Vietnam War and defeat there, along with the Watergate scandal, marked the
beginning of a serious weakening of the US position - both economically and
The United States first recovered from its political and economic decline
after Ronald Reagan took office in 1981 as the country's president. He
implemented a military-Keynesian policy that, through extensive public
investment in the military, fueled the country's economy. The consequence in the
mid-1980's was a considerable economic growth that attracted the rest of the
world. However, the strategy was short-lived as it was based on massive public
borrowing. From being a credit nation, during the 1980's, the United States
became the world's most indebted state. At the same time, a growing portion of
the profits were used for speculation as they could not be productively
invested. In 1987, this kind of casino capitalism burst when Wall Street
experienced its biggest crash since 1929. The superpower did not overcome this
crisis until 1992-93.
Yet, the importance of the United States on the world market has dropped
dramatically since World War II - in line with the rebuilding of Europe and
Japan as well as the subsequent growing industrialization of parts of Asia and
|Table 1. Developments in US market shares for some
key industries - as a percentage of the world market.
|Table 2. Developments in the US market share for
some key industries - as a percentage of the domestic market.
Source: Commerce Dept. and Data Resources Inc.
Industrial flight from the United States has led to job losses, and the
service and information sector has not developed quickly enough to absorb
unemployment. Productivity growth has been lower in the United States than in
most other industrialized countries (see Table 3). The overall investment rate
throughout the 60's and 70's has been far lower than in countries such as West
Germany and Japan (see Table 4).
|Table 3. Productivity growth in some industrialized
countries, annual average, as a percentage.
|Table 4. Investments in the United States, West
Germany and Japan, as a percentage of gross domestic product.