So here we are, at a seemingly historical epoch in U.S. history. We've had several, the Revolutionary war, Civil war, WWII, and so on. For history experts (i.e. professors), most modern history starts with WWII. I’ll limit my story to that time frame.
U.S. vs. Economic Crisis, round 1
So around WWII, we had the Great Depression. That was overcome with 2 major public works projects, the New Deal and World War II. WWII was the main public works project that pulled us out of the depression.
These were infrastructure building projects. The New Deal brought NEW buildings, roads, bridges, and nature trails. World War II was the big driver since once that started, GDP doubled and unemployment went from 14% to 2%...EVERYONE was working. We built factories to produce guns, bullets, uniforms, boots, bombs, planes, tanks, canned GI rations... basically every economic sector needed to up production in the name of the War. The War was a noble cause for most of us.
BUT....the U.S. debt was $41 billion in 1941; it was $258 billion in 1945. What is that in 2009 dollars? One dollar in 1945 adjusted via consumer price index is $29, adjusted via GDP (deflation method) is $24. Either way, for mathematical ease, let’s just say a dollar in 1945 is $25 today.
So to recover from the Great depression, an additional $217 billion of government debt pulled us to prosperity (along with the decimation of world competitors due to the War). So let’s take a look at scale, $217 billion in 1945 is $5.4 trillion in 2009!
For the U.S. to receive STIMULUS similar to 1941-945, we'll need a $5.4 trillion dollar stimulus package.
Let's shift the prism
During and after WWII, the U.S. made more of everything; including babies. We now had a "baby boomer" population. This population was created in light of WWII...to man all the factories we had built, to repair all the roads and bridges we had built, to enforce all the new regulations we had written, and in general, to maintain the economic momentum from WWII.
What momentum did the U.S. have? Well, the main infrastructure project that pulled us out of the depression was war-time manufacturing. In 1946, we had a lot of factories and people that had been making & researching bombs, guns, fighter planes, and other war time products. These facilities and people HAD TO reshift their production to something else.
I'll let a history and economics professor fill in the details concerning this shift. I'm going to make a hypothesis here. This shift NEEDED to shed some jobs. A factory that had been producing bombs has no real equivalent in the non-war market. Maybe they could make TNT for demolition projects, but the degree to which that factory was running during the war could not be sustained during peace.
We, the U.S., do not like to shed jobs. We fought this reality that a war time production shift to peace time shift needed to reallocate jobs and possibly shed job positions that were no longer needed. To put it simply, there's no need for a bomb inspector anymore, and that bomb inspector can get a job as a dynamite inspector, but we used to need 20 bomb inspectors but now need one, and there is are only 5 dynamite inspector jobs available. That means 14 bomb inspectors must find a new career.
The U.S. government tried to help. We kept some of those bomb inspector jobs with the Cold War. We kept weapons researchers employed by developing hydrogen bombs and stealth bombers. Yes, the U.S. did maintain the military industrial complex because doing so promoted employment, production, and purchasing power. We had so much more debt as well, the U.S. needed to keep people employed.
There were other factors, such as pent-up desire to spend after years of frugal war time living, the merging and consolidation of businesses into corporations, and a general shift to more service oriented jobs due to "prosperity." The average U.S. worker could afford to pay for "service." Heck, we needed to CREATE a whole new sector for jobs. All those baby boomers needed jobs too!
Farming efficiencies squeezed farmers and farm land; there was a demand for housing in this now vacated land. Let's move there.
From Slave to having some skin in the game