Full Employment: Government Policies in the Late 1940s-1950s

In assessing the view that government policies to deal with the Great Depression 'did more harm than good', a comprehensive analysis must be undertaken. While there were certainly policies that had detrimental effects, such as the Labour government's refusal to increase borrowing and the National Government's ineffective use of protective tariffs, it can also be argued that other policies contributed to the recovery of the British economy.

The Labour government's adherence to orthodox economic policies and balanced budgets, as advocated by Chancellor Philip Snowden, hindered the implementation of necessary measures to stimulate the economy. The refusal to increase borrowing for public works meant that important infrastructure projects were delayed or even abandoned. Additionally, proposed spending cuts on government employees' pay and unemployment benefits were met with resistance, leading to the fall of the government. These policies did little to address the underlying causes of the economic downturn and instead exacerbated the hardships faced by the population.

Similarly, the National Government's reliance on protective tariffs did not effectively address the problems facing British industries. While these tariffs were intended to promote domestic production and protect local businesses, they did not lead to tangible improvements. Instead, the decision to abandon the Gold Standard in 1931, which caused the pound to devalue, had a more positive impact on the economy. This devaluation increased exports and lowered interest rates, boosting economic activity. However, it must be acknowledged that this move was not a deliberate policy choice but rather a response to external economic pressures.

Furthermore, the introduction of the Special Areas Act in 1934 was an attempt to provide direct government assistance to heavily affected regions. However, the impact of this policy was limited, and it did little to redirect government funds or alleviate the problems faced by these areas. This highlights the lack of effectiveness of government policies in directly addressing the deep-rooted issues of the Great Depression.

Ultimately, it can be argued that the recovery of the British economy during the Great Depression was largely the result of external factors such as the recovery in world trade in the mid-1930s and the impending need for re-armament as war drew closer. The economic policies implemented by the government had only a limited impact on this recovery. The lack of innovative solutions and failure to address key issues contributed to the overall harm caused by these policies.

In evaluating the view that full employment in the late 1940s and 1950s was largely a result of federal government economic policies, a multifaceted analysis must be undertaken. While government policies certainly played a role in ensuring low unemployment rates during this period, other factors were also significant.

The dismantling of the massive state controls in 1944 and the subsequent reduction in government spending were key factors in the economic landscape of the post-war era. Government spending as a percentage of GDP dropped significantly, and federal tax revenues also experienced a more modest decline. Combined with the release of over 20 million people from armed forces employment, this shift allowed for non-military-related civilian employment to rise by 16 million. The swiftness and success of this transformation from war to peace employment were lauded by President Truman.

Furthermore, policies such as the GI Bill, which provided veterans with subsidized college places, contributed to lower unemployment rates in the 1950s. Although the bill did not have a significant immediate impact on unemployment, it did play a role in improving the educational level of the U.S. workforce.

However, it can be argued that the broader socio-economic context of the time, rather than government policies alone, was responsible for the sustained low unemployment rates. Factors such as the pent-up demand from wartime rationing, high levels of personal savings, and the rapid conversion of private businesses to peacetime needs were crucial in buoying employment. Additionally, the stimulus from Cold War military programs, the Korean War, and subsequent arms races increased government spending and contributed to lower unemployment rates.

Moreover, the New Deal social policies and business-friendly tax environments provided a safety net and economic incentive for sustained employment. The wage differentials between skilled workers and those employed in services, as well as the economic impact of marginalized groups, also played a role in overall employment levels. Lastly, the consumer-based boom fueled by technological advancements and increased household consumption further sustained employment through internal demand.

In conclusion, while government policies did contribute to the achievement of full employment in the late 1940s and 1950s, these policies cannot be viewed in isolation. The broader socio-economic context, external stimuli, and shifts in societal dynamics were equally important factors. The combination of fiscal measures, social policies, and changing economic landscape led to the overall success of this period.