Comment by underlipton
1 day ago
Speaking completely out of my ass in the interest of stimulating thought on the matter: the fall of the Bretton Woods system was not inevitable, and the trade imbalances of the 1960s were mere symptoms of the true source of the collapse of our ability to maintain the peg.
Post-war, we embarked on a number of massive and economically-inefficient expeditions, driven largely by xenophobia and racism, which inflated the labor and time costs of American life across the board, both in the short and long terms, and made monetary inflation a necessity in order to forestall an economic collapse. The most prominent of these are the creation and expansion of suburban America and the car and consumer cultures required to make it possible, and the expansion of the military-industrial complex in the midst of the Cold War.
An America that had spent the 40s, 50s, and 60s continuing to build densely (reaping the benefits of efficient servicing of public needs), and focusing industry on export-ready products and services (preempting trade imbalances), would not have incurred the ever-rising costs of creating and maintaining sprawl, and would have benefited from pro-trade spending that actually delivered a return rather than falling into a black hole.
If I might be slightly hyperbolic: American hubris and intolerance blew up the American experiment about 80 years ago. It's just been exploding very, very slowly.
You're factually right. The high government spending of the 1960s was avoidable. By the 1970s, the loss of the peg was inevitable due to what happened in the previous decade.
I have a more sanguine feeling about America's development through its short history. It embarked on a series of many experiments, many which were successful and many which had terrible externalities. At the time, most people thought they were doing the most reasonable thing. For example, the huge benefit one family got from owning a car, it would follow that all families owning one would have even more benefits. It turned out that suburbanization hits scaling limits, but it was not immediately apparent at the time.
Overall, the standard of living for the median American is higher than it was in the 1960s and 1970s. However, the immediacy of information has caused widespread anxiety. In the 1990s and 2000s, we thought the same optimistic thoughts about interconnected information networks.
I have faith that we will adapt to this new reality, just in time for the next technological wave to catch us off guard. Maybe it will be cheap artificial intelligence.
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