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Minsky's 1986 Stabilizing an unstable economy contains an economic history of the US 1945-1985. His analysis is that what made 1945-65 special and stable was that the private sector was stuffed with US treasury securities as a result of the enforced savings and investment of the war economy, and it took 20 years to unwind those government bond holdings. Then after roughly 1965 financial innovation started out of necessity since banks couldn't do their business just shuffling US treasuries. And then financial crises hit every 5 years or so, until now.
So it may not just be the political economy - maybe you couldn't pull it off with today's balance sheets.
Incidentally, Minsky dates the start of stagflation well before peak oil in the lower 50 US states (he doesn't mention peak oil), which means that maybe stagflation wasn't only or even primarily about resource constraints, as many of us here appear to believe.
By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan
I think the story in very general is quite similar in the post-war Western Europe economic success story.
Lyndon Johnson refused to seek a tax increase to pay for the war, hoping to keep the war's impact from being felt by most Americans, and this apparently led to the inflation as well as screwing with the balance of payments system set up with Europe at the end of the war.
There's likely more to the story, but that's a piece. While we have a good understanding of economic policy history from 1980 to the present, it seems that the era from 1960 to 1980 is less well understood.
And the world will live as one
I think the economic policies of the industrialized Western European economies (except Britain) after WWII are a much better model for how the the West should revive their economies. Deficit spend till full employment, for example. Have an incomes policy and understand that strong and nearly universal unions are an element of that. Lead, protect and encourage industry into high-employment and international quality production. There is no re-invention involved.
An important understanding is that whatever is done you will not get the growth rates of Europe recovering from WWII or the U.S. without much competition in the 40s and 50s, or of China over the last decade. Mature economies don't grow very fast, they're not where 'the market' wants to invest. So governments of mature economies have to force that investment.
We need something like unions for the mobile, telecommuting, 'freelance', contractor temp economy that most workers live in now - including many who are supposedly middle class.
Union membership should be automatic, in the same way citizenship is.
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