Opinion – Samuel Pessôa: Not-so-glorious years

It is commonly believed that the 30 years between the end of World War II and the mid-1970s were “glorious”. The reason is clear. The growth rate, mainly in European countries, was very high. Additionally, it was a period of great development of the welfare state and of advances in the social area.

What is often forgotten is that the 30 years leading up to the glorious years were disastrous. Two world wars, with a Great Depression in between.

So much of the growth of the 30 glorious years was recovery from the disastrous years, particularly in Europe. A process that statisticians call mean reversion.

The first four rows of the table present the growth rate per year of output per inhabitant for the US, Germany, the UK, France and Italy, for four periods between: 1914 and 1976, 1914 and 1946, 1947 and 1976 and 1977 and 2018. Information was obtained from Maddison’s database.

It is evident that the higher growth rates in the 30 glorious years outweigh the much lower rates for the previous 33 years. For example, Germany grew by 6% a year in its glorious 30 years. This spectacular growth offset the decline of 1.5% per year in the previous 33 years.

If we look at the whole period, the growth of 2% per year is the same as that which occurred in Germany throughout the neoliberal era, from 1977 to 2018. Equivalent arguments, with variations, apply to other countries.

France and Italy, which were a little more refractory than Germany to market liberalization reforms, grew a little less in the neoliberal era. Of course, nothing can be said about social welfare. It is perfectly possible to imagine that the lower growth was the fair price to pay for a greater supply of social security.

The four lines at the bottom of the table represent, for each of the European countries and for the base year of each period, the product per inhabitant related to the same indicator of the American economy, which represents the world technological frontier.

If we remember that the transition period between the end of the 30 glorious years and the neoliberal era was one of stagnation of productivity with accelerating inflation, it is understandable why democracies chose policies to liberalize markets.

It seems that there is social demand for the pendulum to swing towards greater concerns about equity and public insurance. Years of worsening inequality in central countries will possibly generate political pressure to increase the tax burden and social security. to see.