policy - The Black Vault

THE BDM CORPORATiON
of the New Economics maintained, to eliminate or dt least minimize cyclical
problems such as those which had plagued the 1950s. Indeed, throdgh the
mid 1960s the record bore out the apparent truth of this confident
assertion.
The record since 1965 has shown that this confidence was premature. A
new era of slow growth, unemployment (low by the standards of the 1930s,
but painful nonetheless), and inflation has highlighted the limits to our
understanding of economics and the political difficulty of applying even
]
what is known. In addition, the US's international economic position has
gradually become less prominent. This shift, which was largely inevitable,
reflects such developmnents as the speed and extent of the European and
Japanese economic recoveries and the massive post-1973 transfer of wealth
to certain oil-producing countries. The US economy coitinues to be preeminent,
but no longer is it; overwhelmingly so. What is more, the pieceby-piece
abandonment of the international economJic arrangements established
after World War II has meant that the US can no longer enjoy certain of the
political and economic prercgatives enjoyed between 1945 and the mid
1960s. 3/
While there is no simple explanation for many of the economic developments
'f the last 15 years, it
1960i that the US
is clear that the assumption of the early
could have both guns and butter, that the costs of
involvement in Vietnam could be borne without sacrificing domestic economic
goals, was wrong. 4/
The government's failure to develop consistent and
effective policies to mitigate the impact of the war on
the civilian
economy was an important cause of the economic difficulties experienced by
the United States during and after the Vietnam War.
it
Generalizing further,
can be seen that this failure is an example of the growing disparity
between the US's international politico-military role and its ability, or
Ait least its political willingness, to foot the bill domesticzlly.
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