Between 1945-1973 a post-war Keynesian consensus prevailed in most of the Western world. Largely based on Keynesian demand managment economics, it consisted of full employment (1-2%), moderate inflation (less than 5% in the 1950's but rising to around 10% in many nations in the late 1960's), strong trade union rights, an economic focus on fiscal rather than monetary policy and strong regulatory environment and depeding on the nation in question, varying degrees of neo-corporatist economic management (tripartite agreements between govt, business and unions).
The OPEC oil crisis brought the whole edifice crashing down with spiralling inflation and growing unemployment, stagflation, in other words.
Some economists however see that by the late 1960's problems were already emerging, with rising inflation, sparked primarily by overzealous fiscal expansion. In the US it was due to the Vietnam War in other nations it was done in an attempt to get even 'fuller' employment (below 1% ueempoyment).
This all led to the adoption of monetarism and supply-side economics in the 1980's ie Thatcherism and Reaganomics, etc.
What POD would be required to have the Keynesian post-war consensus still in operation today.
My own proposed POD would be where the limits of the consensus are not tested, ie policy-makers do not try and get unemployment below 1%, perhaps accepting a level of 3-4%, thus keeping inflation down. Also in boom times there must be substantial govt surpluses (rather than the constant deficits OTL).
Note: I am not an expert in economics am writing this from a more political angle. Comments by those with more economic expertise would be appreciated.
The OPEC oil crisis brought the whole edifice crashing down with spiralling inflation and growing unemployment, stagflation, in other words.
Some economists however see that by the late 1960's problems were already emerging, with rising inflation, sparked primarily by overzealous fiscal expansion. In the US it was due to the Vietnam War in other nations it was done in an attempt to get even 'fuller' employment (below 1% ueempoyment).
This all led to the adoption of monetarism and supply-side economics in the 1980's ie Thatcherism and Reaganomics, etc.
What POD would be required to have the Keynesian post-war consensus still in operation today.
My own proposed POD would be where the limits of the consensus are not tested, ie policy-makers do not try and get unemployment below 1%, perhaps accepting a level of 3-4%, thus keeping inflation down. Also in boom times there must be substantial govt surpluses (rather than the constant deficits OTL).
Note: I am not an expert in economics am writing this from a more political angle. Comments by those with more economic expertise would be appreciated.