Well, it did so as a result of collaboration between the government and the private sector and, increasingly in the 20th century, the nonprofit, academic research sector. It’s quite a different story in reality from the tale that is sometimes told of how capitalism grew up without controls in the United States, and then with the New Deal it came under regulation. In fact, the government both at the federal and the state level was deeply involved with projects for promoting the industrialization of the United States and the creation of a capitalist market from the administration of George Washington onward.Since we invented government, there has never been one that did not intervene in the economy and try to promote economic growth.
One of the ways it did so was through investing in infrastructure. We’ve had a series of ambitious infrastructure projects – the early canal system and then the transcontinental railroads that were funded by the Lincoln administration and Congress at the beginning of the Civil War, through to the interstate highway system. But government contribution to economic growth wasn’t just limited to that – it included funding basic research. For example, Congress gave a grant to Samuel Morse, who developed Morse code and the first American telegraph [in the 1840s], and the government role in R&D [research and development] became central in World War II. This continued after 1945, with Department of Defense procurement and the National Institutes of Health and other forms of basic federal R&D.
Wednesday, May 2, 2012
Economic Growth and the U.S. Government
Michael Lind answers the question, how did the U.S. become an economic powerhouse: