Question

What explains the expansion of government in the post-World War II period and elaborate on the roles that governments perform in the economy.

Answer 1

The government or the state plays an important role in maintaining peace law and order within the economy through effective administrative system

Efficient utilisation of domestic resources is the main role of the government.

The post World War II economic expansion, also known as the golden age of capitalism was a broad period of worldwide economic expansion beginning after World War II and ending with the 1973–1975 recession.

Industries that were created or expanded during the post war period included television, commercial aviation and particularly in the US, computer technology.

Government in this period also charged a very nominal interest rates and low or negative real interest rates which resultied respectively in debt servicing costs being low and in liquidation of existing debt .

This allowed countries to deal with each other at existing government debt level and reduce the level of debt without needing to direct a high portion of government spending to debt service.

THE government helped to maintain the High productivity growth fafter the war till the early 1970s. Manufacturing was aided by automation technologies such as feedback controllers, which appeared in the late 1930s were a fast-growing area of investment following the war. Wholesale and retail trade benefited from new highway systems, distribution warehouses, and material handling equipment such as forklifts and intermodal containers.

Much property was destroyed in war. In the inter-war period, the Great Depression also caused investments to lose value.

The government imposed progressive taxation and capital levies with the generally-stated aim of distributing the sacrifices required by the war more evenly.

While tax rates dipped between the wars, they did not return to pre-war levels. Top tax rates increased dramatically, in some cases tenfold. This had a significant effect on both income and wealth distributions. Such policies were commonly referred to as the "conscription of income" and "conscription of wealth".