Postwar Optimism about the Economic Benefits of International Trade (1965)
In the aftermath of World War II, the ascendant United States played a central role in creating an economic order built on encouraging international trade. While tariffs to protect domestic manufacturing had been the norm for decades, mid-century economists argued that reduction of trade barriers would promote economic prosperity for all involved. The General Agreement of Tariffs and Trade was signed in 1947 with the purpose of achieving "substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis.” The excerpt, from a 1965 news series entitled Great Decisions, largely embodies this optimism about international trade. At the outset, former US Asst. Secretary of State Roger Hilsman cites the concept of comparative advantage while arguing for the long-term benefits of global trade. The succeeding portion of the clip channels the view of international commerce that prevailed among Western leaders in the postwar era : that international trade helped create a “miracle of economic recovery” for countries recently devastated by World War II.
Great Decisions 1965; 3; Trade, Food and Dollars: What Policies for the US?
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03:20 - 03:32
The speaker is Robert Hilsman, a former US Assistant Secretary of State under the Kennedy and Johnson Administrations
03:33 - 03:48
Hilsman discusses the crucial economics concept of comparative advantage to explain the overall economic benefit of international trade. Hilsman briefly uses the example of US and West German cars.
04:56 - 05:21
World War II was indeed devastating on the economies of Europe. As referenced in the clip, buildings and factories were destroyed, agricultural economies had been devastated, and governments were deeply in debt. Many countries also experienced high levels of inflation after the war ended. In this context, the US enacted the Marshall Plan, a foreign aid program that provided over $13 Billion (in 1948 dollars) to facilitate the economic recovery of dozens of countries, including France, West Germany, and the United Kingdom. The effort had genuine humanitarian goals, but also was designed to serve the US economic and political interests. If the Marshall Plan helped European economies get back on their feet, then those countries could become markets for US exports. Additionally, historians have argued that the Marshall Plan served US Cold War goals. Communist parties were gaining ground in countries like France and Italy, and it was thought that a struggling economy was fertile ground for a Communist takeover. Thus, stimulating the growth of capitalist economies also served US foreign policy goals
05:22 - 05:43
This excerpt associates the "miracle of economic recovery" in Europe to global trade. The US played a central role in building a global economic order that facilitated this international commerce. In 1944 at a United Nations meeting at Bretton Woods, New Hampshire, the US and 43 other countries established an agreement for managing international monetary exchange and established the International Monetary Fund as an institution to monitor international economic relations. The General Agreement of Tariffs and Trade was signed in 1947 with the purpose of achieving "substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis.”
05:44 - 06:40
Notice the way the clip makes a clear case that global trade benefits the United States, particularly how Americans can gain from exporting to other countries.
06:41 - 07:18
This section discusses the creation of a "Common Market" forged between a group of European nations. This zone of free trade and economic integration between European states ultimately grew and evolved into the European Union.