When the U.S. Was Big: The Ticker

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By Francis Wilkinson

For the U.S., 1950 was a far more perilous moment than the present. The world was still digging its way out of the most expansive and destructive war in human history. The U.S. confronted a powerful and provocative foe sworn to its destruction and armed with fast-growing nuclear capabilities. The USSR eagerly probed the globe– Greece, Austria, Iran, Turkey, Germany, Korea – for weak points in a western alliance organized and guaranteed solely by U.S. resolve.

Instead of a crisis of debt, the U.S. faced an existential threat and a self-imposed obligation to counter communist influence and insurgencies from South America to Southeast Asia. The cost of containment would be high. A joint team of analysts from the departments of state and defense recommended an almost fourfold increase in the annual defense budget, from about $13.5 billion to as much as $50 billion.

Reading a biography of Dean Acheson recently, I was struck by a quote from Robert Lovett, the Wall Street banker and “wise man” who would become Secretary of Defense in 1951. Asked his opinion of the proposal to drastically ramp up U.S. defense spending and obligations around the world, Lovett said, “there was practically nothing that the country could not do if it wanted to do it.”

The country that warranted Lovett’s unwavering confidence had a GDP, adjusted for inflation, of less than one sixth of the U.S.'s current GDP. The pinched budgets of America’s battered and fearful consumers circa 2011 are lavish by the standards of their mid-20th century forebears. Yet the U.S. was already rich enough, by 1950, to forge ahead with the expensive work of containing, and ultimately breaking, the Soviet threat and its myriad totalitarian derivatives.

Democracies, Walter Lippmann said, must “lift themselves by their own bootstraps.” American bootstraps are more than ample for the current crisis. It's the nation's political imagination that seems tattered and small.

(Francis Wilkinson is a member of the Bloomberg View editorial board.)


-0- Aug/30/2011 19:19 GMT