Western Democracies Post-World War II

Economic Recovery and the Marshall Plan

Post-WWII, Western Europe was in economic turmoil.
The Marshall Plan: U.S. invested $13 billion in Western Europe's reconstruction.
- Resulted in drastic prosperity during the 1950s and 1960s.
The plan was a catalyst, not the sole reason for growth.

European governments focused on economic recovery to avoid a repeat of the Great Depression.
Embraced liberal democratic principles and Keynesian economics:
- Government’s role is to stimulate the economy through increased spending.
- 1950s-1960s saw significant government spending increases.

Governments began offering welfare benefits, leading to the term "welfare state."
Welfare state roots trace back to Bismarck's Germany (19th century):
- Included insurance for job injuries and old age pensions.
Post-war era saw widespread adoption of welfare state principles.
Great Britain led in establishing a welfare state:
- Implemented low/no-cost universities, subsidized healthcare, and unemployment insurance.
- Policies driven by the Liberal Labour Party aiming for "cradle to grave" welfare.

Welfare programs required funding, leading to higher taxes.
Programs popular as long as economies thrived.
Two recessions (1973-1975 and 1979-1983) reduced tax revenue and strained government spending.
Led to the term "stagflation" (stagnant economy + inflation).
Western governments continued high spending on welfare programs, often running budget deficits instead of using tax income.

Continue with AP Euro review and resources for exam preparation.