Okay so we've talked extensively about how states in the Soviet black Fair during the post-war years but you didn't think we weren't going to talk about Western democracies and how they fared did you you so crazy so if you're ready to get them brain cows milked democratically then let's get to now back at the beginning of this unit we talked about how right after World War II ended Western Europe was in a bad way economically but then came along those sweet American dollars in the form of the Marshall Plan which invested 13 billion dollars into Western Europe's reconstruction all of those states that accepted Marshall Plan dollars enjoyed more or less a drastic increase in prosperity during the 1950s and 1960s now to be clear it wasn't only the Marshall Plan that led to this unprecedented growth in European economies though it certainly help to get it off the ground quickly in addition many European governments made strong policy decisions that put economic recovery at the Forefront and mainly this is because these states saw what happened after the first world war you remember that global economic crisis called the Great Depression yeah they did too and so these Western States put forward economic policies to avoid a repeat of that disaster so for the most part Western European States after the war embraced liberal Democratic principles and Keynesian economics if you don't remember what that is from Unit 8 and let me explain it up real nice for you Keynesian economics basically comes down to the idea that it's the government's job to stimulate the economy and it does that by increasing government spending so during the 1950s and 1960s Western Democratic states increased their government spending by roughly a metric Butler and one of the significant effects of governments taking a major role in the economy is that they began offering significant welfare benefits to their population now when we're talking about governments offering these kinds of social programs to their people the term for that is welfare state so many Western European nations now became welfare states during this period and let me show you how that worked out but hold on I said now became welfare states as if this is a new phenomenon but that needs to be qualified the welfare state had its roots in Bismarck Germany in the second half of the 19th century he implemented insurance for people who got injured in their jobs and old age pensions for those too old to work so the newness that I'm referring to is how widespread this idea of the welfare state became in the post-war era now it was Great Britain who led the way in establishing a welfare state and many other European nations followed suit and Britain they established low cost or no-cost universities they subsidized health care benefits and unemployment insurance just to name a few these programs were implement by the liberal labor party whose goal was to create a cradle to grave social welfare state now maybe that sounds great at the time they're born till the time they die but if the government is going to be responsible for all of this that money has to come from somewhere and where it came from was higher tax and for the most part these programs were popular and people didn't mind the higher taxes just as long as the economy was good but when two recessions hit one from 1973 to 1975 and the other in 1979 to 1983 tax revenue decreased in Britain and across Western Europe as well and the high level of government spending was difficult to maintain in fact so pronounced was the problem that economists had to invent a new term to describe it namely stagflation it was a combination of two terms stagnant and inflation so the economies of Western Europe are no longer growing that's the stagnant part but prices were Rising like mad and that's the inflation part even so many Western governments still spend Hefty amounts on their newly minted social welfare programs precisely because they were so popular it's just that they had to continue that spending by running up budget deficits instead of paying for them with tax income Okay click here to keep reviewing unit 9 of AP Euro and then click here to grab my AP Euro review pack which is everything you need to get an A in your class and a five on your exam in May and I'll catch you on the flip-flop I'm Laura