Overview
This lecture covers the key economic and political changes in the United States during the 1970s, focusing on economic decline, oil shocks, presidential leadership, and the shift in American political and economic thought.
The Economic Crisis of the 1970s
- The long post-WWII economic expansion ended in the 1970s, leading to inflation and slow growth.
- Decline in U.S. manufacturing as other countries like Japan and Germany became more competitive.
- America experienced its first 20th-century trade deficit in 1971.
- Nixon ended the dollar’s link to gold, but this didn't solve economic problems.
- Manufacturing jobs declined: from 38% in 1960 to 28% in 1980.
- Automation and moving jobs overseas or to lower-wage U.S. regions further cut jobs.
- Northern "Rust Belt" cities lost manufacturing and tax bases, causing urban decline.
- Oil shocks in 1973 and 1979 caused prices and inflation to soar.
- High inflation and unemployment led to "stagflation" and the "misery index."
Presidential Responses: Ford and Carter
- Gerald Ford became president, pardoned Nixon, and proposed "Whip Inflation Now" (WIN), which failed to stop unemployment.
- Ford was limited by a Democratic Congress and is remembered for being ineffective.
- Jimmy Carter focused on fighting inflation by cutting spending, deregulating industries, and supporting high interest rates.
- Carter's "Crisis of Confidence" speech criticized American values, costing him public support.
- Carter promoted energy conservation (solar panels, nuclear power) but nuclear growth stalled after the Three Mile Island accident.
Foreign Policy and Global Events
- Carter emphasized Human Rights, reducing aid to abusive regimes and returning the Panama Canal.
- Camp David Accords: Carter brokered peace between Egypt and Israel.
- Continued U.S. support for unpopular dictators, most notably the Shah of Iran, led to the 1979 Iranian Revolution and hostage crisis.
- USSR invaded Afghanistan in 1979, prompting the Carter Doctrine (U.S. would defend Persian Gulf interests), grain embargo, and Olympic boycott.
Long-Term Impacts and Political Shifts
- Economic crisis weakened support for New Deal liberalism; ideas like tax cuts and deregulation gained traction.
- Stagflation undermined the Keynesian idea that government could control the economy.
- Rise of economic theories focusing on individual choices over government policy.
Key Terms & Definitions
- Stagflation — simultaneous high inflation and high unemployment.
- Misery Index — sum of inflation and unemployment rates.
- Rust Belt — northern U.S. industrial region hit hard by manufacturing job losses.
- Phillips Curve — theory that unemployment and inflation are inversely related.
- Carter Doctrine — U.S. commitment to use force to protect interests in the Persian Gulf.
Action Items / Next Steps
- Review differences between Keynesian and new economic theories of the period.
- Prepare to discuss the political shift toward conservatism in the 1980s.