Lecture Notes: Transformation of the American Economy (1980-Present)

Overview

• Focus: Economic and technological changes from 1980 to the present.
• Main Theme: Transformation due to digital technology and global economy.
• Goal: Understand causes and effects of these changes.

Key Developments in Technology

Computers

• Origin: U.S., 1946, initially massive in size.
• Innovations: Transistors, microprocessors led to size reduction.
• 1977: Apple introduced home-use computers.
• 1980s: IBM produced PCs, leading to widespread workplace adoption.

Internet

• 1990s: Revolutionized communication and commerce.
• Functions: Email replaced letters/memos; facilitated file sharing (e.g., Napster).
• Impact: Affected news and media industries; emergence of e-commerce (e.g., Amazon).

Economic Impacts

Productivity

• Increased significantly starting in 1995 due to global communication.
• Paradox: Despite productivity gains, standards of living didn't increase as expected.

Changing Nature of Work

• Manufacturing

  • Sharp decline since 1980s.
  • Outsourcing to countries with cheaper labor (e.g., China).
  • Impact: Decline of American labor unions (e.g., 35% membership in 1954 vs. 12% today).
  • Major Event: Reagan's 1981 dismissal of striking air traffic controllers.

• Service Sector

  • Growth as manufacturing declined.
  • Intangible products: Education, legal services, food service.
  • Current statistic: 71% of American jobs in service sector.
  • Source of manufactured goods: Predominantly from China.

Income Disparity

• Increasing gap between wealthy and middle class.
• Stagnation of real wages for working class.
• Wealth Increase (1979-2007):
  • Top 1%: 275% increase.
  • Middle 60%: 40% increase.
• Factors: Outsourcing, rise of low-wage service jobs, tax code restructuring under Reagan.

Conclusion

• Digital revolution has fundamentally transformed the U.S. economy.
• Current implications of these changes continue to evolve.

Additional Resources

• Review packet available for AP US History exam preparation.
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