Ford, Carter, and the Economic Malaise: Crash Course US History #42

Summary

This Crash Course episode explores the transformative period of the mid-to-late 1970s in U.S. history, marked by economic challenges including inflation, slow growth, and the decline of manufacturing. The script discusses the impact of global competition, oil shocks, and political responses under Presidents Ford and Carter. It highlights the era's influence on contemporary economic inequality and the shift towards conservative economic policies, setting the stage for Reaganomics.

Takeaways

• 📚 The script discusses the mid-to-late 1970s as a transformative period in American history, with significant economic and social changes.
• 🛑 The 1970s marked the end of 25 years of economic expansion and prosperity, leading to inflation and slow growth, a situation referred to as 'stagflation'.
• 🚗 The decline of the U.S. manufacturing industry was a result of global competition, particularly from countries like Japan and Germany, which had been economically bolstered post-WWII.
• 💵 The U.S. experienced an export trade deficit for the first time in the 20th century in 1971, importing more than it exported, partly due to the strong dollar linked to gold.
• ⛽ Two oil shocks in the 1970s, in 1973 and 1979, had severe impacts on the U.S. economy, causing gasoline shortages, price increases, and contributing to inflation.
• 📉 The economic downturn of the 1970s contributed to the rise of economic inequality and a halt in real wage growth for two decades.
• 🏦 Gerald Ford's presidency was marked by an unpopular pardon for Richard Nixon and an unsuccessful 'Whip Inflation Now' campaign.
• 🌐 Jimmy Carter's presidency was characterized by efforts to combat stagflation through spending cuts and deregulation, and a focus on human rights in foreign policy.
• 🕊️ Carter's Camp David Accords were a significant diplomatic achievement, attempting to foster peace between Egypt and Israel.
• 📉 The Iranian Revolution and the hostage crisis significantly damaged Carter's image, contributing to a perception of weakness in his presidency.
• 🔑 The economic challenges of the 1970s shifted American political thought towards individual economic decisions over government intervention, setting the stage for future policy changes.

Q & A

What significant period in American history is discussed in the script?

The script discusses the mid-to-late 1970s, a period of momentous change in American history.

Why was the 1970s considered a turning point in the American economy?

The 1970s marked the end of 25 years of economic expansion and prosperity, leading to inflation, slow growth, and a decline in manufacturing.

What was the impact of the decline in U.S. manufacturing on the workforce?

The decline in manufacturing led to a decrease in manufacturing jobs, with the percentage of Americans working in manufacturing dropping from 38% in 1960 to 28% in 1980 and 9% today.

How did the economic policies after World War II contribute to the economic challenges of the 1970s?

Post-World War II policies promoted the economic growth of Japan, Germany, South Korea, and Taiwan, which later became strong competitors to U.S. manufacturing due to their protected industries and subsidized defense.

What was the effect of the oil shocks in the 1970s on the U.S. economy?

The oil shocks led to a quadrupling of oil prices, long lines for gasoline, higher prices for goods, and contributed to the phenomenon known as stagflation, characterized by high inflation and unemployment.

What was the 'Crisis of Confidence' speech by President Jimmy Carter, and why was it significant?

The 'Crisis of Confidence' speech addressed a perceived loss of American spirit and unity of purpose, and it is significant because it is considered a reflection of Carter's political challenges and contributed to a significant drop in his approval rating.

What economic phenomenon was referred to as 'stagflation', and when did it occur?

Stagflation refers to the combination of stagnant economic growth, high inflation, and high unemployment, which occurred in the 1970s.

What was the 'WIN' program proposed by President Gerald Ford, and what was its outcome?

The 'WIN' program, which stood for 'Whip Inflation Now', was a plea for Americans to spend less and be better shoppers. It did not significantly improve the economy, and inflation dropped only slightly while unemployment increased.

How did the economic challenges of the 1970s shape the political landscape in the U.S.?

The economic challenges led to a decline in support for New Deal liberalism and an increase in the appeal of conservative ideas such as lower taxes, reduced regulation, and cuts in social spending.

What was the impact of the Iranian Revolution and the hostage crisis on President Carter's administration?

The Iranian Revolution and the subsequent hostage crisis significantly damaged Carter's image, contributing to the perception of him as weak and ultimately affecting his re-election chances.

How did the economic theories of the time influence government policy during the 1970s?

The breakdown of the Phillips Curve, which suggested that unemployment and inflation were inversely proportional, undermined the Keynesian consensus on government intervention in the economy and opened the door for a shift towards individual economic decisions influencing economic policy.