ZA, GR, CS

 

 

Changes in trade, commerce, and technology across time. The effects of capitalist development, labor and unions, and consumerism.

 

       =Vocabulary

       = IDs

       = Summary

       = Commentary 

 

Chapter 25:  World War II

 

Foreign Policy in the 1930s

Herbert Hoover - the 31st President of the United States

 Franklin D. Roosevelt - the 32nd President of the United States and central figure of the 20th century during a time of worldwide economic crisis and world war

 London Economic Conference - a meeting that took place between representatives of 66 nations in the June 1933 to attack global depression, revive international trade, and stabilize international currencies

The Great Depression - a worldwide economic downturn starting in most places in 1929 and ending at different times in the 1930s or early 1940s for different countries 

-There was a worldwide depression occurring with financial disasters in many countries, and so Hoover agreed to an abeyance of the war debts from European countries.

-Roosevelt attended an international economic conference in June 1933.  He ultimately put America first; domestic economic crises seemed more important than international economic collaboration.

-Roosevelt cooperated with the Soviet Union in hopes of aggrandizing the market for U.S. grain surplus.

~The United States was not the only country undergoing a Great Depression, but German citizens actually suffered more than the American people.  In addition to the debts owed by the nation, Germany's lands were destroyed, people's spirits crushed, and inflation shot through the roof.  People would have to empty their savings accounts for a loaf of bread.  Their economic crisis in part led to the rise of Adolf Hitler, because he could feed off of their pain and offer the people hope.

~This attitude of the president reflected America's tendency towards isolationism.  If he add from the start mettled in international affairs, the United States may have entered the war at an earlier date.

~The economic connection Roosevelt established with the Soviet Union led to a diplomatic recognition between the countries and moved the American people from thinking of them as enemies to partners.  Obviously, this alliance proved essential and beneficial on the war front.

 

Secretary of State Cordell Hull - led the reversal of the earlier policy of intervention in South America

Good Neighbor Policy - the foreign policy of the administration of United States President Franklin D. Roosevelt toward the countries of Latin America

-The U.S. continued to support dictators, especially in Central America, in order to preserve economic interests.

-Roosevelt extended the Good Neighbor Policy and removed troops from Haiti and Nicaragua.

~Latin American economies were also affected by the Great Depression and entered stages of chaos.  Even though they renewed economic and trade interests, the countries, in some cases, still desperately needed the troops to keep order.  These Central American nations still seem to heavily rest on U.S. support, whether they wish to or not.

  

Ethiopia and Spain

Neutrality Acts, 1935-1939 - a series of laws, including embargos and prohibition of citizens of belligerent nations' ships that were passed by Congress in the 1930s

Lend-Lease - a program under which the U.S. supplied Great Britain with vast amounts of war materiall

-Roosevelt imposed the Neutrality Act of 1935 to prohibit all arms shipments to nations at war.

~This was only the beginning to the series of Neutrality Acts and the series of embargos Roosevelt had the United States employ.  Throughout the war it can be seen that disturbances in economic relations are what usually stimulate war outbreaks; this can be more clearly seen in "The Path to Pearl Harbor" section.  At this point in 1935, Roosevelt is still claiming to remain neutral, but he cannot deny the severe economic bias held between warring nations.  For example, he can "lend-lease" to Great Britain because they are our "neighbors," but not Germany.

  

War in Europe

World War I - a global military conflict which involved the majority of the world's great powers organized into two opposing military alliances

-Roosevelt asked for a repeal of the embargo section of the Neutrality Acts, but the U.S. declined because they did not want to risk entering the war or disrupting their civilian economy, already in disarray.

~This was a good attempt by Roosevelt to transition America to war; however, the people are adamant about refraining from European affairs.  This was probably because the generation directly affected by World War I were still living in society, and thus people still had poignant emotions and regrets over the war.  The same people were being lobbied for money for a second time, and they most likely did not want to support the atrocities they saw World War I cause.  War is an ugly sight, not something most people want to see twice in a lifetime.

 

The Path to Pearl Harbor

Attack on Pearl Harbor - a surprise military strike conducted by the Japanese navy against the U.S.' naval base at Pearl Harbor, Hawaii

-July 1939, the United States gave Japan 6 months notification regarding the cancellation of the 1911 commercial agreement between the two nations.

-Two years later, Roosevelt froze all Japanese assets in the U.S.

~In freezing all Japanese assets, Roosevelt knowingly provoked the Japanese into aggression because now their economy is going to be negatively affected.  As a result, the White House should have been expecting some sort of military invasion in the near future.  Although Hawaii originally seemed too far to be plausible, the United States should have been more responsible, more cautious, and prepared defense troops in possible target areas.

 

  

II.  The Home Front

Mobilizing for War

Consolidation - the mergers or acquisitions of many smaller companies into much larger ones

War Production Board - board that regulated the production and allocation of materials and fuel during WWII

-Roosevelt created the War Production Board (WPB) to mobilize the nation's resources for an all-out war effort.

-The Roosevelt administration was desperate for the cooperation of prestigious businessmen, many of whom the New Deal alienated.

-Small farms consolidated into larger farms and those large farm operators profited because of the increased demand for basic commodities that effectively raised prices.

~It is obvious to see that after the "shocking" attack of the Japanese on Pearl Harbor, the American people have jumped on the bandwagon towards war.  However, Roosevelt must now organize this support in order ot use it most efficiently.  The problem he now faces is that businessmen are only begrudgingly submitting to new programs to aid the war, when he truly needs their full support.  This war could potentially rescue the nation out of its Great Depression, but only if industrial America can adapt to it.

~This coalescence of smaller farms originally seems like a great idea because it increases productivity of the farming industry, but only later do they realize this drives too many farmers out of business.  Workers eventually get replaced by tractors, and only a few reap the benefits from the increased demand for grain and the like.

 

Socialism - a broad set of economic theories advocating state ownership of the means of production and distribution of goods; a society characterized by equality for all individuals

Office of Price Administration - the functions of the OPA were originally to stabilize prices and rents after the outbreak of WWII

-The Office of Price Administration set prices to control inflation.

~Roosevelt's presidency has already been marked by regulation and centralized government, and this is merely an extension.  The OPA could now essentially control what people ate and wore by lowering certain prices and raising others.  Socialism anyone? 

 

War Bonds - debt securities issued by a government for the purpose of financing military operations during times of war

Income tax - a tax levied on the financial income of people, corporations, or other legal entities

-The government sold war bonds and increased taxes to reduce inflation, as well as initiating a payroll deduction for income taxes.

~Slogans such as "For Freedom's Sake, Buy War Bonds" appeared to goad citizens into supporting the war effort in any way possible.  By unifying the country under one front, Roosevelt was able to arouse confidence back into the economy and sent the economy on an upward path.

~The income tax policy, in general, redistributed wealth and balanced a sort of equilibrium between the rich and the poor.  This prevented a false economic recovery, one that would solely benefit the upper class.

  

Wartime Opportunities

-Many Americans were now moving from rural areas to cities, or even to the west.

-Membership in labor unions grew, but now members were required to remain in the union for life and not to threat striking.

-The economic and industrial upturn changed the region - shipyards, testing sites, and supply depots emerged.

~More goods were needed to supply the war; more businesses opened up to supply those goods; more jobs arose to operate those businesses.  This demographic change (Themes in US History - Demographic Changes) furthered the change to a more industrialized and modern America.

 

 

 

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Chapter 26: Postwar Growth and Social Change

 

 

 

 

 

 

  

 

 

  McDonald's and other various fast-food chains not only transformed the culture of America, but also the economy.  People began to eat out at these less-formal eateries because of its affordability, especially now that both parents were beginning to work.  I can only assume that produce and other basic goods at supermarkets' demands were decreasing because now food is more readily available.  Basically, franchises opening up altered a huge portion of consumption and was only the starting point to Americans' profuse eating habits.

 

 

 

The Thriving Peacetime Economy

Gross National Product (GNP) - the total monetary value of all final goods and services produced in a country during one year

Purchasing power - the value of money in terms of what it can buy at a specified time compared to what it could buy at some period established as a base

Discretionary income - the amount of an individual's income that is left for spending after the essentials have been taken care of

Mortgages - a temporary, conditional pledge of property to a creditor

The Cold War - the continuing state of conflict and tension that existed primarily between the U.S. and the Soviet Union from the mid-1940s to the early 1990s.  In spite of peoples' anxieties toward this war, Americans were for the most part optimistic after 1945

The Great Depression - see Chapter 25

The GI Bill - provided for college or vocational education for returning WWII veterans as well as one year of unemployment compensation

The National Security Act - created the Department of Defense, to which a large amount of government money was allotted to

President Eisenhower - the 34th President of the United States from 1953 until 1961

-GNP rose significantly from $200 billion in 1945 to $300 billion in 1950 and to $500 billion in 1960.

-60% of all families were now part of the middle class.

-Why such high economic growth?

     1.  Higher wages now facilitated consumers' readiness to buy

     2.  Increase in purchasing power and discretionary income

     3.  Automobile industry boomed

     4.  The Interstate Highway Act gave $26 billion to build over 40,000 miles of federal highway

     5.  House construction and lower mortgage rates

     6.  Government playing a bigger role in business

~This time of economic growth serves as a complete contrast to the post-WWI time of economic recession.  Thus, the American people must have had some sense of prudency in the back of their minds to prevent any sort of risky business investments that could lead to severe loss.  America's capitalistic economy always undergoes chronic cycles of wealth and depression, so people may have been fearing a possible depression yet again.  Consequently, the aggregate demand did not rise with the investment component, but rather with both the consumer and government spending portion.

~The fact that the middle class was rising shows that the increase in wealth is not only diving into the pockets of the rich, like in the 1800s and early 1900s.  Instead, a majority of Americans are reaping the benefits.

~With inflation decreasing and more money in the wallets of thousands, the American people had the potential to spend not only for what they needed, but also for what they wanted.

~The automobile industry boomed in this decade, similarly to the way it fluorished in the 1920s.  Innovations increased choices of style, brand, and color; therefore social classes were more easily divided because it their wealth was visible through the car they owned.

~Lower mortgage rates and the increase in housing construction provided cheaper living places for those (most likely in the middle class) to live close enough to the city to find easy work, but also far enough to escape the ratty conditions.

  

Corporate Impact on American Life 

Oligopoly - a market in which control over the supply of a commodity is in the hands of a small number of producers and each one can influence prices and affect competitors  

Conglomerates - a corporation made up of a number of different companies that operate in diversified fields

X inefficiency - the difference between efficient behavior of firms assumed or implied by economic theory and their observed behavior in practice

-During the war, government encouraged big businesses and revoked antitrust laws solely to promote war production, but now they are applying stricter regulation laws.

-Companies are expanding abroad.

-The oligopoly market system was growing and conglomerates emerging.

-Introduction of corporate planning and skillful managers to maximize profits.

~It is suspicious that the government would permit conglomeration and merging during the war to meet the need of U.S. supplies, because ultimately it is and was illegal.  Now they must suffer the consequences because it is hard to undo what has already been done.  Big businesses have already emerged, and even a series of laws cannot completely break them up; many still exist to this day:  Wells Fargo, Dell, Wal-Mart, etc.

~It makes sense that the oligopoly market system was growing because the government was doing a fine job at preventing huge monopolies.  It was extremely difficult to maintain a monopoloy not only because of restricting laws, but also because society and consumers could simply refuse to buy that company's product and thus force it to lose significant business.

~More strategic business planning with skillful managers would increase productivity because now companies can be run systematically with less X-inefficiency.

  

Changing Work Patterns

-American workers experienced increased leisure time with a possible 4-day weekend.

-The nature of work this time assimilated people:  they would dress the same, act the same, talk the same, etc.

-Despite the huge transition to white-collared work, there were still numerous blue-collared jobs.

~After years of hard work in support of the war, Americans are not used to this free time.  They do not know what to do with themselves!  They most likely have not developed the thirst for empty relaxation and probably felt the need to fill the gap with more productive work.  On the other hand, the developing motion pictures provided people with a place to go and get away.

~If someone were to walk around a typical American office in present day, he or she would see men and women wearing similar shirts, drinking coffee, and talking about the same topics.  This trend is specifically identified with the 1950s because it originated during this time period, when workers began to blend together.

  

Union Movement at High Tide

COLA - the cost of maintaining a certain standard of living

-There were more union members than ever before - a total of 14.5 million.

-Unions ditched the no-strike pledge and sought salary enhancements and a bigger voice.

-After the war orders were canceled, there were less jobs.  The fear of post-war depression led to strikes.

-There began an increase in cooperation between workers and employers.

~Clearly, the demand for war materials vanished with the defeat of the Axis Powers and brought along countless jobs with it.  The people who lost their jobs as a result of the conclusion of WWII must have been struggling with anxiety and fear for another depression, which would leave them ahead of the gang who were become unemployed.  Thus, unions appeared more appealing than ever because many voices as one seemed to be effective at getting what the group wanted.  Unions jettisoned the no-strike pledge because now they were more exigent at depicting their needs.  ~Also, since so many people now joined unions, the workforce could be more easily narrowed down.  This is because some employers could require all employees to belong to a certain union, and thus that would solely benefit members.  People on the "outside"  witnessing this practice, especially skilled workers completely capable of performing the job, were enticed to join in order to find work.

 

Agricultural Workers in Trouble

Consolidation - see Chapter 25

-Agriculture was no longer supporting many people; 15 million rural jobs disappeared.

-New technology, such as improved planting and harvesting machines, fertilizers, and pesticides, increased productivity of farms.

-Just like the industrial world, the agriculture realm experienced consolidation.

-This affected blacks in the South who immediately began migrating North to city jobs.

~The decrease in job availability on farms pushed even more people to the North and contributed to major cities' overcrowdedness.  Many people, who only knew of life on the farm, underwent a culture shock as they migrated to the cities due to different entertainment, mannerisms, and dress (Themes in US History - Culture).  Although the introduction of new technology seems a fabulous improvement, these innovations actually replaced many farmers because now less people could perform more work.  The aura of the nation seemed to be consolidation, and that was what happened in agriculture, as well.

  

Population Shifts

-The economy of California grew faster than the rest of the United States.

~With all of the migration West, in addition to North, it makes sense that there would be such a rapid improvement of life there in general (Themes in US History - Demographic Changes).  Unlike the 1930s, where people would voyage to California and realize no promise there, people were actually thriving and achieving more of that American dream.  Even to this day, California's huge population and density controls much of our economy, as it also is a hot spot for consumer spending and vacationing.

  

Consumer Culture

-Credit cards made purchasing new goods easier.

-TV could show products in comparison to the radio.

~Credit cards must have increased consumerism tenfold because of the extreme power one piece of plastic can hold.  With one swipe of a card, someone could access their entire life savings!  It completely transforms shopping and purchasing because people no longer had to carry cash in their wallets; that one card could handle it all.  In present day, credit card debt is the principle cause of debt because of the high interest companies charge.  That must have all originated in this time period.  However, despite the burden of debt on consumers' shoulders, credit cards did wonders for the economy.  Americans were excited about this new form of money and were, for the most part, shameless in buying larger items.  The effect of one hundred dollars leaving your hand is not felt when you pay with a credit card, so people were not as prudent with investments.

~Before the 1950s, companies could only advertise their products through paper ads and radio pitches.  Now, they had the power of enticing people through mouth-watering images or feigned happiness obtainable through the latest toy.  Television advertisements drastically increased consumerisms because it could reach a wider audience more effectively.

 

Some interesting statistics dealing with the U.S. economy in this time frame:

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Chapter 27: Chills and Fever During the Cold War

 

Communism - a theory or system of social organization based on the holding of all property in common, actual ownership being ascribed to the community as a whole or to the state

~Before beginning the summarization and commentary for this chapter, it is important to recognize the economic system of communism, because that is what politicians blame the commotion of the Cold War on.  What began as a concern for the capitalist society proliferated into a massive nuclear war.

 

The American Stance

-The fear of the Depression still haunted leaders, and once the fighting stopped, world markets were needed.

-As a result, the government eliminated trade barriers to provide outlets for agricultural surpluses.

-Americans assumed that other countries would indirectly benefit from their prosperity.

~The need for world markets emanated into future decisions made concerning politics and expansion.  American isolationism decreased because now that the United States established itself as a world power after WWII, it then sought to reign in the economic realm.

~Of course, Americans have the imperialistic attitude where everything it does somehow will "benefit" nations involved in its affairs and that the U.S. is "doing a favor" to less fortunate countries.  Americans actually were convinced that in improving their own prosperity they could in turn assist the economies of developing nations.  To anyone looking back, that just seems like an excuse to pursue selfish desires.

 

Economic Pressure on the USSR

Harry S. Truman - the 33rd President of the United States

-After the war, the question of the U.S. aid to allies arose.  So in 1945, Truman cut off lend-lease supplies to Allies.  This hurt the Soviet Union the most.

-The Soviets desperately needed money to rebuild after the destruction the war caused and thus asked for $6 billion.

  >They reduced their request to $1 billion, but the U.S. would only agree if they pledged "nondiscrimination in world commerce."  Russia refused, and then Stalin launched a five year plan.

~The fact that the United States first turned a cold shoulder to Russia with economic concerns could very easily have goaded the development of the American enemy.  The whole situation is similar, in a lesser degree, to the rise of Hitler.  One would think the U.S. would have learned from its mistakes. 

 

II.  Containing the Soviet Union

 

First Step:  Truman Doctrine

Truman Doctrine - a set of principles of U.S. foreign policy declaring that as leader of the "free world" the United States must support freedom-loving peoples wherever communism threatened them

-A conservative Congress wanted smaller budges and lower taxes

~This is a recurring theme throughout the next few years as the need to spend frugally deepens.  However, the president's goals do not always go hand-in-hand.  For example, even though the president's principal concern lies with American people, he tends to push his foreign policy which always requires more money:

 

-The Truman Doctrine committed to economically supporting the threatened nations - $400 million were sent for military and economic aid to Turkey and Greece.

~That may seem like a generous gesture, except where did that money come from?  That beseeches for another huge sum of money to be taken out of the United States, which ultimately could lead to the economic recessions yet to come.

 

The Next Steps:  The Marshall Plan, NATO, and NSC-68

The Marshall Plan - the primary plan of the United States for rebuilding and creating a stronger foundation for the countries of Western Europe

-A motive to stimulate the European economy was to provide markets for American goods.

-The Marshall Plan claims to be against hunger, poverty, desperation, and chaos.

~This is yet again another piece of evidence of America's selfishness and lack of responsibility.  Instead of aimed to rebuild the broken nations, the U.S. was seeking to expand its own economy.  This, however, is not a sin.  Every country needs to look out for itself, but the problem with this American thinking is that leaders are using the economic reasoning as a scapegoat to divulging to the public the true diplomatic reasons of entering other countries oppressed by Russia.

 

 

III.  Containment in Asia, the Middle East, and Latin America

 

Stalemate in the Korean War

Korean War

NSC-68 - National Security Council

-During the Korean War, military expenditures soared from $13 billion in 1950 to $47 billion only 3 years later as defense spending in response to NSC-68 guidelines.

-In 1960, the military absorbed half of the budget.

-The military-industrial complex employed 3.5 million Americans.

~Military spending plays a huge role in the domestic economy because it takes a huge toll on the federal deficit.  It seems unnecessary for half of an entire budget to be dedicated to military expense when the people do not even see direct results.  The positive that originates from these expenditures is that it really does employ more Americans.  So while the massive spending might lead to higher inflation, it will also reduce unemployment.  That relationship is developed with the Phillips Curve, a historical inverse relation between the rate of unemployment and the rate of inflation in an economy.

 

IV.  Atomic Weapons and the Cold War

 

Nuclear Proliferation

Cold War

-Anxiety about nuclear attacks facilitated the advertisement for ready-made shelters ranging from $1,795 to $3,895 and 900 planned franchises.

~This was a huge contributing sector to the nation's real GDP.  Each time era has a unique product that consumers flock to, whether it be the car or fast-food, and in this era it was those shelters.  They provided a net of safety for families, even though America was never bombed.  Literature and many movies stemmed off of this fear, such as "Blast from the Past" or "Six Feet Under."

 

V.  The Quagmire of Vietnam

 

Vietnam War

-Much of American money was directed toward financing the Vietnam War, but the American forces in South Vietnam were eventually overtaken.

~It is ridiculous how much military involvement and aid went into Vietnam.  However, as horrendous of a tangled situation we got ourselves into, the ongoing military demands still provided work for Americans at home, thus sustaining part of the economy.

~The loss of the Vietnam War not only resulted in the destruction of South Vietnam's political system, but economic as well.  They must now succumb to a more Communist leadership and repair its economy - a large portion of their money went to a failed military cause.

 

 

Chapter 28:  High Water and Ebb Tide of the Liberal State

 

I.  The Origins of the Welfare State

 

Truman's Approach

Inflation - see Chapter 30

Unemployment - see Chapter 30

Socialism - see Chapter 25

Harry S. Truman - see Chapter 27

-Truman believed the federal government had the responsibility for ensuring the social welfare of all Americans and wanted to embrace and define economic goals.

-Truman entered office having to deal with servicemen, fears of inflation, and consequences of labor unrest.

-He passed a 21-point program advocating full-employment legislation, a higher minimum wage, greater unemployment compensation, and housing assistance.

~With the inception of Truman's term came a push for social welfare and a more heavily involved federal government.  It would no longer just be the "invisible hand" guiding economic affairs, but rather direct involvement to ensure economic security for more people.  It will become more evident that his plans will tip-toe on the border of socialism.

 

John Maynard Keynes - a British economist whose ideas have had a major impact on modern economic and political theory as well as on many governments' fiscal policies

Keynesian economics - a macroeconomic theory arguing that private sector decisions sometimes lead to inefficient outcomes and therefore advocates active policy responses by the public sector, including monetary policy actions by the centra bank and fiscal policy actions by the government to stabilize output over the business cycle

Fiscal policy - the use of government spending and revenue collection to influence the economy

Monetary policy - the process in which a central banking figure can control the money supply and interest rates in order to attain growth and stability of the economy

-Truman looked to John Maynard Keynes for economic advice.  He was previously right in advising the nation that massive federal spending could get the country out of depression, so his input was heavily favored.

-The implication of a Keynesian economy called for tax cuts and spending programs.

~A Keynesian outlook on the economy means always viewing it as unstable.  The demand and supply can never be fully adjusted with inherent stabilizers and thus it calls for both fiscal and monetary policies.  It can be assumed that many Americans went along with this theory because of its success with other depressions, as well as it makes government action visible and tangible to the people.  Large corporations must have been upset over this shift in managing the economy though, because it undermines free enterprise.

~In a sense, increased government intervention is a huge step towards socialism, because if the policies work, the government can then cajole people into allowing full authority over the economy.  All leaders really need is a couple of successful ventures to get the consent of the people.

 

 

Truman's Struggle with a Conservative Congress

-Republicans and conservative Democrats planned to reverse Roosevelt's liberal policies and insisted on reducing the power of the executive branch.

~This is ironic because it sounds exactly like what pure capitalists should want, and yet the president is fighting it.  So overseas it is okay to overthrow a powerful federal government, but here it is a COMPLETELY different story in the U.S.

 

Taft-Hartley Act - this limited the power of unions by restricting the weapons they could employ

Wagner Act - a law protecting the rights of most workers in the private sector

-The Taft-Hartley Act was enacted, and the Wagner Act was revised to void the section where one needed to be in a union to be employed.

~Clearly, the power that labor unions had over their economic standings was fleeting, upsetting the union leaders.  They had gone too far after the war ended with uncontrollable strikes and were now paying the consequences.  It can be argued also that unions travel in cycles just like the economy does - going from high points to low points to high points.  During the Truman era they were definitely at a low point.

 

The Fair Deal and Its Fate

The Fair Deal - President Harry S. Truman's liberal domestic reform program

-The successes of Truman's Fair Deal consisted of a raised minimum wage and expanded social security programs.

-The failures of Truman's Fair Deal consisted of a farm program to protect farmers' income that never got passed and a rejected measure to provide federal aid to education by Congress.

~It seems to be a recurring theme in American history of the farmers never getting the luck of the draw.  Since the Industrial Revolution, they have been thrown down the list of priorities and never truly given the respect they deserve for their hard work.  Not only are countless farmers losing their jobs to machinery, but now they also cannot obtain protection from the federal government when it is awarding factory workers and the like a higher minimum wage.

~The fact that Congress denied an increased budget for education is also astounding because our society and political leaders now highly weigh the importance of educating the youth.  For example, Obama is investing much of his time and energy developing programs to abet the American education system.

 

"Modern Republicanism"

Stagflation - See Chapter 30

Phillips Curve - See Chapter 27

-In times of economic stagflation, leaders are willing to risk unemployment in order to keep inflation under control.

~This way of thinking makes sense because inflation affects the entire U.S. population, whereas unemployment affects people on a more individual level, even if that group is large.

 

Submerged Lands Act

-Eisenhower successfully reduced the government's economic role.

-The Submerged Lands Act in 1953 transferred the control of about $40 billion worth of oil lands from federal government to states.

~This shift in resources can be traced back to the Jacksonian era when he transferred large aggregates of money to pet banks in order to rid the beast of a national bank.  This alters power significantly because now the states have control of pricing oil, a huge debate at the time.  This decision made in part by Eisenhower can immediately tell the public of what type of government he will lead during his presidency because it was a risky move to reduce federal power by that degree.

 

Recession - a general slowdown in economic activity over a sustained period of time

TVA - Tennessee Valley Authority

-Eisenhower sought to reduce federal activity in the electrical power field as well by opposing the expansion of the TVA.

-His refusal to stimulate the economy excessively sometimes backfired with the decline of economic growth.

-The country suffered three recessions in Eisenhower's years.

~Because Eisenhower sought to decrease the role of the federal government in the economy, less stabilizers were enacted and thus less revenue could be generated.  So although in the larger scheme this "hands-off" approach may have been beneficial to the economy, people are narrow-sighted and only see what is directly in front of them.  So with declining growth, it can be assumed that the confidence dropped and thus consumption.

 

II.  The High Water Mark of Liberalism

 

The New Frontier

John F. Kennedy - the 35th President of the United States

-Kennedy aimed to expand the economic system and enlarge social welfare programs.   He tried to end the recession by working with the business community while controlling inflation.

-The stock market plunged in the greatest drop since the Great Crash of 1929.

~Sound familiar?  The same line seems to appear all over the news in the United States even to this day.  It's amusing to think of how history repeats itself, specifically how closely the theory of economic cycles applies - great stock market crashes occured during the 30s, 60s, and now.  So hopefully it will only be a matter of time before the U.S. present economy gets back on its feet!

 

Laffer Curve - a graph used to illustrate the idea that increases in the rate of taxation do not necessarily increase tax revenues

-In 1963, there was a $13.5 billion cut on corporate taxes.

~One one hand, this increases business capital, which will increase investment, stimulating the economy, and finally increasing tax revenues.  This relationship is represented with the Laffer curve, showing that reducing taxes can actually raise more revenue than raising taxes when the economy is at certain points.  On the other hand, it drastically increases the deficit. Just like any time an economic decision is made that affects a large group of people, there will be controversy.

 

The Great Society in Action

LBJ - the 36th President of the United States

-There was an increased desire to use money for social issues like building schools and raising teacher salaries.

-LBJ took over and launched an attack against poverty.

~LBJ's approach to governing and expenditures was fantastic because he was able to please progressives and conservatists by improving the economy in one swoop.  He had the right motives behind assembling the programs that he did.

 

Economic Opportunity Act of 1964 - this act created an Office of Economic Opportunity (OEO) to provide educationa nd training through programs such as the Job Corps for unskilled young people trapped in the poverty cycle

-LBJ accepted the Keynesian theory that deficits could promote prosperity.

~Hence, his many federal funded projects to improve the quality of life of many Americans across the nation.

-The Economic Opportunity Act of 1964 and additional economic programs including the Medicare-Medicaid program emerged.

 

 

III.  The Decline of Liberalism

 

The Republican Agenda

Richard Nixon - the 37th President of the United States

-When entering office, Nixon faced inflation rising from 2.2% to 4.5%.

-Nixon pressed the Federal Reserve Board to increase interest rates.

~If interest rates are increased, then there will be less business investments because the "cost of money" has increased.  That would shift the RGDP curve in the aggregate model to the left, reducing the price level, reducing inflation.  This process is known as "tight money."

 

"Say's Law" - Supply creates its own demand

-Even still, there was a mild recession from 1969 - 1970 while inflation slowly continued.

-Thus, he continued implementing monetary and fiscal policies.

~Doing so is usually a Keynesian approach to stabilizing the economy because the opposing economists, the Classics, argue that "supply creates its own demand" and thus hardly any government intervention is needed.

 

-The large wheat sale to Russia in 1972 led to insufficient wheat left in the American market, and so grain prices shot up.

-Surplus --> shortage.

-Between 1971 and 1974, farm prices rose 66%.  Therefore, agricultural inflation accompanied industrial.

~This does not seem historically correct, only because for the past century the issue with the agricultural realm has always been overproduction.  FDR even had to restrict production.  Now, with the unwise speculative sale to Russia, America is in need and thus more rapid inflation.

 

OPEC - the Organization of the Petroleum Exporting Countries

-The Arab oil embargo

  >The United States depends on cheap energy and gasoline.

  >The Arab-Israeli war led Saudi Arabia to impose an embargo on oil.

  >Other OPEC nations quadrupled prices.

  >So then there were shortages and skyrocketing prices - inflation reached 11% in 1974

-The unemployment rate reached 9%

~The invention of cars alone increased the demand for oil in unbelievable ways, allowing OPEC nations to become practically monopolies over the sale of oil and pure "price-makers."  That means they can easily influence the price we must pay for oil, fully aware that we would pay it.  This unprecedented power added to our recession because it helped raise inflation and unemployment, a condition that defies the Phillips Curve.

  

 

Gerald Ford:  Caretaker President

Tight Money Policy - a course of action undertaken by the Federal Reserve to constrict spending in an economy that is seen to be growing too quickly, or to curb inflation when it is rising too fast

Gerald Ford - the 38th President of the United States

-He adopted the tight money policy to curb inflation.

-During Ford's presidency, the unemployment rate peaked at 12%

-He implemented a multibillion-dollar tax cut with higher unemployment benefits.

~Ford was a president more directed towards helping the people directly, manifested by the unemployment benefits and tax cuts which will immediately put more money into consumers' pockets.  What presidents have done in the past is alter government spending and open market operations to trickle down the economy, but Ford attacks businesses and consumers head-on. 

 

The Carter Interlude

Deregulation - the removal of governmental controls in economic life

Jimmy Carter -the 39th President of the United States

-The Federal Reserve Board increased the money supply to help reduce deficits, but instead increased inflation to 10%

-Carter tried to slow the economy by reducing spending and then cutting the deficit.  In other words, he permitted the policy of deficit spending.

-The money supply was then contracted which increased unemployment and small business failures.

~Since the graph of the money supply is a vertical line in comparison to the downward sloping money demand curve, contracting the supply will automatically increase nominal interest rates.  That makes it hard for small businesses to keep up with their loans and investments and so are sometimes driven to shut down.

 

-Carter decontrolled the oil and natural gas prices to spur production.

-He also deregulated the railroad, trucking, and airline industries.

~This is a peculiar approah to dealing with the economic crisis, but his main goal is, in fact, evident - to increase production.  Carter supposes that if he lets major corporations be with limited restrictions, they will be able to produce more.

 

Chapter 29: The Struggle for Social Reform

 

Integrating the Schools

Plessy v. Ferguson - a landmark U.S. Supreme Court decision in the jurisprudence of the U.S., upholding the constitutionality of racial segregation even in public accommodations (particularly railroads), under the doctrine of "separate but equal"

-In the Plessy v. Ferguson case, the Supreme Court deemed that segregation was constitutional, as long as the facilities used were "separate but equal."

~Providing for double the amount of appliances and capital goods must have taken a toll on the nation's economy.  Although regarding the civil rights movement this did not necessary achieve every black man's goals, it certainly stimulated the economy a slight amount.

 

II.  Pressure from the Women's Movement

 

Attacking the Feminine Mystique

pressure group - an organized collection of people who seek to influence political decisions

National Organization for Women (NOW)- the largest feminist organization in the United States, founded in 1966

-As more women were attending universities and entering the work force, they found themselves to be treated as second class citizens.

-Numerous women formed pressure groups, similar to unions, to "take action to bring American women into full participation in the mainstream of American society" (NOW).

~It's interesting to see how the ideas of unions are manifested in this time period regarding all of the social changes.  Specific groups must have seen the effectiveness of collaborating and capitalized on the "strength in numbers."  Also, the fact that there were more women in the workforce alone transforms the demographics of the American economy, even if they were not treated equal to men yet.

 

Feminism at High Tide

capitalist - pertaining to an economic system the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations

-45% of mothers with pre-school kids held jobs outside of the home.

-Feminists claimed that it was not enough to strike out male domination, for the capitalist society itself is responsible for women's plight.

~More mothers working outside the home is more than just a cultural change in American Diversity (Themes in US History - American Diversity), it also affects the economy.  More people in the labor force could potentially shoot unemployment up, especially within male demographics, but because of the increased demand of goods and services in this time era, there is sufficient work in the U.S.

~America's economy has evolved to such an intricate capitalistic system, and thus these feminists are correct in thinking that weakening male dominance will not solve their problems.  It's going to take time for women to achieve full respect in the workforce and to adapt to the ideals of "you're okay, I'm okay."  Aftering being the mother figure for so many years, their biggest opponent might be themselves, and their inner transformation.

 

II.  Native American Protest

 

Origins of Struggle

Office of Economic Opportunity - the agency responsible for administering most of the War on Poverty programs

-Indians are now claiming commissions for their land previously seized.  Numerous tribal cases argued that ancestral lands had been illegally taken and now their people must be repaid in large settlements of cash.  The Office of Economic Opportunity worked towards gaining direct funding for them.

~In some sense, Indians are demanding a one-way trade because they were forced to offer what was precious in their eyes - their land.  Before the U.S. could coerce them to relinquish their land at minimal cost, but now it will take a toll on the economy as some government money must be allocated to repay the Indians.

 

**Although Chapter 29 deals primarily with social reform, these are all minor points related to the American economy as a whole from the time of 1945-1996.  However, the economy is focused more upon in Chapters 25 (the  1940s), Chapter 26 (the 1950s), Chapter 28 (the 1960s), and Chapter 30 (the late 1900s).  Please see those sections of this wiki page for future reference.

 

 

Chapter 30: The Revival of Conservatism

  

The New Politics

Conservatism - a political and social term from the Latin verb conservare meaning to save or preserve

Vietnam War - war fought between the communist North Vietnam, supported by its communist allies, and the government of South Vietnam, supported by the United States

Milton Friedman - an American economist and a recipient of the Nobel Memorial Prize in Economic Sciences

-Conservatives promised profitability to those who worked hard and showed initiative in the economic realm

-Doctrines of Milton Friedman, University of Chicago

     >Free play of market forces

     >Sharp restriction of government activism in regulating the economy

~The country is drastically deviating from any socialist thinking, in that now every man will finally be given the fruits of his labor.  By reducing government intervention in the economy, the U.S. economoy will be more capitalist because every individual must put themselves out there and work for a living.  He or she can no longer expect the federal government to provide menial jobs or prevent the rich from becoming richer.  The late 1900s ultimately show progression from FDR's New Deal back to Adam Smith's theory of "laissez-faire", or "hands-off"  government.

 

Conservative Leadership

Ronald Reagan - the 40th President of the United States and a former actor, radio broadcaster, and public spokesman for General Electric

Jimmy Carter - the 39th President of the United States and incumbent in the 1980 election, which he lost to Reagan

-Ronald Reagan, the Republican candidate, was a former radio broadcaster and actor

-He defeated Jimmy Carter and Walter Mondale by a landslide

~Acquired from his time spent as a broadcaster and actor, Ronald Reagan had a pleasing demeanor, calming voice, and intriguing storytelling skill.  He used these attributes on public television to reach the American people, very similar to Franklin D. Roosevelt's fire-side chats.  Reagan was able to articulate the economic state in very plain terms, facilitating the understanding of the people, and thus they could always be on-board with his new philosophies or policies.

 

George H. Bush - the 41st President of the United States who served eight years as Reagan's vice president

-George Bush followed Reagan into the White House and faced mis-managed savings and loan issues, because high salaries and high-risk investments resulted in major losses.

-In response, Bush issued a $166 billion rescue plan committing taxpayers to bail out the industry.

~The situation Bush inherited upon moving into the White House is an utter parallel to what Obama currently is.  As a result of risky business investments and loans, the economy is currently at a distressing low point.  Both presidents recognized the immediate attention needed to the crisis and responded with a bailout plan.  Isn't it odd how history repeats itself?  More information regarding the recent bailout plan can be found at this question and answer site:  http://www.nytimes.com/2008/09/21/business/21qanda.html.

 

 

Republican Policies at Home

Supply-side Economics - a school of macroeconomic thought that argues that economic growth can be most effectively created using incentives for people to produce (supply) goods and services, such as adjusting income tax and capital gains tax rates

Stagflation - an economic situation in which inflation and economic stagnation occur simultaneously

Reaganomics - the economic policies promoted by United States President Ronald Reagan during the 1980s

-Republicans aimed to reverse stagflation and provide new opportunites for businesses to prosper

-Reagan's programs were based off of "supply-side" economics and received much criticism

-Belief that if you decrease taxes, business investment will increase, the quantity supplied will increase, and this will

help stimulate the economy as a whole

     >Tax reductions severely increased defecit (from $74 billion to $290 billion in 12 years)

     >Reagan signed tax reform revision

-Enormous military expenditures

-Reagan reversed copious social programs of the New Deal, accusing them as "waste, fraud, and abuse"

~"Supply-side" economics is a theory in which the government makes changes that will affect producers and manufacturers, and that will indirectly affect consumers and the aggregate demand.  This was a relatively new theory which was not widely accepted, so by standing firm to his "Reaganomics", Reagan proved that he has confidence in his policies and confidence in his country.

~Although exorbitant expenditures on the military may seem imprudent, it is actually a wise decision because that will increase the Government component of Aggregate Demand and increase Real GDP.

~The reversal of FDR's New Deal programs is parallel to Woodrow Wilson and his attempt at establishing his New Freedom.  In some sense, Wilson was running against the wind because he was working against everything Theodore Roosevelt and even William Taft enacted during their terms.  However, the difference is that Reagan had the support of a majority of Americans and thus could successfully oppose preceding programs and pursue his own.

 

  

III.  The Post-Industrial Economy

 

The Changing Nature of Work

Productivity - metrics and measures of output from production processes; per unit of input

Inflation - a rise in the general level of prices of goods and services in an economy over a period of time

-Reagan entered into a period of declining productivity, unprecedented inflation, oil shortages, and high unemployment.  Under his supply-side economics, the U.S. went through cycles of recession to boom, recession to boom.

-Automation and other technological advances hit the industrial world like an "economic neutron bomb" (The New York Times).  The introduction of the computer replaced many workers; those who stayed, stayed behind a screen.

-In the past, better technology meant increased leisure time, but in the mid-1990s American employees worked more than 320 hours more a year than their counterparts in Germany or in France.

~America had experienced a pleasant time of stability before the late 20th century, but when Reagan entered office he needed to think of a plan not only to deal with the downturning economy, but the also the rapidly transforming technology.  Although computers brought unmatchable efficiency, they jettisoned millions of Americans, leaving them jobless and desperate for money to buy simple commodities.  The increased use of computers must have also brought about health concerns for the possibility of radiation emanating from the screens.

 

Shift to a Service Economy

-America shifted from an industrial-based to a service-based workforce.  3/4 of 113 million workers now worked in the service sector

~In the past, American industries centralized on mass-producing goods with very little focus on providing services such as clerks, doctors, lawyers, bankers, teachers, etc.  This opened up the doors to where our economy stands now:  our goods are provided mostly by large-scale factories overseas.  Most people are employed in companies that furnish services, because very few human resources are needed to actually run industries fabricating goods.

 

Gross Domestic Product - the total value of all final goods and services produced in a particular economy

-The U.S. slipped from being the world's industrial leader in the late 1800s.  Why?

     >Systematic failure to invest sufficiently in basic productive capacity

     >Speculation spending abroad, so Gross Domestic Product of other countries increased while domestic investment decreased

     >Rising oil prices

~The temporary confidence in our own economy must have goaded companies to invest abroad and start up companies overseas; however, that only augments foreign countries' GDP, not our own.  This speculation can be traced back to the time before the Great Depression where people falsely invested into the stock market and that partly contributed to the deep depression.  Speculation and misguided investment seem to be the main culprit for recessions, because even the one America faces today was caused by irresponsible decisions to invest and loan money.

   

Workers in Transition

Structural Unemployment - long-term and chronic unemployment arising from imbalances between the skills and other characteristics of workers in the market and the needs of employers

Frictional Unemployment - always present in the economy, resulting from temporary transitions made by workers and employers or from workers and employers having inconsistent or incomplete information.

Cyclical Unemployment - unemployment that relates to the cyclical trends in growth and production that occur within the business cycle

Irrigation - an artificial application of water to the soil usually for assisting in growing crops

United Steelworkers of America - the largest industrial labor union in North America, with 722,000 members 

Knights of Labor - one of the most important American labor organizations of the 19th century

American Federation of Labor - one of the first federations of labor unions in the U.S.

-Thousands of workers were laid-off, but when new jobs opened in cities, minorities usually lacked the skills to take them

-Union membership severly declined because of the shift from blue to white-collared working and the increase of women and children workers

-The diminishing profit of farmers generally went to the large operators because they alone could afford the high oil prices to run a modern farm and increase their productivity

~The transition the American economy was undergoing produced massive amounts of structural unemployment, in comparison to both frictional and cyclical.  The difference was that these people could not wait for the economy to turn up or for a job opening in another state, because the skills that they offered extremely limited the jobs they could perform.  Unfortunately, social status played a significant role because those in the lower class usually could not afford to receive the proper training.  Immigrants, as well, had a tough time even getting a glimpse at the American Dream because they simply could not adjust to the technological advances changing the American lifestyle.

~The decline in union membership in the late 1900s is a complete contrast to the flourishing labor organizations of the late 1800s.  Groups like the Knights of Labor, the American Federation of Labor, and the Federation of Organized Trades emerged and dominated the nation for a century.  However, given the shift away from unskilled labor, the need to prevent exploition of those workers faded away.

~Chemical fertilizers, irrigation, pesiticides, and scientific agricultural management must have contributed to the astounding productivity in some farms; however, that was literally only for some.  America became the "bread basket" of the world during this time, but unfortunately only a small portion of farmers reaped the benefits.

 

The Roller Coaster Economy

Deficit - an entity that spends more money than it takes in

Federal Reserve Board - the central banking system of the United States

-The recession of 1980-1982 began during the Carter years when the Federal Reserve Board tried to deal with deficits by increasing the money supply.  Carter, in response, cut programs but it only led to unemployment.

-Unprecedented levels of inflation were reached, accompanied by high unemployment, but Reagan turned the economy around in late 1983.  This helped the middle to upper class, but it masked the lingering problems of the poor - they faced skyrocketing mortgage rates, credit card debt interest rates, etc.

-Because of the nation's deficits, America headed back towards a recession in the early 1990s.  It resulted in not only a loss of confidence in the stock market, but the economy as a whole.

~Through the troughs of the chronic boom and bust cycles, people must have been psychologically affected by the high levels of unemployment.  If one of their immediate family members was not directly affected, they most likely had a close friend or neighbor who was given the pink slip.  This sort of situation is very familiar to the people living in the U.S. now because this economic crisis is taking a toll on everyone.  Whether it be by proliferating "For Sale" signs or tragic funerals of parents committing suicide, men and women of all ages are being affected.

~Clearly, the President, Federal Reserve Board, and Congress have to focus moreso on the confidence of Americans in their economy than in the logistics of this recession.  Just like the early 1990s, the loss of confidence is not only found in the stock market, but in the entire economy.  This means reduced purchases of consumers, less investment by businesses, and even tightened government spending.  In order for any program to be successful, political leaders of both times must first seek to improve the confidence level.

 

 

 

 

                       Works Cited

The American People:  Creating a Nation and a Society

http://images.huffingtonpost.com/2009-02-16-USUnemployment_1930_1950d.jpg

http://en.wikipedia.org/wiki/Unemployment_types

http://angrybear.blogspot.com/uploaded_images/a1-766432.JPG

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