Hi, I’m John Green, this is Crash Course
U.S. History and today we are going to talk about one of the most important periods in
American history, the mid-to-late 1970s. Stan why is there nothing on the chalkboard? We
can’t find a picture of Gerald Ford somewhere around here?
Don’t worry Crash Course fans we got one. Thanks for your support through Subbable.
It paid for this 90 cent Gerald Ford photograph. These really are the years where everything
changed in the United States and amidst all that turmoil something wonderful was born.
Mr. Green? Mr. Green? Strong with the force, this episode is.
No, me from the past, Yoda doesn’t show up until Empire Strikes Back which came out
in 1980. I’m referring of course to the fact that we were born! It’s the beginning
of the John Green era! From here on out, almost everything we discuss
will have happened in my lifetime. Or as most Crash Course viewers refer to it, “that
century before I was born”. But it wasn’t just the birth of me and the
death of Elvis, the late 1970s were truly a period of momentous change, and for most
Americans it sucked. Intro
So how Americans reacted to those no good very bad years really has shaped the world
in which we find ourselves. The big story of the 1970s is economics. Twenty-five
years of broad economic expansion and prosperity came to a grinding halt in the 1970s meaning
the our party was over. And what did we get instead? Inflation and extremely slow growth.
The worst hangover ever. Just kidding, the worst hangover was The Depression.
The 2nd worst hangover was the 2008 recession, and then the 3rd worst hangover was Hangover
Part III. It was the 4th worst hangover in American history.
Narrowly beating out America’s 5th worst hangover the Hangover Part II.
What happened to the American economy in the 1970s was the result both of long-term processes
and unexpected shocks. The long-term process was the gradual decline of manufacturing in
the U.S. in relation to competing manufacturing in the rest of the world.
Part of this was due to American policy; after World War II, you’ll remember that we promoted
the economic growth of Japan, Germany, South Korea and Taiwan, ignoring the tariffs that
they set up to protect nascent industries, and effectively subsidizing them by providing
for their defense. And not having to build nuclear arsenals of
their own really allowed them to invest in their domestic economies.
And then one day, a bunch of Toyotas and Mercedes showed up, and you could drive them up to
like 40 thousand miles before they would break down and we were like, “wait a second”.
In 1971, for the first time in the 20th century, America experienced an export trade deficit,
importing more goods than it exported, which is the same problem that my aunt has with
QVC. I mean, they hardly import anything from her.
One reason for this deficit was because the dollar was linked to gold, making it a strong
currency but also making American products more expensive abroad. So Nixon took the U.S.
off the gold standard, hoping to make American goods cheaper overseas and reduce imports,
but that didn’t really work. Because the U.S. was also competing against
cheaper labor costs, and cheaper raw materials, and more productive economies.
And in many cases this growing global competition put American firms that couldn’t compete
out of business. This was especially true in manufacturing.
In 1960, 38% of Americans worked in manufacturing. In 1980, it was 28%. Today, it’s nine. Not
9%, nine people. Stan wants me to tell you that was a joke.
It actually is 9%. Unionized workers were hit particularly hard.
In the 1940s and 1950s unions had won generous concessions from corporate employers including
paid vacation, and health benefits, and especially pensions, which employers would agree to as
a kind of deferred compensation so that they wouldn’t have to pay higher w ages to people
while they were working. And this worked great, until people started
to retire. So by 1970, competition led employers to either
eliminate high-paying manufacturing jobs, or else to increase automation, or to shift
workers to lower wage regions of the U.S. or even overseas.
The American South benefitted from this trend because its anti-union stance was attractive
to manufacturers. But then, non-union industries that were already in the South found that
they had no way to find new workers so the only way to survive was to move production
overseas. And also as industries moved production to
the Sunbelt that increased the political influence of the region, and because the South and Southwest
are generally conservative politically, the nation’s politics continued to move to the
right. Meanwhile the northern industrial cities,
particularly the Rust Belt of the Midwest, were becoming the empty urban playgrounds
that we know and love today. Detroit and Chicago had lost half of their
manufacturing jobs by 1980 and smaller cities fared even worse. As industry moved away,
they found their tax bases dried up, and they were unable to provide even basic services
to their citizens. I mean with the world of Wall Street fat cats
this is hard to imagine today, but in 1975 New York City faced bankruptcy.
In addition to these long term structural changes to the American economy and our demographics,
the 1970s saw two oil shocks that sent the economy into a tailspin.
In 1973, in response to Western support of Israel, Middle Eastern Arab states suspended
oil exports to the U.S which led to the price of oil quadrupling.
This resulted in long lines for gasoline, dramatically higher oil prices, and Americans
deciding to purchase smaller, more fuel efficient cars, which is to say Japanese cars.
Also, prices of everything else went up because oil is either used for the production of or
transportation of just about everything. I mean with 70’s inflation, this 90 cent
portrait of Gerald Ford would have cost at least $1.10.
The paint that covers the green parts of not-America, oil based.
The plastic that comprises the DVD’s of Crash Course World History, available now
at DFTBA.com, oil based. Those were a fantastic bargain and they would
have been way more expensive if the price of oil was higher.
And then, in 1979, a second oil shock hit the United States after the Iranian revolution.
Wait Stan, did we say 1979? We’ve got to put up a picture of Jimmy Carter.
Bam! Sorry, Gerald Ford there’s a peanut farmer in town.
So during the 1970s inflation soared to 10% a year and economic growth slowed to 2.4%,
resulting in what came to be known as stagflation. Unemployment rose, and a new economic statistic
was born: the misery index, the combination of unemployment and inflation. At the beginning
of the decade it was 10.8, by 1980 it had doubled.
If you’re looking for the roots of America’s contemporary economic inequality, the 1970s
are a good milestone, since according to our old friend Eric Foner, “beginning in 1973,
real wages essentially did not rise for twenty years.” 
Americans got to experience the joy of two years of Gerald Ford before poor Jimmy Carter
had a chance to fail at improving the economy. The only president never to have been elected
even to the vice presidency, Gerald Ford was so insignificant to American history that
we already replaced him on the chalkboard. One of Ford’s first acts was to pardon Nixon
making him immune from prosecution for obstruction of justice. That very unpopular decision probably
made it impossible for Ford to win in 1976. Coincidentally, WIN was the only memorable
domestic program that Ford proposed. It stood for Whip Inflation Now and it was basically
a plea for Americans to be better shoppers, spend less, and wear WIN buttons.
Thirty-five years later Charlie Sheen would turn winning into an incredibly successful
social media campaign, but sadly at the time there was no Twitter.
Inflation did drop, but unemployment went up, especially during the recession of 1974-75
where it topped 9%. Now, Ford would have liked to cut taxes and reduce government regulation,
but the Democratic Congress wouldn’t let him.
So that’s Ford, probably best known today as the first president to be satirized on
Saturday Night Live. Then, in 1976, we got a new president: Jimmy Carter.
Now Jimmy Carter is generally considered by historians to have been a failure as president.
Although, he is often seen as a really good ex-president. He tried to fight the inflation
part of stagflation, but to do it he acted in some rather un-New Deal Democrat ways.
He cut government spending, deregulated the trucking and airline industries, and he supported
the Fed’s decision to raise interest rates. Oh, it’s time for the mystery document?
The rules here are simple… I read the mystery document, I guess the author,
and if I’m wrong I get shocked. Alright, let’s see what we’ve got today.
“I want to speak to you first tonight about a subject even more serious than energy or
inflation. I want to talk to you right now about a fundamental threat to American democracy. I do not mean our political and civil liberties.
They will endure. And I do not refer to the outward strength of America, a nation that
is at peace tonight everywhere in the world, with unmatched economic power and military
might. The threat is nearly invisible in ordinary
ways. It is a crisis of confidence. It is a crisis that strikes at the very heart and
soul and spirit of our national will. We can see this crisis in the growing doubt about
the meaning of our own lives and in the loss of a unity of purpose for our nation. The erosion of our confidence in the future
is threatening to destroy the social and political fabric of America.”
It’s Jimmy Carter’s “Crisis of Confidence” speech, my favorite speech ever made that
also cost a president 20 points of approval rating.
So Carter says that Americans have lost their ability to face the future and some of their
can-do spirit. The rest of the speech talks about how Americans’ values are out of whack,
how Americans are wasteful, and need a new more vibrant approach to the energy crisis.
Let me tell you a lesson from history Jimmy Carter, you don’t get reelected by telling
Americans how to do more with less. You get reelected by telling Americans, “more,
more, always more, more for you. More. More. More. I promise.”
The speech ultimately called for a renewal of spirit, but all people remember is the
part where Jimmy Carter was criticizing them, and it’s gone down as a great example of
Carter’s political ineptitude. Domestically, Carter paid lip-service to liberal
ideas like energy conservation, even installing solar panels on the White House, but his bigger
plan to solve the energy crises was investment in nuclear power.
And nuclear power did grow, although never to the extent we saw in certain European countries,
partly because of the accident at Three Mile Island in 1979 when radioactive vapor was
released into the air. This of course spurred public fears of a nuclear
meltdown and drove a huge anti-nuclear energy movement.
But some of Carter’s more conservative policies did ultimately have an impact, like his support
for deregulation of the airlines. Before airline deregulation, prices were fixed, so airlines
had to compete by offering better service. Now, of course, flights are much cheaper and
also so much more miserable. In many ways, Carter was more important as
a foreign policy president, but as with his energy initiatives, he’s mostly remembered
for his failures. Aiming to make Human Rights a cornerstone
of America’s foreign policy, Jimmy Carter tried to turn away from the Cold War framework
and focus instead on combatting 3rd world poverty and reducing the spread of nuclear
weapons. Let’s go to the Thought Bubble. Carter’s notable changes included cutting
off aid to Argentina during its “Dirty War” and signing a treaty in 1978 that would transfer
the Panama Canal back to Panama. His greatest accomplishment was probably brokering
the Camp David Accords. This historic peace agreement between Egypt and Israel has, as
we all know, led to a lasting peace in the Middle East, just kidding, but it has been
a step in the right direction and one that’s lasted.
But the U.S. continued to support dictatorial regimes in Guatemala, the Philippines and
South Korea. Carter’s most significant failure in terms of supporting international bad guys,
though, is the Shah of Iran. Iran had oil and was a major buyer of American
arms, but the Shah was really unpopular and our support of him fuelled anti-American sentiments
in Iran. Those boiled over in the 1979 Iranian Revolution, especially after Carter allowed
the Shah to get cancer treatments in America, which in turn prompted the storming of the
American embassy in Tehran and the capture of 53 American hostages. The Iranian hostage
crisis lasted 444 days and although Carter’s secretary of state did negotiate their release,
it didn’t happen until the day Carter’s successor Ronald Reagan was inaugurated.
The inability to free the hostages and the botched rescue attempt — Affleck’s ARGO
notwithstanding — added to the impression that Carter was weak.
Events in the Middle East also increased Cold War tensions especially after 1979, when the
USSR invaded Afghanistan. Carter claimed that the invasion of Afghanistan
was the greatest threat to freedom since World War II and proclaimed the Carter Doctrine,
which was basically said that the U.S. would use force, if necessary, to protect its interests
in the Persian Gulf region. In direct response to the Soviets, the U.S. put an embargo on
grain shipments and organized the boycott of the 1980 Olympics in Moscow.
Thanks for another dose of good news Thought Bubble. So despite focusing on Carter, I’ll
again stress that the real story of the 1970s was the economy.
High inflation and high unemployment had monumental effects in shaping America. And no president
could have dealt with it effectively. Not Carter, not Gerald Ford, not anyone. The truth
is, history isn’t about individuals. Oil shocks and inevitable systemic changes
led to the poor economy and that weakened support for New Deal liberalism and increased
the appeal of conservative ideas like lower taxes, reduced regulation, and cuts in social
spending. All of which, for the record, started under
the Democrat Jimmy Carter, not the Republican Ronald Reagan.
More abstractly, the economic crisis of the 1970’s dealt a serious blow to the Keynesian
consensus that Government action could actually solve macro-economic problems.
I mean according to the economic theory that had prevailed for the previous 50 years, unemployment
and inflation were supposed to be inversely proportional, the so-called Phillips Curve.
When that relationship broke down and we had both high inflation and high unemployment
it undermined the entire idea of government intervention.
And that opened the door for a different way of thinking about economics that emphasized
the economy as an aggregate of individual economic decisions.
Now that might sound like a small thing, but whether you think of individual choices or
governmental policies really make economies work or not work turns out to be pretty freaking
important. And this has come to really shape the contemporary
American political landscape especially when it comes to taxes. Which we’ll talk about
more next week. Thanks for watching. Crash Course is made with all the help from
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thanks for watching, and as we say in my hometown, “don’t forget to be awesome.” ________________
 Foner. Give me Liberty ebook version p. 1097