Ford, Carter, and the Economic Malaise: Crash Course US History #42
Ford, Carter, and the Economic Malaise: Crash Course US History #42
In which John Green teaches you about the economic malaise that beset the United States in the 1970s. A sort of perfect storm of events, it combined the continuing decline of America’s manufacturing base with the oil shocks of 1973 and 1979 and brought about a stagnant economy, paired with high inflation. Economists with a flair for neologisms and portmanteau words called this “stagflation,” and it made people miserable. Two presidential administrations were scuttled at least in part by these economic woes; both Gerald Ford and Jimmy Carter are considered failed presidents for many reasons, but largely because of an inability to improve the economy. (hint: In reality, no one person can materially change something as big as the world economy, even if they are president, but one person sure can make a handy scapegoat!) So, by and large, the 70s were a pretty terrible time in America economically, but at least the decade gave us Mr. Green.
Crash Course is no longer available on DVD, sorry to disappoint.
Chapters:
Introduction: The 1970s 00:00
Economics in the 1970s 1:02
The End of the Gold Standard 2:32
The Decline of American Manufacturing 2:54
Oil Shocks 4:12
Stagflation and the Misery Index 5:16
Gerald Ford’s Presidency 5:49
Jimmy Carter’s Presidency 6:52
Mystery Document 7:15
Nuclear Power 8:51
Carter’s Foreign Policy 9:17
The Economic Crisis of the 1970s 11:18
Credits 12:44
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Content
0.22 -> Hi, I’m John Green, this is Crash Course
U.S. History and today we are going to talk
3.49 -> about one of the most important periods in
American history, the mid-to-late 1970s.
8.41 -> Stan why is there nothing on the chalkboard?
10.17 -> We can’t find a picture of Gerald Ford somewhere
around here?
12.68 -> Don’t worry Crash Course fans we got one.
14.73 -> Thanks for your support through Subbable.
16.33 -> It paid for this 90 cent Gerald Ford photograph.
18.949 -> These really are the years where everything
changed in the United States and amidst all
22.679 -> that turmoil something wonderful was born.
25.169 -> Mr. Green?
26.169 -> Mr. Green?
27.169 -> Strong with the force, this episode is.
28.38 -> No, me from the past, Yoda doesn’t show
up until Empire Strikes Back which came out
32.07 -> in 1980.
33.07 -> I’m referring of course to the fact that
we were born!
34.79 -> It’s the beginning of the John Green era!
37.07 -> From here on out, almost everything we discuss
will have happened in my lifetime.
40.62 -> Or as most Crash Course viewers refer to it,
“that century before I was born”.
44.98 -> But it wasn’t just the birth of me and the
death of Elvis, the late 1970s were truly
49.64 -> a period of momentous change, and for most
Americans it sucked.
57.96 -> Intro
So how Americans reacted to those no good
64.81 -> very bad years really has shaped the world
in which we find ourselves.
68.07 -> The big story of the 1970s is economics.
70.79 -> Twenty-five years of broad economic expansion
and prosperity came to a grinding halt in
76.19 -> the 1970s meaning the our party was over.
79.55 -> And what did we get instead?
81.68 -> Inflation and extremely slow growth.
83.54 -> The worst hangover ever.
84.88 -> Just kidding, the worst hangover was The Depression.
86.65 -> The 2nd worst hangover was the 2008 recession,
and then the 3rd worst hangover was Hangover
91.14 -> Part III.
92.14 -> It was the 4th worst hangover in American
history.
94.23 -> Narrowly beating out America’s 5th worst
hangover the Hangover Part II.
97.88 -> What happened to the American economy in the
1970s was the result both of long-term processes
102.77 -> and unexpected shocks.
104.38 -> The long-term process was the gradual decline
of manufacturing in the U.S. in relation to
109.22 -> competing manufacturing in the rest of the
world.
110.97 -> Part of this was due to American policy; after
World War II, you’ll remember that we promoted
115.25 -> the economic growth of Japan, Germany, South
Korea and Taiwan, ignoring the tariffs that
120.84 -> they set up to protect nascent industries,
and effectively subsidizing them by providing
125.48 -> for their defense.
126.48 -> And not having to build nuclear arsenals of
their own really allowed them to invest in
130.34 -> their domestic economies.
131.67 -> And then one day, a bunch of Toyotas and Mercedes
showed up, and you could drive them up to
135.78 -> like 40 thousand miles before they would break
down and we were like, “wait a second”.
140.04 -> In 1971, for the first time in the 20th century,
America experienced an export trade deficit,
146.37 -> importing more goods than it exported, which
is the same problem that my aunt has with
149.9 -> QVC.
150.9 -> I mean, they hardly import anything from her.
152.87 -> One reason for this deficit was because the
dollar was linked to gold, making it a strong
156.84 -> currency but also making American products
more expensive abroad.
160.709 -> So Nixon took the U.S. off the gold standard,
hoping to make American goods cheaper overseas
165.53 -> and reduce imports, but that didn’t really
work.
168.26 -> Because the U.S. was also competing against
cheaper labor costs, and cheaper raw materials,
172.17 -> and more productive economies.
174.069 -> And in many cases this growing global competition
put American firms that couldn’t compete
178.89 -> out of business.
179.89 -> This was especially true in manufacturing.
181.68 -> In 1960, 38% of Americans worked in manufacturing.
186.29 -> In 1980, it was 28%.
188.64 -> Today, it’s nine.
190.75 -> Not 9%, nine people.
191.75 -> Stan wants me to tell you that was a joke.
193.38 -> It actually is 9%.
194.9 -> Unionized workers were hit particularly hard.
196.92 -> In the 1940s and 1950s unions had won generous
concessions from corporate employers including
202.01 -> paid vacation, and health benefits, and especially
pensions, which employers would agree to as
207.2 -> a kind of deferred compensation so that they
wouldn’t have to pay higher w ages to people
211.05 -> while they were working.
212.19 -> And this worked great, until people started
to retire.
214.94 -> So by 1970, competition led employers to either
eliminate high-paying manufacturing jobs,
219.87 -> or else to increase automation, or to shift
workers to lower wage regions of the U.S.
225.19 -> or even overseas.
226.19 -> The American South benefitted from this trend
because its anti-union stance was attractive
227.19 -> to manufacturers.
228.19 -> But then, non-union industries that were already
in the South found that they had no way to
229.19 -> find new workers so the only way to survive
was to move production overseas.
230.19 -> And also as industries moved production to
the Sunbelt that increased the political influence
231.19 -> of the region, and because the South and Southwest
are generally conservative politically, the
232.19 -> nation’s politics continued to move to the
right.
233.19 -> Meanwhile the northern industrial cities,
particularly the Rust Belt of the Midwest,
234.19 -> were becoming the empty urban playgrounds
that we know and love today.
235.19 -> Detroit and Chicago had lost half of their
manufacturing jobs by 1980 and smaller cities
238.17 -> fared even worse.
239.29 -> As industry moved away, they found their tax
bases dried up, and they were unable to provide
243.7 -> even basic services to their citizens.
245.66 -> I mean with the world of Wall Street fat cats
this is hard to imagine today, but in 1975
250.26 -> New York City faced bankruptcy.
251.78 -> In addition to these long term structural
changes to the American economy and our demographics,
257.419 -> the 1970s saw two oil shocks that sent the
economy into a tailspin.
261.449 -> In 1973, in response to Western support of
Israel, Middle Eastern Arab states suspended
266.639 -> oil exports to the U.S which led to the price
of oil quadrupling.
270.23 -> This resulted in long lines for gasoline,
dramatically higher oil prices, and Americans
275.35 -> deciding to purchase smaller, more fuel efficient
cars, which is to say Japanese cars.
280.57 -> Also, prices of everything else went up because
oil is either used for the production of or
284.98 -> transportation of just about everything.
287.78 -> I mean with 70’s inflation, this 90 cent
portrait of Gerald Ford would have cost at
291.28 -> least $1.10.
292.28 -> The paint that covers the green parts of not-America,
oil based.
295.63 -> The plastic that comprises the DVD’s of
Crash Course World History, available now
299.65 -> at DFTBA.com, oil based.
301.44 -> Those were a fantastic bargain and they would
have been way more expensive if the price
304.44 -> of oil was higher.
305.44 -> And then, in 1979, a second oil shock hit
the United States after the Iranian revolution.
309.9 -> Wait Stan, did we say 1979?
311.32 -> We’ve got to put up a picture of Jimmy Carter.
313.199 -> Bam!
314.199 -> Sorry, Gerald Ford there’s a peanut farmer
in town.
316.71 -> So during the 1970s inflation soared to 10%
a year and economic growth slowed to 2.4%,
322.85 -> resulting in what came to be known as stagflation.
325.75 -> Unemployment rose, and a new economic statistic
was born: the misery index, the combination
330.6 -> of unemployment and inflation.
332.72 -> At the beginning of the decade it was 10.8,
by 1980 it had doubled.
336.62 -> If you’re looking for the roots of America’s
contemporary economic inequality, the 1970s
341.3 -> are a good milestone, since according to our
old friend Eric Foner, “beginning in 1973,
346.53 -> real wages essentially did not rise for twenty
years.”
350.05 -> [1]
Americans got to experience the joy of two
351.72 -> years of Gerald Ford before poor Jimmy Carter
had a chance to fail at improving the economy.
356.12 -> The only president never to have been elected
even to the vice presidency, Gerald Ford was
360.24 -> so insignificant to American history that
we already replaced him on the chalkboard.
364.85 -> One of Ford’s first acts was to pardon Nixon
making him immune from prosecution for obstruction
369.06 -> of justice.
370.06 -> That very unpopular decision probably made
it impossible for Ford to win in 1976.
374.49 -> Coincidentally, WIN was the only memorable
domestic program that Ford proposed.
379.889 -> It stood for Whip Inflation Now and it was
basically a plea for Americans to be better
385.4 -> shoppers, spend less, and wear WIN buttons.
387.53 -> Thirty-five years later Charlie Sheen would
turn winning into an incredibly successful
391.07 -> social media campaign, but sadly at the time
there was no Twitter.
394.11 -> Inflation did drop, but unemployment went
up, especially during the recession of 1974-75
400.229 -> where it topped 9%.
401.449 -> Now, Ford would have liked to cut taxes and
reduce government regulation, but the Democratic
406.13 -> Congress wouldn’t let him.
407.29 -> So that’s Ford, probably best known today
as the first president to be satirized on
410.99 -> Saturday Night Live.
412.02 -> Then, in 1976, we got a new president: Jimmy
Carter.
415.24 -> Now Jimmy Carter is generally considered by
historians to have been a failure as president.
419.29 -> Although, he is often seen as a really good
ex-president.
422.44 -> He tried to fight the inflation part of stagflation,
but to do it he acted in some rather un-New
428.09 -> Deal Democrat ways.
429.539 -> He cut government spending, deregulated the
trucking and airline industries, and he supported
433.919 -> the Fed’s decision to raise interest rates.
436.169 -> Oh, it’s time for the mystery document?
438.9 -> The rules here are simple...
441.73 -> I read the mystery document, I guess the author,
and if I’m wrong I get shocked.
444.71 -> Alright, let’s see what we’ve got today.
446.11 -> “I want to speak to you first tonight about
a subject even more serious than energy or
450.74 -> inflation.
451.74 -> I want to talk to you right now about a fundamental
threat to American democracy.
454.389 -> I do not mean our political and civil liberties.
457.35 -> They will endure.
458.699 -> And I do not refer to the outward strength
of America, a nation that is at peace tonight
462.96 -> everywhere in the world, with unmatched economic
power and military might.
467.24 -> The threat is nearly invisible in ordinary
ways.
470.569 -> It is a crisis of confidence.
472.77 -> It is a crisis that strikes at the very heart
and soul and spirit of our national will.
477.569 -> We can see this crisis in the growing doubt
about the meaning of our own lives and in
481.759 -> the loss of a unity of purpose for our nation.
484.349 -> The erosion of our confidence in the future
is threatening to destroy the social and political
488.74 -> fabric of America.”
490.44 -> It’s Jimmy Carter’s “Crisis of Confidence”
speech, my favorite speech ever made that
494.77 -> also cost a president 20 points of approval
rating.
497.66 -> So Carter says that Americans have lost their
ability to face the future and some of their
501.94 -> can-do spirit.
503.24 -> The rest of the speech talks about how Americans’
values are out of whack, how Americans are
507.47 -> wasteful, and need a new more vibrant approach
to the energy crisis.
510.78 -> Let me tell you a lesson from history Jimmy
Carter, you don’t get reelected by telling
514.319 -> Americans how to do more with less.
516.24 -> You get reelected by telling Americans, “more,
more, always more, more for you.
520.93 -> More.
521.93 -> More.
522.93 -> More.
523.93 -> I promise.”
524.93 -> The speech ultimately called for a renewal
of spirit, but all people remember is the
526.029 -> part where Jimmy Carter was criticizing them,
and it’s gone down as a great example of
530.23 -> Carter’s political ineptitude.
531.589 -> Domestically, Carter paid lip-service to liberal
ideas like energy conservation, even installing
535.649 -> solar panels on the White House, but his bigger
plan to solve the energy crises was investment
540.529 -> in nuclear power.
541.529 -> And nuclear power did grow, although never
to the extent we saw in certain European countries,
545.98 -> partly because of the accident at Three Mile
Island in 1979 when radioactive vapor was
550.91 -> released into the air.
551.97 -> This of course spurred public fears of a nuclear
meltdown and drove a huge anti-nuclear energy
557.07 -> movement.
558.07 -> But some of Carter’s more conservative policies
did ultimately have an impact, like his support
559.07 -> for deregulation of the airlines.
560.07 -> Before airline deregulation, prices were fixed,
so airlines had to compete by offering better
561.07 -> service.
562.07 -> Now, of course, flights are much cheaper and
also so much more miserable.
563.07 -> In many ways, Carter was more important as
a foreign policy president, but as with his
564.07 -> energy initiatives, he’s mostly remembered
for his failures.
565.07 -> Aiming to make Human Rights a cornerstone
of America’s foreign policy, Jimmy Carter
568.079 -> tried to turn away from the Cold War framework
and focus instead on combatting 3rd world
573.001 -> poverty and reducing the spread of nuclear
weapons.
575.889 -> Let’s go to the Thought Bubble.
577.379 -> Carter’s notable changes included cutting
off aid to Argentina during its “Dirty War”
581.85 -> and signing a treaty in 1978 that would transfer
the Panama Canal back to Panama.
586.519 -> His greatest accomplishment was probably brokering
the Camp David Accords.
589.889 -> This historic peace agreement between Egypt
and Israel has, as we all know, led to a lasting
594.42 -> peace in the Middle East, just kidding, but
it has been a step in the right direction
597.879 -> and one that’s lasted.
599.12 -> But the U.S. continued to support dictatorial
regimes in Guatemala, the Philippines and
603.04 -> South Korea.
604.04 -> Carter’s most significant failure in terms
of supporting international bad guys, though,
607.91 -> is the Shah of Iran.
609.149 -> Iran had oil and was a major buyer of American
arms, but the Shah was really unpopular and
614.269 -> our support of him fuelled anti-American sentiments
in Iran.
617.72 -> Those boiled over in the 1979 Iranian Revolution,
especially after Carter allowed the Shah to
622.939 -> get cancer treatments in America, which in
turn prompted the storming of the American
626.89 -> embassy in Tehran and the capture of 53 American
hostages.
630.47 -> The Iranian hostage crisis lasted 444 days
and although Carter’s secretary of state
635.879 -> did negotiate their release, it didn’t happen
until the day Carter’s successor Ronald
640.61 -> Reagan was inaugurated.
641.619 -> The inability to free the hostages and the
botched rescue attempt -- Affleck’s ARGO
646.019 -> notwithstanding -- added to the impression
that Carter was weak.
649.559 -> Events in the Middle East also increased Cold
War tensions especially after 1979, when the
654.449 -> USSR invaded Afghanistan.
656.499 -> Carter claimed that the invasion of Afghanistan
was the greatest threat to freedom since World
660.439 -> War II and proclaimed the Carter Doctrine,
which was basically said that the U.S. would
665.139 -> use force, if necessary, to protect its interests
in the Persian Gulf region.
669.689 -> In direct response to the Soviets, the U.S.
put an embargo on grain shipments and organized
673.999 -> the boycott of the 1980 Olympics in Moscow.
676.68 -> Thanks for another dose of good news Thought
Bubble.
678.499 -> So despite focusing on Carter, I’ll again
stress that the real story of the 1970s was
683.44 -> the economy.
684.44 -> High inflation and high unemployment had monumental
effects in shaping America.
688.389 -> And no president could have dealt with it
effectively.
690.879 -> Not Carter, not Gerald Ford, not anyone.
693.79 -> The truth is, history isn’t about individuals.
697.259 -> Oil shocks and inevitable systemic changes
led to the poor economy and that weakened
701.68 -> support for New Deal liberalism and increased
the appeal of conservative ideas like lower
706.489 -> taxes, reduced regulation, and cuts in social
spending.
709.509 -> All of which, for the record, started under
the Democrat Jimmy Carter, not the Republican
713.74 -> Ronald Reagan.
714.74 -> More abstractly, the economic crisis of the
1970’s dealt a serious blow to the Keynesian
719.43 -> consensus that Government action could actually
solve macro-economic problems.
723.749 -> I mean according to the economic theory that
had prevailed for the previous 50 years, unemployment
728.33 -> and inflation were supposed to be inversely
proportional, the so-called Phillips Curve.
732.999 -> When that relationship broke down and we had
both high inflation and high unemployment
737.199 -> it undermined the entire idea of government
intervention.
739.64 -> And that opened the door for a different way
of thinking about economics that emphasized
743.839 -> the economy as an aggregate of individual
economic decisions.
747.1 -> Now that might sound like a small thing, but
whether you think of individual choices or
750.769 -> governmental policies really make economies
work or not work turns out to be pretty freaking
756.35 -> important.
757.35 -> And this has come to really shape the contemporary
American political landscape especially when
761.009 -> it comes to taxes.
762.639 -> Which we’ll talk about more next week.
764.359 -> Thanks for watching.
765.359 -> Crash Course is made with all the help from
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768.92 -> your support through Subbable and also because
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773.439 -> History on DVD.
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775.8 -> Our mission here at Crash Course is to make
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789.61 -> Thank you for supporting Crash Course, thanks
for watching, and as we say in my hometown,
792.529 -> “don’t forget to be awesome.”
793.529 -> ________________
[1] Foner.
794.529 -> Give me Liberty ebook version p. 1097
Source: https://www.youtube.com/watch?v=pyN5LPHEQ_0