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CCA 73 Presidents Ford and Carter
Date
Day
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American Cultural Fact: Gerald R. Ford once worked as
a fashion model. Ford was a model for Cosmopolitan
and Look magazines in the 1940's.
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This Day in History
Class work
Homework
Changes in the American
Economy:
Under President Ford and
Carter
The Energy Crisis,
Deindustrialization, and
the Service Economy
Globalization in the 1970’s
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Since the 1970’s, globalization has sharply accelerated its
momentum towards a single-world society.
Slowly and methodically institutions such as the United Nations,
World Health Organization, and World Trade Organization
acquired dominance.
A global system of governing through multinational companies
extends its interests on a formal and personal level
The manner in which these businesses conducted their day-to-day
transactions were significantly altered by technology. Industries
such as Mercedes-Benz, Walmart, McDonalds, AT&T, and Coca
Cola were staking out more territory on the global landscape. But
the deepest roots of globalization are found in the financial
institutions of The World Bank and International Monetary Fund
(IMF). Other financial trends toward globalization include the
introduction of the Euro, the “dollarization” of certain Latin
American currency.
Stagflation
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Throughout 1970's, the American
economy was plagued by the
unprecedented combination of
soaring prices, the high
unemployment, and low economic
growth.
Economists dubbed the phenomena
"Stagflation," a period of rising prices
in a stagnant economy.
The high standard of living in the US
following World War II suddenly
began to lag behind that of Western
Europe and Japan.
Americans found it increasingly
difficult to sustain a middle class
lifestyle.
Stagflation
Compare the rates of
inflation between 1972
and 1980 to those of
the 1980's and 1990's.
Stagflation
In 1975, unemployment
reached almost 9%, the
highest level since the
Great Depression at that
time.
The Oil Crisis Begins
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By the late 1950's, the
demand for oil in the
United States outstripped
domestic production
capabilities.
By 1970's, the US
imported a third of its oil,
making the American
economy vulnerable to
geopolitical upsets in the
Middle East.
The Oil Crisis Begins
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On October 6, 1973, the Yom
Kippur War began when
Egypt and Syria attacked
Israel from two sides.
The US airlifted supplies to
Israel, prompting OPEC to
levy an oil embargo against
Israel's allies that lasted until
March 18, 1974.
Our support of Israel made
U.S. an enemy to other Arab
nations.
Coping with the Energy Crisis
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The oil embargo led to
dramatically increased prices
for all types of fuel, including
gasoline, home-heating fuel,
and electricity.
Prices for virtually
everything else rose in
response to high energy
costs, causing record
inflation.
Long lines for gasoline
became everyday
occurrences.
Coping with the Energy Crisis
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The presidents of the 70’s and 80’s
appealed to the nation to make
sacrifices in the name of conserving
energy.
They warned that the country was
"heading toward the most acute
shortages of energy since World War
II.”
The presidents asked Americans to
reduce air travel, reduce work, school
hours, turn down thermostats 6
degrees, reduce highway speed limits
to conserve energy.
Coping with the Energy Crisis
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Leaders urged the use of
coal and nuclear power
rather than the limited
commodity of oil.
Congress was urged to
approve measures for
increased exploration and
extraction of domestic oil
and to relax
environmental standards
that impeded energy
requirements.
Economic Policies of President Ford
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Gerald Ford inherited an economy in
crisis when replaced Richard Nixon in
August 1974. Ford lacked the
economic vision to curb the effects of
stagflation.
Ford attempted to initiate a grassroots
anti-inflation campaign, but the Whip
Inflation Now (WIN) program was
little more than a public relations
maneuver.
Skeptical Americans began wearing
the red and white WIN buttons upside
down to stand for "No Instant
Miracles."
After a few months, the WIN effort
was abandoned.
Economic Polices of President Ford
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As a Republican, Ford believed that
a balanced federal budget and
reductions in government spending
were the best way to curb inflation.
Democrats in Congress favored
increased federal spending as a
stimulus to economic and job
growth.
Ford admitted in 1975, “the state of
the Union is not good.”
Ford vetoed more major bills than
any president in the 20th century.
Despite the legislative battle,
recessionary pressures eased
somewhat by 1976.
Deindustrialization
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"Deindustrialization" refers to a
shift away from a manufacturingbased economy.
In the United States and
Europe, deindustrialization has
preceded a shift to a servicebased economy.
The trend toward
deindustrialization began in the
1960's and continues into the
present day, as the service sector
overtakes the manufacturing
sector.
Deindustrialization
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During the 1970's, the oil
crisis and the falling
productivity of the US
manufacturing sector sped
the decline of several
industries, including steel,
automobiles, and electronics.
The industrial production
index measures the total
output of US factories. A
decline in production
indicates slow economic
growth.
Deindustrialization
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Increases in foreign industrial
efficiency allowed Europe,
Asia, and Latin America to
effectively compete by
producing quality goods for a
lower cost.
Many American companies
began outsourcing labor to
foreign countries to remain
competitive.
This chart illustrates the
balance of trade. The United
States increasingly imports
more than it exports.
Deindustrialization
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Structural unemployment often
spikes during deindustrialization.
In this case, "structural
unemployment" refers to
unemployment that occurs
during the transition from a
manufacturing to a service
economy because workers lack
skills, education, experience, or
proximity to the new types of
jobs available.
The Decline of Organized Labor
Membership in AFL-CIO Unions
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AFL-CIO lost over 4
million members
between 1970 and 1982.
Along with declining
membership came
decreased political power
for organized labor.
The Service Economy
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Economies in the developed
world typically change over time.
Agrarian economies first
transition to industrial, then
develop into service economies.
Service industries include retail,
wholesale, banking, public
utilities, entertainment, etc.
This graph shows the eclipse of
the manufacturing sector by the
service sector by the early 1980's.
The trend toward
deindustrialization resulted in a
service-based economy.
The Rustbelt and the Sunbelt
The Rustbelt and the Sunbelt
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The economic region known as
the Manufacturing Belt became
known as the Rust Belt by the
1970's, as manufacturing and
heavy industry declined due to
high energy costs and foreign
competition.
Cities in the Rust belt were
subject to unemployment,
underemployment in low-paying
service jobs, "white flight" to the
suburbs, and general outmigration as manufacturing jobs
moved south and abroad.
The Rustbelt and the Sunbelt
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Meanwhile, Sunbelt states in
the West and Southwest
continued to enjoy the
economic growth trend
spurred by Cold-War defense
spending and an influx of
retirees.
The South profited from a
booming agribusiness
industry and the California's
Silicon Valley became the
hub of the technology
industry.
As population in the Sunbelt
increased, so did the region's
political influence.
Working Women
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High inflation, a series of
recessions, and the changing
role of women in society
encouraged more females to
enter the workforce
throughout the 1970's.
Working women became the
norm, as more households
depended on two incomes.
Working Women
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Women, especially women of
color, continue to make
substantially less money than
their male counterparts.
Several factors account for
this wage gap, including
discrimination and female
concentration in low-wage,
non-union industries.
The Feminization of Poverty
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Despite increased participation in the labor force and the progress made during the
women's movement, women experienced a decline in economic status during the
1970's.
The Feminization of Poverty
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Low pay and inflation combined with increased rates of divorce and teenage
pregnancy led to a phenomena known as "the feminization of poverty," as
females became increasingly economically marginalized.
Economic Policies of President
Carter
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As a rhetorical device during 1976
presidential campaign, Governor
Jimmy Carter combined the rate of
inflation (6%) and unemployment
(8%) into a "Misery Index" of 14.
At first, Carter modeled his
economic recovery program after
FDR's New Deal by advocating tax
cuts, public works, and employment
programs to stimulate the economy.
The Democratic Congress
responded with legislation in
accordance with the President's
plan, but as unemployment
decreased, inflation continued to
rise.
Economic Policies of President
Carter
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In response, Carter tried an almost opposite approach. He attempted to curb inflation
by slashing government spending, deregulating industries, and implementing wage and
price controls.
Many Democrats were alienated by what they perceived as a shift to the right in
presidential policies.
Despite the President's sincere efforts, the "Misery Index" soon rose to 21.
President Carter and the Continuing
Energy Crisis
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Although the oil embargo had ended
and gas lines had ceased by Carter's
presidency, the threat created by US
energy dependence loomed on the
horizon.
Carter characterized the energy crisis as
"the moral equivalent of war," which
critics derisively nicknamed "meow."
His calls for sacrifice and conservation
were opposed by the influential oil and
auto industries, and accordingly the
subsequent National Energy Act of
1978 focused on increasing domestic
production rather than conservation.
President Carter and the Continuing
Energy Crisis
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Carter was successful in creating the Department of Energy as a cabinet-level position,
and he continued to try and set an example for citizens by conserving energy in the
White House.
President Carter had solar panels installed atop the White House in 1979 (which
President Reagan later removed).
President Carter and the Continuing
Energy Crisis
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Following the 1979 Islamic Revolution
in Iran, Ayatollah Khomeini stopped all
oil shipments, further exacerbating US
energy woes.
In July the president delivered a
televised address that became known as
the "Malaise Speech," in which he
entreats Americans to share the
responsibility of energy conservation.
The public and the press responded
defensively and Carter's approval rating
plummeted.
Although the speech was a frank
diagnosis of the country's ills, Carter
was criticized for "blaming" the
American people and offering few
solutions.